B Fund

[BluDevAv8r]

No, it counts TOWARDS the max, from my understanding, before you are taxed on it.

You can contribute whatever you WANT to your 401k, but anything over 24% (for this year) is no longer pre-tax dollars.

For instance, AirTran contributes 10.5% of your salary. You can contribute another 13.5% and that 13.5% will be taken out pre-tax.

If you contribute more than the 13.5%, your total 401k contributions (company included) now are more than 24%, and anything over that is supposed to be taxed.

That's how it was explained to me. However, I'm not a tax expert.

Ski, if you have information to the contrary, please let me know. I'm not at a high enough income yet here to withhold much (that won't come until year 4 F/O rates at our current book), but it would be good to know for future use.

Uh....this is pretty much all incorrect. Percentages aren't taken into account when discussing the contribution limits...they are defined by dollar amounts (at least under the IRS rules 402(g) and 415). Any money contributed into your 401k plan by your company (whether it is a DC plan or 401k match) does NOT count towards the employee contribution limit of $15,500 for 2007 (plus $5,000 more if you are 50 or over). The only money that counts towards the $15,500 limit is money that you earn and defer on your own. The 10.5% you get at Airtran (or the 10% at CAL...12.75% in July), whether it goes to a separate B Plan account or to your 401k account, does NOT count towards the $15,500 limit.

However, there is a combined annual contribution limit and for 2007 that limit is $45,000 (or $50,000 if you are 50 or over). This limit applies to all contributions made under both the 401(k) as well as B-Plan (and any other Company defined contribution plans in which you have participated such as selling back unused vacation as well as profit sharing into the 401k, etc).

Hopefully this makes sense...if not, let me know what you don't understand and I'll do my best to answer it for you. I'm not a tax accountant or retirement expert but I have a little bit of experience with this stuff from some ALPA work I have done in the past.

-Neal

 

[Lear70]

Cool, thanks for the update. I was just reading directly off the plan materials which were mailed to me by the company.

"Any contributions greater than 24% will be withdrawn from your paycheck after all appropriate taxes have been withheld."

Possibly that may be that at my proposed income bracket, that is where I hit the $15,500 limit for this year?

Don't know, and it doesn't say. Like I said, not a tax expert.

Thanks for the correction.

 

[BluDevAv8r]

Cool, thanks for the update. I was just reading directly off the plan materials which were mailed to me by the company.

"Any contributions greater than 24% will be withdrawn from your paycheck after all appropriate taxes have been withheld."

Possibly that may be that at my proposed income bracket, that is where I hit the $15,500 limit for this year?

Don't know, and it doesn't say. Like I said, not a tax expert.

Thanks for the correction.

Lear,

2 things come to mind. First, the limits I spoke of are IRS limits. The actual plan itself may of course trump the IRS limits if that was what was negotiated by your union and the company. Secondly, you could very well be correct that the materials you received were based off of your projected income for the year. You would have to earn $64,583 for the year for 24% to hit the IRS limit of $15,500. But the verbiage you referenced above talks about contributions from YOUR paycheck...thus, it is not talking about the B-Plan of 10.5% that Airtran pays into your account.

-Neal

 

[TheBaron]

Our B-fund (7% of earnings) is deposited into a Vanguard account monthly. We get to choose from several different funds and can move the money around within these funds as we see fit.

...6% now. 7% starting January 2008.

 

[SkiFishFly]

Uh....this is pretty much all incorrect. Percentages aren't taken into account when discussing the contribution limits...they are defined by dollar amounts (at least under the IRS rules 402(g) and 415). Any money contributed into your 401k plan by your company (whether it is a DC plan or 401k match) does NOT count towards the employee contribution limit of $15,500 for 2007 (plus $5,000 more if you are 50 or over). The only money that counts towards the $15,500 limit is money that you earn and defer on your own. The 10.5% you get at Airtran (or the 10% at CAL...12.75% in July), whether it goes to a separate B Plan account or to your 401k account, does NOT count towards the $15,500 limit.

However, there is a combined annual contribution limit and for 2007 that limit is $45,000 (or $50,000 if you are 50 or over). This limit applies to all contributions made under both the 401(k) as well as B-Plan (and any other Company defined contribution plans in which you have participated such as selling back unused vacation as well as profit sharing into the 401k, etc).

Hopefully this makes sense...if not, let me know what you don't understand and I'll do my best to answer it for you. I'm not a tax accountant or retirement expert but I have a little bit of experience with this stuff from some ALPA work I have done in the past.

-Neal

This is what I was referring to earlier. Thanks for posting the exact dollar amounts.

 

[-9Capt]

However, there is a combined annual contribution limit and for 2007 that limit is $45,000 (or $50,000 if you are 50 or over). This limit applies to all contributions made under both the 401(k) as well as B-Plan (and any other Company defined contribution plans in which you have participated such as selling back unused vacation as well as profit sharing into the 401k, etc). -Neal

That is correct.

The Gov't sets a maximum to the amount they'll let you stash away untaxed.

I've maxed out my 401K for the last 5 years and the companys B-fund contributions has never been taxed. Total amount of tax deferred retirement contribution (401K+Bfund) was aprox $29K, less than the $45K max so no tax.

 

[Ex737Driver]

At CAL we also have the ability to royaly screw-up your B-fund retirement. Schwab allows you to take a portion of your B-fund and place in into an account PCRA. This account allows you to choose from several thousand mutal funds, some load and some no-load, as well as trade almost any type of stock, pink sheet stock, bonds, t-bills, and futures commodities. There are fees associated with these transactions but why leave it to your second or third ex-wife when you can wipe out your retirement with a poorly placed stock trade in one week. :laugh:

 

[-9Capt]

At CAL we also have the ability to royaly screw-up your B-fund retirement. Schwab allows you to take a portion of your B-fund and place in into an account PCRA. This account allows you to choose from several thousand mutal funds, some load and some no-load, as well as trade almost any type of stock, pink sheet stock, bonds, t-bills, and futures commodities. There are fees associated with these transactions but why leave it to your second or third ex-wife when you can wipe out your retirement with a poorly placed stock trade in one week. :laugh:

I'm a big fan of good quality, low cost funds. Buy 'em, hold 'em, and fughetaboutit.

 

[Lear70]

We had a couple day traders come to work at my last job (regional) and those guys LOVED the PCRA option. Made a LOT more money, but those guys admittedly knew EXACTLY what they were doing with it.

GREAT option if you're smart enough to get professional help managing it. Otherwise...