Management’s final “enhancement” provides that if as a result of eliminating the pilots’ current A-Plan and B-Plan, converting to a strict 401(k) Plan, a pilot exceeds the current IRS limits for 401(k) contributions, management will pay the pilot those amounts that exceed the IRS limits in taxable income instead of keeping the money.
Management’s proposal:
Company contributions on compensation above the IRS compensation limit will be paid as taxable income to the participant.*
No pilots reach these limits under the current A and B Plans so this “enhancement” is not currently needed. This problem is one created solely by management wanting to get rid of the A and B Plans and converting them to a 401(k) Plan. Management wants to give the pilots an “enhancement” that may result in the pilots’ pension plans being taxed as ordinary income for the first time ever.
If the pilots agree to the other 67 onerous items, a couple being agreeing to terminate their A-Plan and eliminate their B-Plan, management will provide them with this final “enhancement” - a smaller pension and a pension plan that may be taxed.
An enhancement? Really?
