DELTA PILOTS DEFINED CONTRIBUTION PLAN (“DC PLAN”)
The DC Plan is a Qualified Money Purchase Plan in which Delta makes contributions based upon a percentage of your compensation. Pilots are not able to make contributions to this plan. Contributions and earnings are tax-deferred until you begin taking distributions. Fidelity is the Plan Administrator and you can access your account at http://netbenefits.401k.com.
Contributions
Delta currently make contributions each month based on 9% of your earnings and are set to increase each year as follows:
- 2012: 13% of earnings *
- 2013 and beyond: 14% of earnings
* The expectation is a new contract will be reached prior to 2014 and higher contribution levels will be agreed to.
Investment Options
Your DPSP is self-directed, which means you choose your own investments from a number of different options including 14 Core Investment Choices, 195 mutual funds and/or the Fidelity brokerage option.
Retirement
If you take funds from your DC Plan before age 59 ½ you will incur a 10% early distribution penalty from the IRS. Upon retirement, you are allowed to roll over your 401(k) assets into an Individual Retirement Account (“IRA”). There are two advantages to doing this. First, you will not have to pay federal or state income taxes on the assets in your IRA until you take a distribution. Second, you can continue to control the amount and timing of distributions in your IRA. You also can choose to remain with your employer’s 401(k) Plan until age 70 ½. However, you cannot make additional contributions to the 401(k) after retirement.
If you plan to roll over your 401(k) assets into an IRA, establish the IRA before you retire. Then have the distribution transferred directly to your IRA custodian. To avoid the 20% withholding tax, make certain the distribution is made payable to your IRA, and not to you. Before you make a decision, you should carefully consider your options and the tax consequences. Once again, part of our service offering involves helping you evaluate your options in light of your specific situation. Please feel free to contact one of the Financial Consultants at Retirement Advisors of America for assistance with your specific situation.
