Tuesday, December 29, 2015

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401(k) Catch-Up Contributions - LAA

The way 401(k) Catch-Up contributions are taken out of your paycheck is changing for LAA Flight Attendants.  

For 2015, if you elected both Regular Contributions and Catch-Up Contributions, (for over age 50 participants) the company would deduct Regular Contributions, and zero Catch-Up Contributions until you hit the annual maximum for Regular Contributions ($18,000 for 2015,) THEN they would start the Catch-Up Contributions. (In other words, they followed one another, they never took both out at the same time.)  

That meant that if you had selected 20% for Regular Contributions, and 20% for Catch-up Contributions, the company only took 20% out of your check at any one time.

This is changing in 2016.  In 2016, the company will take out both Regular and Catch-Up Contributions at the same time.  In the above 20% and 20% example, the company would take 40% out of your check.  Yikes!  This may not be what you want to have happen.  

To avoid this possible “paycheck surprise”, the Company will reset your Catch-Up contribution to zero at the end of this year. If you really do want both contributions taken out for both Regular and Catch-Up Contributions, you can log back into http://netbenefits.com/aa after January 5, 2016 and increase your Catch-Up Contributions. The 2016 maximum contributions are $18,000 for Regular, and $6,000 for Catch-Up Contributions.

Please call Fidelity at 1-800-354-3412 or log onto http://netbenefits.com/aaif you have any questions.

Patrick Hancock
APFA Retirement Specialist

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