SkyWest Employee Stock Purchase Program and 401K

[CFIT]

With the new contract the discrimination test is performed just against ASA pilots, which should prevent the HCE trigger from happening. I assume ExpressJet is the same way.

Previously, we were compared with all ASA employees, most of which didn't contribute to the 401k. I think company-wide ASA is at 30% participation, which is why we ran into trouble with it before.

At SkyWest Airlines it was just the opposite, when the test was run against just the pilot group the HCE bias was even worse than compared to the entire employee group. The HCE group has been offered a Deferred Compensation Plan but I have not been able yet to invesitigate it.

For the last 5 years I have been getting money back from my 401K plan that is taxed at sky high levels.

 

[Nevets]

There are quite a few at ASA and Skywest that hit the 100K threshold every year...Many ASA pilots ran into this problem.....

With the new contract the discrimination test is performed just against ASA pilots, which should prevent the HCE trigger from happening. I assume ExpressJet is the same way.

Previously, we were compared with all ASA employees, most of which didn't contribute to the 401k. I think company-wide ASA is at 30% participation, which is why we ran into trouble with it before.

That's all true...but for years it was an issue. Many pilots had their contributions returned because they "made too much"....another case of social engineering that hurts people...

This may explain why it was never an issue at XJT and now ASA with its new contract but it is for Skywest.

 

[Andy Neill]

I can see where the cut off can be higher when using only the pilot group for the HCE calculation, but somebody's still got to be in the top 20%. Are the top 20 not investing beyond the average levels of the bottom 80?

 

[CFIT]

I can see where the cut off can be higher when using only the pilot group for the HCE calculation, but somebody's still got to be in the top 20%. Are the top 20 not investing beyond the average levels of the bottom 80?

Not from what I have been told, I think the problem stems from the newer employees not contributing enough to their 410K's. As I understand it if every employee fully contributed there would be no HCE refund required.

 

[sweptback]

Not from what I have been told, I think the problem stems from the newer employees not contributing enough to their 410K's. As I understand it if every employee fully contributed there would be no HCE refund required.

ASA automatically starts new pilots with a 3% 401k contribution. Now, they can opt out of it, but maybe that's the difference.

 

[Nevets]

ASA automatically starts new pilots with a 3% 401k contribution. Now, they can opt out of it, but maybe that's the difference.

Yeah, XJT does that also but I think they start you at 5%. You can opt out or lower/raise the contribution also.

 

[SKYWRJGUY]

I know there are folks who make more than me, and the HCE is based on hte Federal Taxable Gross plus the 401k contribution back in...

Therefore, you're looking at anybody making over $115,000 and fully contributing (or 103,000 and contributing $3k) being considered HCE. As the literature from MK said, SkyWest has failed both the ADP and ACP portions, which I think is both percentage and absolute contributions. Still pisses me off, don't know why we don't automatically enroll people [almost zero added cost] and match 2% from 90 days on...[small added costs considering it's first year pay across all crafts].

Oye.

 

[amcnd]

Standby, for more to come out on the Stock and 401k plan.... (it's good news)

 

[auspac]

I looked over the Deferred Compensation Plan (SkyWest) and the big thing that I don't like is that the assets are considered the company's. In the event of bankruptcy the creditors could go after them. Also you cannot roll over to an IRA. So what happens when you leave SkyWest? Do you have to leave your money in the plan until retirement? The fund choices are pretty limited. The positives of the plan are no maximum contributions, no mandatory distributions and tax deferred savings.

 

[Nevets]

I looked over the Deferred Compensation Plan (SkyWest) and the big thing that I don't like is that the assets are considered the company's. In the event of bankruptcy the creditors could go after them. Also you cannot roll over to an IRA. So what happens when you leave SkyWest? Do you have to leave your money in the plan until retirement? The fund choices are pretty limited. The positives of the plan are no maximum contributions, no mandatory distributions and tax deferred savings.

My deferred compensation plan is called a 401k or IRA. Curious as to what this other plan is that you are talking about?

 

[CFIT]

I looked over the Deferred Compensation Plan (SkyWest) and the big thing that I don't like is that the assets are considered the company's. In the event of bankruptcy the creditors could go after them. Also you cannot roll over to an IRA. So what happens when you leave SkyWest? Do you have to leave your money in the plan until retirement? The fund choices are pretty limited. The positives of the plan are no maximum contributions, no mandatory distributions and tax deferred savings.

I've signed up for it and will try to maximize my contribution on my 401K without going to the point of getting a refund. I am going to put about 10K in each one a year which will lower my taxes. The deferred compensation program is a company assett but I don't think SkyWest is going anywhere soon.

 

[Skywest Pylot]

The deferred compensation program is a company assett but I don't think SkyWest is going anywhere soon.

I wonder if the folks at United, Delta, U.S. Airways, etc. at one time said the same thing. Not trying to bash you CFIT, but maybe we can all learn something from the past.

 

[CFIT]

I wonder if the folks at United, Delta, U.S. Airways, etc. at one time said the same thing. Not trying to bash you CFIT, but maybe we can all learn something from the past.

I think the key word in my post "going anywhere soon", but you are right, I'm sure at one point most of those thought there nest egg was safe too.

What I am also trying to find out is what can happen if the company is aquired, which I think is a situation that is more likely.

 

[auspac]

My deferred compensation plan is called a 401k or IRA. Curious as to what this other plan is that you are talking about?

Nevjets, We have just been introduced to a separate Deferred Compensation Plan for HCEs. This is NOT a 401K. There are significant differences:

- only a select group of highly compensated or management employees may participate
- the IRS does not limit how much may be contributed
- distributions made prior to age 59.5 are not subject to an early withdrawal penalty
- distributions may not be "rolled-over" to an IRA
- loans are not available
- hardship withdrawals are available under limited circumstances
- CONTRIBUTIONS ARE CONSIDERED ASSETS OF THE COMPANY AND ARE AVAILABLE TO SATISFY THE CLAIMS OF THE COMPANY'S CREDITORS IN THE EVENT OF ITS BANKRUPTCY OR INSOLVENCY
- forms of payment must be elected at the time of deferral, but can be modified as provided under the Plan


I don't see SkyWest going bankrupt anytime soon, however I'm sure the employees at Pan Am, United, Lehman Bros, Enron, insert company name....., all said that at one time. With a 401K your money is safe from creditors, the problem with our plan is we cannot max it out once we earn a certain amount because we get some of our money sent back to us.

 

[Nevets]

Nevjets, We have just been introduced to a separate Deferred Compensation Plan for HCEs. This is NOT a 401K. There are significant differences:

- only a select group of highly compensated or management employees may participate
- the IRS does not limit how much may be contributed
- distributions made prior to age 59.5 are not subject to an early withdrawal penalty
- distributions may not be "rolled-over" to an IRA
- loans are not available
- hardship withdrawals are available under limited circumstances
- CONTRIBUTIONS ARE CONSIDERED ASSETS OF THE COMPANY AND ARE AVAILABLE TO SATISFY THE CLAIMS OF THE COMPANY'S CREDITORS IN THE EVENT OF ITS BANKRUPTCY OR INSOLVENCY
- forms of payment must be elected at the time of deferral, but can be modified as provided under the Plan


I don't see SkyWest going bankrupt anytime soon, however I'm sure the employees at Pan Am, United, Lehman Bros, Enron, insert company name....., all said that at one time. With a 401K your money is safe from creditors, the problem with our plan is we cannot max it out once we earn a certain amount because we get some of our money sent back to us.

So you can participate if both?