Lear70 said:
B funds aren't anything more than company-directed investment accounts. If you really want money these days, concentrate on negotiating for a better 401k match, like 100% matching of up to 6% of your pay or whatever the government maximum is at your contract's D.O.S. (Date Of Signing) without having to pay taxes as it's deducted. They can't touch the 401k money, it's yours by law and is self-directed.
I guess it depends on how the individual company sets up it's B-Fund. UAL's is SELF directed with a variety of funds to choose from. It's just like my current and past 401k's have been - with the exception that I was vested on day 1 at UAL. When I got furloughed, I rolled the $$ out to an IRA.
The only limitation of 401k's, as Lear70 mentioned, is the goverment limitations on contributions. 13k this year. Even if you make 150k, you can only put 13k away and even with a STELLAR match of 100% the company is only going to contribute 13k as well.
With a B-fund of say 10%, you would get the full $15,000 and would still be able to contribute the $13,000 to your 401k.
Now, the real problem
occurs when you pass the threshold for "highely compensated employees." When I was junior-bird-man back in November of 2001, I would fly with Captains that had reached this threshold (it was $170,000 at the time I believe) and the company could no-longer contribute to the b-fund... so the rules stated that the 10% would be deposited SQUARELY in their paychecks instead of the tax-defered account. Nothing like getting a nice 10% raise every halloween or so
Of course I always pointed out this pay inequity when I pranged a landing on. You get what you pay for is my motto
Fate
***warning warning Tangent warning warning ***
This is directed at no one on this board...
What really irritates me is the fact that most pilots fail to educate themselves as to the advantages of these alternative methods of retirement planning. I'm basically an idiot when it comes to retirement planning, but I have been lucky enough to been exposed to a few different techniques. The reality is, that pilots who have only known 401k's never have any idea what the power of a combined a-fund/b-fund plan can do for their futures. And as such, even with equal salaries, they are GROSSLY undercompensated if they think -for example- a 50% match on a 401k is sufficent.
Also, many do not understand that a 100% match on the first 7.5% of your income is very different than 50% on the first 15% of your income. If you make $100,000 this year, a 100% match will get you the full $7,500 from the company. If your plan matches 50% of the first 15%, you'll only get $6,500... because the max you can contribute is $13,000. Certainly I'm preaching to the choir to many here, but I've ran into to too many people who fail to grasp this simple concept.
I work for a company currently in contract negotiations and quite frankly they really should have called a financial planner before negotiating our 401k/profit sharing combination.
I hear many young pilots (some older than me) sing the tune of "just give me a 401k with a good match, I want to keep MY money!" These vocal juniority will be singing a different tune when one day they start surpassing the limits of what a 401k can do for them.
A-plans may be going the way of the dinosaur. As for profit sharing, the airline industry, throughout its history has lost more money than it ever made. Certainly individual companies have had tremendous success with profit sharing. But for the MAJORITY, having the company sell you on the benefits of "profit sharing" is like trying to sell ice to eskimos. The problem is that these eskimos all have starry aspirations of living in a bigger igloo or perhaps driving a "heavy" bobsled one day and can't see the forest for the trees.
