ASA Refunding 2004 401K Contributions

[HoserASA]

Not much one can do but numerous ASA pilots are receiving refunds of 2004 contributions because of the law govening low and high wage earners. If you contributed the max you'll be seeing 2-4 thousand bucks back. Nice. So, over a year and a half you get your bucks back when you thought they were working for you. And Bushie wants us to save our money! The government really burns me on this. But, it's the law, so we're screwed!

 

[Andy Neill]

Still have time to put that returned money into a Roth IRA, right? Hey, the good news is that you're getting money returned because you are in the upper tier of compensated employees. Since I'm an old guy in the lower tier, I can still put aside $18,000 this year and $20,000 next.

 

[HoserASA]

Already have Roth maxed out! Here's the question I posted on MyASA:

I received a refund check from American Century this week for $XXXX from my contributions for 2004. The letter stated that I was a "highly compensated" employee. I may be mistaken but I thought that pilots had an exemption from this? I am really disappointed that this has occurred, and resent the fact that ASA did not inform anyone of this. Will this occur for 2005 contributions too? If so, I'd stop my contributions and put the money to work elsewhere. Again, really great that ASA kept the employees in the dark about this.

 

[captain caveman]

I maxed mine out too. Does this mean we have a new tax bill coming or do the a$$holes just take it out of what is refunded?

 

[FN FAL]

I would think you could do a "rollover" into a private account. My wife was furloughed from a AC Neilson after 20+ years with them. When she left, she rolled it over her retirement into a private account. I know times are tough, but you guys should be able to do the same. Good luck!

p.s. why isn't someone from ALPA giving you guys information on how to handle this? Not a knock on your ALPA, but they should be all over this thing.

 

[HoserASA]

Tax is taken out of the refund check but you still have to report both the tax withheld, and the gross amount of the refund when you file your taxes for 2005. And no, you can not do a rollover. At least we don't get hit with the 10% penalty. About all you can do is buy stock or invest in a mutual fund, or buy a condo at the beach!

Still sucks that we can't max out our 401K. There are just not enough "lower earners" participating in the 401K to offset the "higher earners". Or they just don't participate at all. And ASA management doesn't do a thing to encourage these folks to save. Surprise there!

 

[DwayneWorthless]

ALPA: doing what it ca

To all you ASA and other "small" guys out there... ALPA is looking at your money... in fact we take some of it as your DUES. The 401K issue proves that you Regional guys make too much money. It's time to cut your pay... oops... that would mean a reduction in dues... on second thought.. let's just forget what I said. If fact ALPA will just ignore the entire issue, not to mention YOU!

 

[banned username 2]

Not much one can do but numerous ASA pilots are receiving refunds of 2004 contributions because of the law govening low and high wage earners. If you contributed the max you'll be seeing 2-4 thousand bucks back. Nice. So, over a year and a half you get your bucks back when you thought they were working for you. And Bushie wants us to save our money! The government really burns me on this. But, it's the law, so we're screwed!

The 401k contribution limit for 2005 (for those of us under 50 years old) is $14,000. Once that limit is hit, your contributions should no longer be taken from your paycheck. If you are over 50 years old, you can contribute an additional $4,000 in 2005 ($18,000 total). Once you hit one of these limits your employer should no longer deduct the contribution from your paycheck.

FYI, 2006 contribution limits will be $15,000 with an additional $5,000 for those of you over 50 years old.

 

[Andy Neill]

Falcon,
What Hoser is facing, however, is being restricted well below the $14,000 limit level because he is considered to be part of the "highly compensated employee" group (the lower limit of the group is somewhere in the $90,000-$100,000 range I believe). If the HCE's are socking away a significant amount more than the lowly compensated employees, then the excess is refunded to them as taxable income. At another operation, I have seen this cutoff somewhere in the $7000-$8000 range - well below the maximum. It seems the highly compensated employees would have an interest in encouraging their lower paid couterparts to increase the level of their own 401k participation to raise the average.

 

[Ben Dover]

Falcon,
It seems the highly compensated employees would have an interest in encouraging their lower paid couterparts to increase the level of their own 401k participation to raise the average.

Not a bad idea. But when your FO's are on welfare and government cheese, it's kind of hard to sock much away into a 401K. Not to mention these companies 401K match in the early years is embarrassing, so there's very little incentive for people on the low end to participate.