Category: Pilots

Understanding the SWAPA Market-Based Cash Balance Plan

Posted on by Nick Coleman

If you’re a Southwest pilot, you recently received many needed changes to your benefits package through the Contract 2020. The introduction of the SWAPA Market-Based Cash Balance Plan (MBCBP) has piqued the interest of many Southwest pilots. As a CERTIFIED FINANCIAL PLANNER™, I’ve had the privilege of working with over 50 pilots, just like you, helping them get on the right track to a successful financial life and retirement as their Fiduciary advisor. My specialization in Southwest pilot benefits helps me to guide you in maximizing your career earnings, benefits, and wealth.

HOW THE SWAPA MARKET-BASED CASH BALANCE PLAN WORKS WITH YOUR CURRENT PLAN

The Market-Based Cash Balance Plan allows you to increase your retirement savings without increasing your current taxes. Once you maximize your 401(k), the 17% contribution from Southwest will then spillover into the MBCBP, on top of contributing 1% of your salary into the MBCBP, and then 2% of your salary starting in 2026 if you spillover or not. 

Many pilots are running into the issue of maximizing their 401(k) and wanting other ways to save for retirement. The MBCBP is the benefit that will solve this issue. The MBCBP allows Southwest’s 17% “spillover” contributions to go into a pre-tax retirement account rather than be given to you via taxable check. The spillover occurs when you reach either the 415(c) Limit or the 401(a) Limit.

The 415(c) Limit sets the total cap on contributions to your 401(k) from both your employee and employer contributions. For individuals under 50, this limit stands at $69,000, while those 50 or older have a total limit of $73,500. Meeting this limit can occur when maximizing your employee 401(k) contributions, which are:

  • $23,000 for individuals under 50
  • $30,500 for those aged 50 or older

This means that you can contribute the $23,000 or $30,500 (50 years+) to your 401(k) and Southwest will contribute 17% of your salary up to the total limit including your contribution of $69,000 or $73,500 if 50 years +. 

The 401(a) Limit limits the amount of salary that can be considered that Southwest can contribute their 17% to. In 2024, this limit is set at $345,000. Southwest can only contribute 17% of your salary up to $345,000. If your salary exceeds this amount, Southwest’s 17% contribution will spill over to you (or the MBCBP). For example, if your salary reaches $445,000—$100,000 over the limit—this excess 17% translates to $17,000 as spillover into the MBCBP.

BENEFIT OF THE SWAPA MARKET-BASED CASH BALANCE PLAN

So, what exactly is a Cash Balance Plan? It serves as a retirement account, much like your 401(k). However, it has the capacity to hold a more significant sum for retirement than traditional retirement accounts. While a 401(k) is constrained by an annual limit—$69,000 or $73,500 if 50+ in 2024, for instance—a Cash Balance Plan can theoretically accommodate contributions of up to $300,000 annually. This account operates differently from a 401(k). It follows a “Defined Benefit” model, allowing for higher contributions to support specific benefits, such as an annual pension.

The Market-Based Cash Balance Plan is a deferred plan, meaning you don’t pay taxes on company contributions or growth within the account. Instead, taxes are paid when you withdraw funds during retirement, aligning with your income tax level at that time. This structure can be advantageous, as it doesn’t increase your taxes while working, potentially leading to lower lifetime taxes.

Regarding investment management, SWAPA Cash Balance Plans prioritize a “reasonable return” within strict ERISA and IRS guidelines to safeguard the defined benefit. As such, investments in the MBCBP aren’t subject to individual choices but rather managed collectively by a committee. Upon retirement, you have the flexibility to roll over the MBCBP into an IRA. This will grant you greater control over investment decisions. You also have the option to take a pension from the account. The pension amount is based on the value of the MBCBP, when you take your benefit, and if you elect to have survivor benefits as a feature to your pension. Determining if taking the pension or the lump-sum transfer into an IRA can be a decision that can have a major impact on your retirement. Discuss with a CERTIFIED FINANCIAL PLANNER on which option might be best for your retirement strategy.

A limitation with the Southwest Cash Balance Plan is that you as an employee cannot contribute to the account. It is only funded by the employer via the 1% contribution (2% in 2026) and any spillover above the 415(c) or 401(a) limits.

IS A MARKET-BASED CASH BALANCE PLAN RIGHT FOR YOU?

Should you consider using the SWAPA Cash Balance Plan? If you want to save more for retirement, especially as retirement draws nearer, it could be a valuable tool. Are you worried about paying too much in taxes and do not need the extra cash? This could be an advantageous option for you. If you want to increase your current income to pay for current bills and goals, you may want to continue using the cash spillover.

OTHER OPTIONS TO MAXIMIZE YOUR RETIREMENT STRATEGY

Additionally, you can maximize your 401(k) contributions further by taking full advantage of your personal contribution limit:

  • $23,000 for individuals under 50
  • $30,500 for those aged 50 or older

By doing so, you not only bolster your retirement savings but also may enjoy significant tax benefits. Contributions are tax-deductible, potentially leading to substantial tax savings.

Furthermore, you may consider diversifying your retirement savings by exploring Tax-Free retirement options like the Backdoor Roth IRA Conversion. This strategy can help you build tax-free retirement income while avoiding Required Minimum Distributions (RMDs).

NEXT STEPS

To ensure you’re making the most of your 401(k) and SWAPA benefits, consider discussing your retirement goals with a CERTIFIED FINANCIAL PLANNER who specializes in helping pilots plan for retirement. I’ve worked closely with many pilots, helping them get on the right track to a successful retirement and financial life, and I’m here to help you achieve your financial goals and maximize your benefits and wealth.

Let’s have a conversation about your financial goals and explore the strategies that can help set you on the path to financial freedom and a prosperous retirement. Set up a free consultation call today to learn more about how we can help you!

Looking for information about the United Pilots Cash Balance Plan? Read more on that here! 

Financial Planning for Pilots with Nick Coleman, CFP®

Posted on by Brian Colvert

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In the most recent episode of The Field Guide Podcast host Brian Colvert is joined by Nick Coleman, a CERTIFIED FINANCIAL PLANNER™ with Bonfire Financial. Nick has developed a unique specialty in helping pilots navigate their financial planning journey. Below is a summary of the insights shared during the interview, highlighting the distinct financial challenges pilots face and the tailored strategies Nick employs to guide them from the runway to retirement.

The Journey to Specialization

Nick’s journey into specializing in financial planning for pilots began with a personal connection. His father, Jerry Coleman, has been a pilot with United for over 30 years, with a prior career as a Navy pilot. This background gave Nick an intimate understanding of the unique benefits and challenges pilots encounter. Starting with his parents as his first clients, Nick quickly expanded his network, working with many pilots across various airlines, including United, Spirit, Southwest, and many others.

Unique Challenges Pilots Face

Pilots have a distinct set of financial planning challenges compared to other professionals. The path to becoming a pilot involves significant time and financial investment. It often takes around ten years, whether through the military or commercial route, to reach a major airline. Once there, pilots face industry volatility, with crises emerging approximately every ten years. Events like the COVID-19 pandemic have led to hiring freezes, early retirements, and reduced hours, posing substantial financial risks.

One of the major issues is the cyclical nature of the airline industry. Pilots must prepare for potential furloughs, layoffs, or reductions in hours. For instance, Spirit Airlines faced challenges with their Pratt & Whitney engines, affecting many pilots’ job security and financial stability. Thus, having a solid financial plan that accounts for these fluctuations is crucial.

Strategic Financial Planning for Pilots

Nick emphasizes the importance of a comprehensive financial plan tailored to each pilot’s specific needs and goals. The plan starts with maximizing retirement accounts, particularly the 401(k). Bonfire Financial partners with Charles Schwab, allowing access to the PCRA (Personal Choice Retirement Account). This partnership enables Nick to build custom strategies within pilots’ 401(k) plans, significantly impacting their retirement savings.

Additionally, Nick sets up tax-free Roth accounts for pilots and their spouses using the Backdoor Roth IRA strategy. This approach allows pilots to save $7,000 per year per person tax-free, amounting to $14,000 per year for a couple. Over time, these contributions grow significantly, providing a substantial tax-free retirement fund.

Medical and Long-Term Care Planning

Medical expenses are a significant concern for pilots, especially as they approach retirement. Many pilots come from military backgrounds and may have TRICARE benefits. However, each airline offers different medical benefits, which Nick meticulously reviews to maximize their potential.

Health Savings Accounts (HSAs) are another critical component. These accounts provide a tax-free way to pay for medical expenses both now and in retirement. United Airlines, for example, offers HRA (Health Reimbursement Arrangement) and RHA (Retiree Health Access) accounts, which pilots can use to cover medical bills tax-free, reducing the need to tap into their 401(k).

Long-term care insurance is another essential aspect of financial planning for pilots. While disability insurance provided by airlines is generally comprehensive, it doesn’t cover long-term care. Nick advises pilots to consider long-term care insurance between the ages of 50 and 65 to cover potential future expenses not included in their standard benefits.

Estate Planning

Estate planning is crucial for everyone, not just pilots. Ensuring that assets are distributed according to one’s wishes is vital. Nick collaborates with estate planners and offers software solutions to help pilots create wills, estates, and trusts affordably. This planning is especially important for those with complex family situations, ensuring their financial legacy is secure.

Managing Risk and Alternative Investments

Pilots often have high salaries and generous benefits, leading to the issue of maximizing their retirement accounts too quickly. Nick addresses this by exploring alternative investments such as private real estate, private equity, and private credit. These options provide higher returns than traditional investments and help pilots build additional wealth once their foundational retirement accounts are maxed out.

Risk management is another critical area. Pilots typically want the best available investment strategies, which sometimes involves higher risks. Nick ensures that the baseline is secure, focusing on maximizing 401(k) returns and other retirement accounts. Once this foundation is established, he explores riskier investments to potentially yield higher returns.

Tax Planning and Roth Conversions

Tax planning is an integral part of Nick’s strategy. He emphasizes the importance of minimizing tax liabilities both now and in the future. One effective method is the Backdoor Roth IRA, which allows pilots to save tax-free. Another strategy is converting part of their 401(k) to a Roth IRA after retirement when their income is lower. This conversion leverages lower tax brackets, ensuring that future withdrawals are tax-free.

The timing of these conversions is crucial. Pilots often retire at 65 but aren’t required to take minimum distributions until 73. This gap provides an opportunity to convert portions of their 401(k) to Roth IRAs at a lower tax rate, significantly reducing their tax burden in retirement.

Personalized and Custom Approach

Nick’s approach to financial planning for pilots is highly personalized. He understands that each pilot’s situation is unique, requiring tailored strategies. Whether it’s setting up emergency funds, exploring alternative investments, or managing retirement accounts, Nick ensures that his clients are well-prepared for any financial eventuality.

He also emphasizes the importance of regular reviews. Meeting with clients every quarter allows Nick to adjust strategies as needed, ensuring that pilots stay on track to meet their financial goals. This proactive approach provides peace of mind, allowing pilots to focus on their careers and families while knowing their financial future is secure.

Conclusion

In conclusion, Nick Coleman’s expertise in financial planning for pilots offers invaluable guidance for navigating the unique challenges they face. His tailored approach, leveraging strategies like the PCRA, Backdoor Roth IRA, and comprehensive tax planning, ensures that pilots are well-prepared for a secure retirement. By focusing on personalized plans and regular reviews, Nick helps pilots achieve their financial dreams, from takeoff to touchdown in retirement.

Next Steps

For pilots seeking specialized financial advice, connect with Nick Coleman by setting up a call today! 

401k Contributions for Pilots

Posted on by Nick Coleman

The landscape of retirement savings is complex, particularly for United Airlines pilots who face unique choices with their 401k in planning their financial future. The recent introduction of the Market-Based Cash Balance Plan (MBCBP) offers an additional avenue for retirement savings complementing the existing 401k plans.

Today we’ll take an in-depth look at these choices, focusing on how United Airlines pilots can best navigate their 401k contributions in light of the new MBCBP. We will examine contribution limits, potential tax benefits, and the strategic implications of different savings approaches, all designed to assist pilots in making well-informed decisions for their long-term financial well-being.

Should United Airlines Pilots Maximize Their 401k Contributions with the new Market-Based Cash Balance Plan Available?

Many United Airline pilots fund their allowable 401k contribution along with receiving the 17% contribution to their 401k from United.

The most an employee can contribute to their 401k in 2024 is:

  • $23,000 if under 50 years old

  • $30,500 if 50 years old or older

United will also contribute to your 401k, whether you are contributing or not. An employee is only limited to contributing the above numbers, however, the 401k has a separate total limit that includes all contributions; both from you and from United. That 401a maximum is called the 401a Limit.

In 2024, the 401(a) Limit is set at:

  • $69,000 if under 50 years old

  • $76,500 if 50 years or older

Once that limit is hit, United’s 17% contribution does not stop. It must flow into a different bucket. Previously, the 17% went into the Health Reimbursement Account (HRA), which many pilots did not find beneficial. Many pilots we worked with wanted to reduce the spillover, so more company dollars went into their 401k, rather than spillover. However, the new Market-Based Cash Balance Plan, a retirement plan similar to the 401k, is a much more beneficial account that many pilots are wanting to take advantage of.

Now, pilots want to get as much spillover as possible, so this account gets funded more.

Why is the Market-Based Cash Balance Plan (MBCBP) a good option?

  1. The contributions from United are not taxed in the year of the contribution. They are deferred until you take the money out. You can also roll the funds into an IRA when you retire and manage the account by yourself or have a retirement planner like us manage it for you. Much like the 401k.

  2. It will allow you to save even more for your retirement. Many pilots that want to save more for retirement, or are nearing retirement and want to maximize savings, will find this account to be very useful.

  3. Your money will be invested for you, and aims to have a reasonable return of 5-6% per year.

With that being said, you may decide that you want to maximize what United “spills” into your new retirement account (MBCBP). But how can you do this?

Best way to maximize your savings:

The best way to maximize your savings is by maximizing your employee 401k contribution. If you are 50 years old, you can contribute $30,500 into your 401k. United, at 17%, will contribute up to the total limit of $76,500, meaning they will fund the rest at $46,000. Once United has funded $46,000, you have hit the max. From there, United’s 17% will fund the MBCBP. If you are under 50, your contribution max is $23,000 and total max is $69,000. So United still has a contribution of $46,000 to reach your $69,000 limit/

According to our math, if you maximize your 401k contributions, your 401k will max out once your salary reaches approximately $270,000. 17% of all dollars above that will flow to the MBCBP. For example, if your salary is $370,000, you will receive $17,000 into your MBCBP ($100,000 x 17%). In total, you would have added $93,500.

This is a better option than not contributing to your employee contribution. If you decide not to contribute at all, United will have to contribute up to 17% of your salary up to $345,000 into your 401k before it spills over (See 401(a) Limit). For example, if your salary is $370,000 that means your total retirement additions will only be $62,900.

Why Should You Maximize Your 401k Contribution?

In the past, United Airlines Pilots were hesitant to overfund their 401k’s because they did not want excess funds funding the RHA or the HRA. Going forward, pilots can now have the spillover continually fund a retirement account. The other reason to maximize your 401k is that you will be saving an additional $30,500 per year for retirement (50+), plus you can write it off as a tax deduction if you are funding the traditional 401k.

When we do a quick math calculation, we can see the major impact that saving $30,500 can have just on a 10 year timeline. Let’s say you contribute $30,500 per year, for 10 years, and you earn a reasonable return of 8%. How much money will you have after 10 years? When you include compounding interest, your total would be $441,840. Close to half a million dollars in additional retirement savings in just 10 years!

Which should you choose, the HRA or the MBCBP?

From initial discussions, it looks like pilots will only be allowed to choose one option or the other. Should you choose the HRA or the MBCBP?

HRA:

  • Benefits:

    • Tax-Free reimbursement for most medical, dental, and vision expenses, including copays and premiums

    • Good option for paying medical expenses in retirement

  • Cons:

    • Non-portable. Meaning you cannot move this account at any time. It stays at a trust at United

    • If you and your spouse pass away without using the entire amount, the balance get reverted back into the trust

MBCBP:

  • Benefits:

    • Can move the account to an IRA at 59 ½

    • Contributes and grows tax-free

    • Helps you save more for retirement above traditional limits

  • Cons:

    • Investment is controlled by a third-party committee

    • Cannot be used until the retirement age of 59 ½

    • Pay income tax when you use the money

 

Want to maximize your financial plan?

As a CERTIFIED FINANCIAL PLANNER™, I’ve had the privilege of working with over 50 pilots, just like you, to help them chart a course toward a secure retirement and a prosperous financial future. My specialization in United pilot benefits helps equip me to guide you in maximizing your career earnings and benefits. There are many accounts and benefits that we want to help you get the most out of, before you are forced into retirement by current FAA laws. By working with us, we can help you get on the right track to the retirement and financial future you deserve. Let’s get started today. 

2024 United Pilot Plan Updates: Cash Balance Plan

Posted on by Nick Coleman

2024 United Pilot Plan Updates: Understanding the Cash Balance Plan

If you’re a United pilot, the dawn of 2024 likely brings with it an exciting prospect—the new contract set to take effect this year. Among the changes, the introduction of the Market-Based Cash Balance Plan (MBCBP) has piqued the interest of many United pilots. As a CERTIFIED FINANCIAL PLANNER™, I’ve had the privilege of working with over 50 pilots, just like you, to help them chart a course toward a secure retirement and a prosperous financial future. My specialization in United pilot benefits helps equip me to guide you in maximizing your career earnings and benefits.

How the Market-Based Cash Balance Plan works with your current plan

The Market-Based Cash Balance Plan represents an opportunity to enhance your retirement savings, working in conjunction with the Profit Sharing Retirement Account Plan (PRAP). This supplementary retirement savings account is designed for spillover contributions from your 401(k) plan. The question on many pilots’ minds is how the MBCBP operates, how it can be utilized, and whether it offers advantages over the Health Reimbursement Account (HRA).

Understanding the MBCBP involves grasping two crucial limits—the 401(a) Limit and the 415(c) Limit.

The 415(c) Limit sets the total cap on contributions to your 401(k) from both your employee and employer contributions. For individuals under 50, this limit stands at $69,000, while those 50 or older can contribute up to $73,500. Meeting this limit can occur when maximizing your 401(k) contributions, which are:

  • $23,000 for individuals under 50
  • $30,500 for those aged 50 or older

The 401(a) Limit, dictated by ERISA regulations, determines the portion of your salary that United considers when contributing to your 401(k). In 2024, this limit is set at $345,000. If your salary exceeds this amount, United’s 17% contribution will spill over into either the HRA or MBCBP. For example, if your salary reaches $445,000—$100,000 over the limit—this excess 17% translates to $17,000 as spillover. Over a decade, this could accumulate to a substantial sum.

Understanding the Market-Based Cash Balance Plan

So, what exactly is a Cash Balance Plan? It serves as a retirement account, much like your 401(k), but with the capacity to hold a more significant sum for retirement than traditional retirement accounts. While a 401(k) is constrained by an annual limit—$69,000 in 2024, for instance—a Cash Balance Plan can theoretically accommodate contributions of up to $300,000 annually. This account operates differently from a 401(k) in that it follows a “Defined Benefit” model, allowing for higher contributions to support specific benefits, such as an annual pension.

The Market-Based Cash Balance Plan is a deferred plan, meaning you don’t pay taxes on contributions or growth within the account. Instead, taxes are levied when you withdraw funds during retirement, aligning with your income tax level at that time. This structure can be advantageous, as it doesn’t increase your taxes while working, potentially leading to lower tax brackets in retirement.

Regarding investment management, Cash Balance Plans prioritize a “reasonable return” within strict ERISA and IRS guidelines to safeguard the defined benefit. As such, pilot investments in the MBCBP aren’t subject to individual choices but rather managed collectively by a committee. Upon retirement, you have the flexibility to roll over the MBCBP into an IRA. This will grant you greater control over investment decisions.

One notable advantage of the Cash Balance Plan is its portability. After retirement, you can transfer the funds to an IRA, allowing for greater flexibility and potential wealth transfer. In contrast, the HRA and RHA remain non-portable and are confined to United’s trust, accessible only for qualified health-related expenses and with limited beneficiary options.

Is a Market-Based Cash Balance Plan Right for You?

So, should you consider using the 2024 United Pilot Cash Balance Plan? If you aspire to save more for retirement, especially as retirement draws nearer, it could be a valuable tool. However, it’s essential to retain some funds for potential health expenses in retirement, considering that healthcare costs can be substantial. Fidelity estimates that a couple retiring in 2021 might spend around $157,000 on medical expenses during retirement.

Additionally, you can maximize your 401(k) contributions further by taking full advantage of your personal contribution limit:

  • $23,000 for individuals under 50
  • $30,500 for those aged 50 or older

By doing so, you not only bolster your retirement savings but also may enjoy significant tax benefits. Contributions are tax-deductible, potentially leading to substantial tax savings.

Furthermore, you may consider diversifying your retirement savings by exploring Tax-Free retirement options like the Backdoor Roth IRA Conversion. This strategy can help you build tax-free retirement income while avoiding Required Minimum Distributions (RMDs).

Next Steps

To ensure you’re making the most of your 401(k) and United pilot benefits, consider discussing your retirement goals with a professional who specializes in helping pilots. I’ve worked closely with numerous pilots to navigate the complexities of their financial plans, and I’m here to help you secure a successful financial future and retirement.

Let’s start a conversation about your financial goals and explore the strategies that can help set you on the path to financial freedom and a prosperous retirement. Set up a free consultation call today to learn more about how we can help you!

Looking for information on the Southwest Pilot’s Cash Balance Plan? Read more on that here.

Navigating Retirement Contributions: Demystifying 401(a) and 415(c) Limits

Posted on by Nick Coleman

Retirement planning isn’t just about saving; it’s about mastering the rules of the game. If you’re a high-flyer working for a major airline, you’ve probably heard about the 401(a) and 415(c) limits – but do you truly understand how they can help supercharge your retirement savings? Let’s break down these limits, unravel the intricacies, and set you on the path to maximizing your retirement nest egg.

What is the 401(a) limit?

The 401(a) limit caps the amount of money your employer can contribute to your 401(k), as described by a salary limit. That salary limit for 2024 is $345,000. This means when your employer is contributing to your 401(k), they are going to contribute XX% of your salary up to $345,000 of your salary.

For example, if United contributed 16% of your salary into your 401(k), the most they will add is $55,200 ($345,000 X 16%). If your salary is higher than $345,000, they can no longer contribute to your 401(k), and this is where the money may spill over.

Some more senior pilots may have a salary higher than salary limit. In this case, they will get the maximum amount allowed from their employer. If your salary is under that, you don’t have to worry about that limit. However, both pilots will have to pay attention to the next limit, called the 415(c) limit, which will limit what you and your employer contribute as a total limit.

401(a) Limit: Your Key to More Employer Contributions

The 401(a)(17) compensation limit, nestled within the U.S. Internal Revenue Code, is your golden ticket to getting your employer to pump more money into your 401(k). This limit caps the portion of your earnings that counts when determining contributions to specific retirement plans, including beloved options like 401(k)s and defined benefit pension plans.

Now, the real magic happens when you align your contributions with the 401(a) limit. This strategic move can lead to a larger employer contribution to your 401(k), leaving you with more take-home dollars. The aim is to maximize your 401(k) without hitting the cap too soon or spilling over.

415(c) Limit: The Sibling of 401(a)

But wait, there’s more! The 415(c) limit, or Section 415(c) limit, is another player in this retirement savings game. This provision in the tax code sets the annual ceiling on contributions or benefits allocated to an individual’s retirement account within qualified plans, spanning 401(k)s, 403(b)s, and pensions.

These limits aren’t etched in stone; they evolve yearly to keep up with inflation and economic shifts. For the most current numbers, consult the IRS or your trusted tax advisor when making retirement contributions.

Making Sense of 415(c): Real-Life Scenarios

Let’s dive into real-life scenarios. Imagine you’ve maxed your contribution at $22,500. Your employer can contribute up to $43,500. If your salary is $280,000 and your company matches 16%, that’s a generous $44,800 from your employer. However, there’s a $1,300 spillover due to the 415(c) limit. In this case, you could reduce your contribution to $21,200 and still receive the full $44,800 employer contribution, reaching a total of $66,000.

Now, what if you’re 50 or older and want to hit the max of $73,500, including a $7,500 catch-up contribution?

401(a) at Play: Maximize Your Employer’s Share

Here’s a twist – you can contribute only the catch-up amount to your 401(k) if your employer’s contributions have already filled your account to the max. Say you earn $345,000, and your employer contributes 16%, giving you $55,200. If you’re under 50, you can add $13,200 to reach the $66,000 cap. If you’re 50 or older, it’s an extra $20,700 to hit the $73,500 limit. Fascinatingly, neither scenario requires you to max out your employee limit of $22,500 plus a $7,500 catch-up.

Crunching the Numbers for Your Benefit

To make the most of these limits, a little number-crunching and projection are in order. Consider your salary history and estimate future earnings to create a strategy that maximizes both your contributions and those from your employer.

Why does all this matter? Because it’s your gateway to getting more money into your 401(k), rather than spillover accounts. And the more you get in now, the better your financial future will look in retirement.

Beyond 401(k) – The Backdoor Roth Conversion

But our journey doesn’t end here. For our high-earning clients in the airline industry, we’re here to uncover your financial dreams and set you on the right track. One exciting strategy to explore is the Backdoor Roth Conversion. This allows you and your spouse to stash away $6,500 each per year, or $7,500 each if you’re 50 or older, in addition to your 401(k) contributions. It’s a powerful way to build a pool of tax-free retirement dollars.

In a nutshell

In real-life scenarios, these 401(a) and 415(c) limits offer opportunities for fine-tuning your contributions. By making thoughtful adjustments to your contributions, you can leverage your employer’s contributions and, if you’re 50 or older, take advantage of catch-up contributions. Ultimately, these limits are the building blocks of a more secure financial future in retirement. The more you invest wisely within these boundaries, the more comfortable and stable your retirement years will become. So, remember, it’s not just about accumulating savings; it’s about understanding and utilizing these financial limits to secure your financial well-being in retirement.

What We Can Do for You

As a Certified Financial Planner and Fiduciary Financial Planner, we partner with over 50 pilots just like you, helping them discover their financial goals and chart a course to success. We can help you navigate 401(a) and 415(c) limits. Those who work with advisors or have done so in the past often have at least double the retirement savings of their peers, sometimes even more. Your financial future deserves expert guidance – let us help you soar towards your retirement dreams.

Set up a free consultation call today to learn more about how we can help you!

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