United Airlines Pilot Retirement
Whether you are a legacy United or Continental pilot, we have experience working with both retirement benefits packages so that we can create a customized financial plan for you to follow to help build the retirement life you have worked so hard to create.
Key members of the Cleary Gull Pilot Program team include Certified Financial Planners, as well as former airline personnel that are uniquely qualified to help pilots and retirees sort through their financial options to maximize their retirement income. Plus, we are equally conversant in the complex and constantly changing world of Social Security and Medicare benefits.
We closely monitor the UAL / CAL merger and analyze the implications to pilots’ retirements to better help you when you transition to retirement.
A Plan/ PBGC
This Defined Benefit Pension Plan was terminated December 30, 2004 and assumed by the PBGC. Your retirement benefits will be paid by the PBGC based upon priority categories. You will receive a PC-3 or PC-4 benefit.
There are no lump sum benefit options available from the PBGC, only a selection of retirement annuity options. We suggest that you contact the PBGC and request estimated retirement benefits at various commencement ages. www.pbgc.gov
There are key things you should know about your PBGC benefits, some are complex and are unique to your individual situation. Among them are:
- How and when to register for benefits?
- What is the best annuity option for you?
- When to start taking your benefits?
Your retirement is made up of three separate plans that form the basis for your future retirement income. It is important to understand your benefits and what your responsibilities are with these plans. Being proactive today in managing these assets will go a long way in helping you create a retirement plan you are more confident of achieving.
Continental Pilots Retirement Plan (CPRP) – A Plan
This Defined Benefit Pension Plan (formerly CARP) was frozen in 2005. The retirement benefit is formula driven based on Final Average Earnings and Years of Service and is calculated to be paid over your lifetime. You will want to understand your early and normal retirement eligibility and vesting service before making your election on when to retire.
An important decision will be the payment option you choose when you retire:
- Single life annuity
- Joint and survivor annuity
The lump-sum option historically has been the most popular. It is effectively the present value of your single lifetime annuity paid in one single sum. The calculated amount will be affected by mortality rate assumptions and current interest rates. For example, a higher interest rate environment will provide a lower lump-sum amount.
We suggest you visit Your Benefits Resources to obtain various CPRP benefit options www.ybr.com\united. There is no “one-size fits all” with this election. Contact us to help determine the best option for you and your family.
Defined Contribution Plan
In 2014, the DC plans for the two pilot groups (PDAP, 401(k) and B Plans) were combined to form the PRAP.
A critical part of your retirement success is your ability to contribute to a tax-advantaged retirement plan and have a plan to maximize those retirement dollars. PRAP assets are held in trust and secure from UAL creditors. Accounts are held in your name for your benefit.
With your employer-sponsored PRAP plan:
– You may make pre-tax and Roth 401(k) contributions plus after-tax contributions
(once you have maxed out of your pre-tax election)
– The Company will contribute to the plan an amount equal to 16% of your eligible
Earnings from the Company each pay period (9% B Plan, 7% C Plan)
– Max 2015 IRS contributions are $18,000 plus additional $6,000 “catch-up” for age 50+
– Max 2015 IRS contributions from all sources are $53,000 plus the $6,000 catch-up
– You are 100% vested
– You select your investments:
- Target Date Funds, Asset Class Funds (both active and passive) and a window called the Personal Choice Retirement Account (PCRA). See PRAP service center for full descriptions: toll-free 1-866-855-7727 or www.schwabplan.com/PRAP/.
- You can self-direct among investments or retain an advisor to manage your account. Cleary Gull offers our ClearWealth® Pre-Retirement Program to actively manage your PRAP account for you.
– Upon retirement you have the ability to do a Rollover to IRA or Roth IRA
If you are interested in finding out more about how to invest in your PCRA, check out our PRAP/PCRA Professional Portfolio Management or call us at 844-4MY-401K to discuss what option is best for you.
You may be interested in the following websites:
Cleary Gull’s Pilot Planning Tips
United Legacy Benefits Center
United Airlines Employees
Air Line Pilots Association website
Social Security Administration
Federal Aviation Administration
Pension Benefit Guarantee Corporation
Additional Legacy United Pilot sites:
*Cleary Gull does not provide legal or tax advice.