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Preview of what we’ll cover today:

💰 Three Choices: Each leads to very different outcomes

🧨 Tax Pressure: Income stacking creates future problems

🛡️ Guaranteed Income: Stability comes with tradeoffs

🧾 Limited Control: Some plans restrict your flexibility

🚀 More Flexibility: After-tax dollars give you options

💡 Smarter Mix: Roth + brokerage create long-term advantages

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More About This Episode:

In this episode, Ryan is joined once again by CPA Zach Smith to unpack the FedEx TA 26 retirement choices, this time from a tax and long‑term planning angle. Instead of just chasing the biggest paycheck, they explore how pensions, 401(k)s, and new cash-balance options can create either freedom or a “ticking tax time bomb” in retirement. If you’re a FedEx pilot facing this decision, this conversation will challenge how you think about taxes, flexibility, and your family’s legacy.

Get the Summary of Proposed FedEx Retirement Changes

Go Deeper Into The Episode:

0:00 – Intro

2:54 – Long-Term vs Short-Term Planning

5:40 – Option #1: Traditional Pension

7:50 – Option #2: Market-based cash balance plan

13:59 – Option #3: Pension freeze

17:51 – Brokerage Accounts

20:27 – Individual vs Joint Accounts (Step-up basis)

24:51 – Option 3 (Summary)

29:10 – Reach out to Ryan or Zach

FedEx TA 2026: 3 Retirement Options That Could Change Everything

https://www.youtube.com/watch?v=xfKnLn_L1Jk

Resources:

Retire Pilots – https://retirepilots.com

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Pilot Tax – https://pilot-tax.com/

The Pilot’s Advisor Podcast is also on video. Watch & Subscribe on YouTube: https://bit.ly/3EIEBW2

Connect with Pilot-Tax: https://pilot-tax.com/

Episode Transcription:

(Note, this is an automated transcription. Please forgive any errors.)

Walter Storholt  00:00

If you’re a FedEx pilot, the biggest retirement decision of your career may come down to one question, which option actually leaves you with the most money after taxes? If you watched our last episode, Ryan Fleming, the pilot’s advisor, broke down three retirement paths in the 2026 tentative agreement, from a pension style income stream to a hybrid approach to a more flexible contribution based option. But here’s the reality, the numbers that you see on paper aren’t the numbers you necessarily keep because we have, course, have taxes, timing, withdrawal strategies and long term planning that can dramatically change the outcome of any of those options. So today we’re going to extend that conversation. We had so much feedback from that first episode with lots of additional questions from folks. So we’re gonna take that next step today and bring in Zach Smith of pilot tax, who you certainly know on the show, well, if you’re a longtime viewer or listener, he’s gonna help us break down how each of these three options could play out from a tax perspective, including impacts on taxable income, Roth opportunities, those required minimum distributions or RMDs, and what all of this means for your family in the long term. Because the best option isn’t just what looks good today, but about what works best over the next couple of decades. We’re going to talk about all of that on today’s episode. So let me grab Ryan and Zach and get started.

Ryan Fleming  01:27

Well, we’re extremely blessed today, not only, of course, we always have Walter coordinating our shows and doing the intro, but Zach Smith from Pilot tax has been nice enough to lend some of his time so we could talk about the FedEx options with the possible new TA, and really look at it from a tax perspective. You know, I can’t legally give tax advice. I’m not a CPA. I have my opinions, but now we have a CPA that works with pilots. His company has been working with pilots for over 30 years, and we’re going to get his his his take on all these things. So Zach, thank you very much for being here. Very much appreciate it. I think it’s very, very valuable to not only talk about these options in general and what’s best for these pilots families, but really with a tax perspective on it, because it matters. It really matters. Yeah,

Zach Smith  02:16

absolutely. I appreciate you having me on here, and it’s been a contract that’s been long awaited for a long time. We’ve been been sitting for a while waiting for this. So we’ve got some interesting stuff with some of the retirement planning that Ryan and I want to take a look at here and kind of go through, go through some of your options and what these look like, both in the short term and long term. And I know you guys that work with us know that Ryan and I aren’t just the short term looking, looking type of folks we’re looking long term, down the road, and that’s really what we want to focus today on, not just what the tax side is going to look like when you make your elections today, but what kind of impact this is going to have for us, you know, as we as we approach retirement,

Ryan Fleming  02:53

well, of course, and you actually get to, you know, work with pilots through retirement in the district distribution phase, when it really matters. I mean, the whole reason why we do any of the things we do, why we save for retirement, is actually for retirement in that distribution phase. And I think unfortunately, you know, most of the time when we file taxes, we’re just looking at this year versus what we like to talk about, which is strategic tax planning and making decisions today that are going to help us over the long term, whether that’s retirement or legacy planning. And I always joke with pilots, you know, you know, pilots want all of the upside, none of the downside. They want instant gratification. And it’s hard, because these decisions that we’re going to make on this TA for retirement have long term consequences, and so we can’t do what just feels good today. We really have to look at the long term and how that’s going to affect these families.

Zach Smith  03:44

That’s true. That’s true. And FedEx is very unique in this regard. You guys have a much, much different retirement setup than what we see at American Delta, United southwest. This is this is so much different. Some of the new stuff that we’re going to go through here today, though, does kind of have some synergies with some of the other plans that Ryan and I have been seeing at some of the other airlines. So we’ll kind of jump in here and start running through the three options that you guys are going to have and talk about the benefits, the downsides and kind of big picture what each one of these looks like. So we’ll jump in your option one here is going to be essentially the legacy plan, where we’ll essentially keep what we’ve had for years right, the traditional pension based on years of service and so forth. They are raising the cap on that. I know Ryan went through some of this in a previous episode that he did. They are raising the cap. The amount of the pension is going up, and they will continue to have the defined contribution at 9% this is the traditional stuff we’ve been dealing with with FedEx pilots for years, right? And you guys are so much more complicated in retirement. You know, Ryan and I talk about avoiding the retirement ticking, tax time bomb. Well, you guys at FedEx start with that time bomb, with the WIC already half lit, because our base income is your pension, and then we’ve got. Contend with the 401, k would draw us on top of that, in addition to Social Security and everything else. So you know that first option is going to give you your pension. We feel really good that this is a good option for folks that are that are close to retirement. If you’re getting within, I’d say 10 years or less of retirement. This option may make a lot of sense for you. And again, everybody’s situation is going to be going to be a little bit different, but maintaining that high pension, and we’ll explain more as we go through some of these other options. But keeping that high pension as close as you are to retirement, or those that may be going before the age of 65 this certainly may be a good option. And then, Brian, you got anything to add to that?

Ryan Fleming  05:40

Yeah, I think, I think that, you know, we try to put numbers to all this where it’s a math equation, but there’s a lot of tough questions, like the questions that are very individual nature, that dictate between one or the other. And the thing that I’d say about the traditional pension is that’s guaranteed money in retirement, and so the math would be that you’d have to make up the difference of what you’re giving up on that pension. If you choose one of the other options, and it’s not performance based, if you have your high five, you can min run and still get that pension, whereas option two and option three are very much performance based, you have to fly and make a lot of money for that to really start working in your favor. And of course, if you have time to do that, it all works out, but it is very much performance based on option two and option three

Zach Smith  06:28

and I and to add to that, Ryan, Ryan has alluded to this previously, and I see it a lot in my practice. Unfortunately, pilots aren’t our people living to 85 or 90, you know, historically, statistically based the longevity, the life expectancy and things like that, especially the cargo airlines. It’s hard on your body, all right. So I think you know, Ryan had alluded to a study that had been done that the average payout period was sometime between, somewhere between five and seven years on these pensions. So some of the other options we’re going to go through here may have some more benefit for legacy planning and long term planning for kids inheriting spouses and things like that, where the pension essentially stops a side of spousal benefits upon your death, so you know, depending on your health and things like that, then some of these other options may may certainly make more sense as well.

Ryan Fleming  07:15

Yeah, and for FedEx pilots accepting this ta where they’re giving up their pension. I cannot honestly say that when I’m doing a retirement income plan for FedEx pilots versus like delta American, where they need all of their income to come from their retirement earnings. In many cases, a FedEx pilot, because of their pension and Social Security, they’re not dipping into their money that much. That money continues to grow, which is great, except when we have tax deferred money, where it just creates a bigger and bigger tax problem later on. So those are some of the things to think about as

Zach Smith  07:50

well, absolutely, absolutely. So well, let’s jump into option two here. This is, this is really interesting that FedEx is going to be offering this. We’ve seen these plans, the market based cash balance plan. We’ve already seen this rolled out with Delta. We’ve seen it rolled out with American and United Airlines. Right now is in the process of getting theirs approved. We fully anticipate that one to go through based on precedence with the IRS, so they’re doing something similar here. So just a quick explanation of what a market based cash balance plan is. Every year contribution, contributions to a 401, K plan, company sponsored plan, are limited in total. Okay, you have an amount that you can put in based on your age, and you have an amount the company can put in with a max for the year between you and your employer. So as these contracts at the airlines have rolled out, there’s been this big question of, what do we do with any excess money? What do we do once we’ve hit the max between the employer and the employee? Our contract says it has to be paid, right? They still owe us, in this case, that 9% so these market based cash balance plans, starting with Delta, started to get popular for the airlines for a number of different corporate reasons that we don’t have to get into today. I option two is essentially a soft freeze on your pension with a continued 9% contribution into your 401, K, 9% of what you’re earning, but anything that then spills over will go into what is a market based cash balance plan. These are highly restrictive plans. They are more pre tax money, and you have no control over it, all. Right? A lot of the pilots like these plans because it is pre tax money being that 9% that they’re giving you that spilling into the plan. We’re not paying tax on it today. Okay, that’s the popular side. The reason that Ryan and I are not a fan of these plans is for the exact reason that some people like them, right, pre tax money, right? Once that money goes in there, it’s contributing more to our retirement. Ticking tax time bomb of pre tax money that we’ve got to contend with in retirement, all right, which you know, can create all sorts of issues later on, with Medicare leaving money to kids and so forth. No. Two, you have no control over how this money is invested, zero control. It gets placed in there. It’s handled by a fiduciary. It will grow at the rate that is set by the fiduciaries and the investment returns. And these are typically very conservatively invested. We tend to like taking an approach where we have pay tax today, save money over the long run, and we’ll get into that here with option three, but option two is that cash balance plan. You’ll still get the pension frozen wherever it is today, and you’ll still get the 9% but you’ve got to be very careful about your contributions on that.

Ryan Fleming  10:33

And what I want to bring up with this, I want exact to be the star of today’s show and really talk and discuss everything from a tax perspective, but what what FedEx is doing here is actually a lot different from the other airlines. A lot of the other airlines are having spillover into a market based cash balance plan. Option two here is you’re actually having that nine or 10% directly contributed to the market based cash balance plan, and then the extra 9% you know, like a defined contribution to fill up those buckets. So it’s very, very different from like the other airlines, where there’s the option for the spillover to go into this market based cash balance plan. This is a direct contribution of that percentage right away into a market based cash balance plan. So if you look at your 19% we’re going to call it nine and 10% of that, as the contract changes, is going directly into this plan that you have no control over. If you’re 30 or 40 years old. It’s very conservatively invested, which, in my opinion, is not really suitable for you.

Zach Smith  11:36

Yeah, absolutely, absolutely. So you’re locking up half, essentially, of the country company contribution of the 18 and then, respectively, 19% half of that’s getting locked up immediately in these cash balance plans. And Ryan’s correct, if you’re mid 30s or even mid 40s or younger, this is a long time for money to be locked up and conservatively invested, from my perspective of things.

Ryan Fleming  11:56

Yeah, I 100% agree with that, and I I get it where this, this is actually quite beneficial to the company, where they’re actually keeping control of all this money, where you and you don’t have control of it, and I get where, from a tax perspective, you’re deferring on half, I mean, half of that for a long, long time. So there’s, there’s that benefit, but it’s the long term consequence of that and what it grows to that scares me. It

Zach Smith  12:25

does me as well. It does me as well. And historically, these cash balance plans, if you actually read through the agreements, the only thing these cash balance plans, many times, guarantee is that you’ll get back what you put in. They call them credits. There’s no guarantee on return on investment or anything like that. They’re just essentially assuring that you’re going to get back what you put in, which generally from from Ryan and I’s perspective, tells you how conservative This is invested.

Ryan Fleming  12:49

It kind of reminds me of Inc Zac. I don’t know your perspective on this, but you know how some companies have these deferred compensation?

Zach Smith  12:55

Yep. I

Ryan Fleming  12:56

mean, that’s what it really seems like to me, is you’re just deferring that compensation till down the line. That’s exactly

Zach Smith  13:01

what it is here. That’s exactly what it is because it’s not, you know, like deferred compensation. You choose to defer that to a later date and not pay tax today. And there is, there is a caveat to that. There’s sometimes that these make sense, but it’s a very individual basis that we need to look on these. There’s some situations where deferred comp makes sense. A few situations I have where the cash balance plan might make sense based on age and what assets, you know, our clients have. So anything else to add to that? Ryan and we’ll, we’ll jump into the third option,

Ryan Fleming  13:27

really, I just want to, you know, throw it out there as well. Like, I love having you on the show, because you have a unique perspective to see pilots in retirement, how this actually plays out, what it looks like them actually paying RMDs down the line. And you’ve also seen a lot of FedEx pilots that actually have the $130,000 a year pension and how that plays out. So, you know, without tainting the well at all, I just love having your perspective on how you see these different plans of what would make the most sense. So I appreciate you going through it.

Zach Smith  13:59

Yeah, absolutely, absolutely. Well, let’s talk about option three. I’m going to be completely honest with everybody. From my perspective, this is the option that I really like again, especially for those that are maybe 45 and under. This provides some opportunity, okay, and especially because, as Ryan had alluded to earlier, many times, our FedEx pilots or pilots that have a pension from somewhere many times in retirement, the pension is sustaining their lifestyle. So we don’t necessarily want those required minimum distributions at 72 nor do we need them, right? But these are things that are forced upon us, the retirement taking tax time bomb with pre tax money. So we believe that option three is potentially going to give us some more options over the long run. So let’s, let’s talk about that.

Walter Storholt  14:44

Hey, just a quick timeout from today’s episode before we can continue with the conversation between Ryan and Zach, I want to let you know that Ryan has built a free educational modeler specifically for FedEx pilots to compare these three ta, 26 retirement. Options. It’s called the FedEx ta 26 retirement option tool. It’s linked in the description of today’s show. It’s based off of 13 questions that are going to walk through your personal situation, basic things like your age, years of service, maybe military benefits, family risk tolerance and some of your long term goals. It only takes about three minutes to complete, and it’s going to give you at least a first step in a clearer picture of how each of these options might stack up for your specific circumstances. So you’ve heard some of the general advice here on the show. Get more specific by taking a look at that model or putting in some of your info and seeing what some of the you know, big decisions that you need to make are going forward with this little educational tool. So check it out today again. The link is in the description of today’s show. Whether you’re watching on YouTube or listening on your favorite podcasting app, should be able to find it easily, and you’ll be all set. All right, let’s get you back to Ryan and Zach.

Zach Smith  15:53

So option three is essentially a combination of the first two, okay, with an opt out. Essentially, the way that this one works is they will freeze the pension. They will freeze your pension today or when the election is made, and then you will get the 18% then stepped up to 19% Inc, right, non elective contribution that 18 to 19% will be paid to you into your 401 k. Now here’s the neat part, you can opt out essentially the cash balance plan through this option, and then any spillover, once you hit the max contribution between you and the company, any spillover will come back to you as cash. Now, couple points on this, all right, coming back to you as cash and spillover, this will be treated as compensation to you. It will be taxed today. Now, as you and I, you know you and I, Ryan, have talked before. I know a lot of you’ve heard us say this. We like being taxed today to save money over the long run. My two favorite vehicles, from a tax perspective, for our pilots and I know Ryan’s going to laugh at this, my two favorite vehicles, hands down, are the Roth accounts and the taxable brokerage accounts. These give us the most flexibility for tax planning, planning to leave money to kids beneficiaries, and planning for tax structure and retirement, these absolutely give us the most flexibility. Now, that’s not to say that we’re not going to have some money in traditional. We’re going to have some money in traditional, but go ahead, Ryan, I was

Ryan Fleming  17:16

just going to say there’s two points I want to bring up here that I think are very important. Option three, because it’s cash over cap, because it’s going to be after tax money coming to the pilot, it’s essential that you actually still save this money versus spend it. If you’re going to choose option three, you have to be disciplined and actually force the discipline to save this money. So I want to say that, you know, in option two, the best part about that is it’s forcing, forcing you to actually invest and save that money. So for option three, you have to have the discipline to do the right thing with that, those big compensations. And then also, Zach, I want you, because I think you’ve really changed my perspective. I want to take a step back here and really talk about that, because I never really viewed a taxable investment account as powerful as I do now, and what I mean by that is you’re investing after tax money, so you’ve already paid tax on the principle that goes in there. If you want to access it, it’s completely liquid. And if you want to access it, you’re only looking at capital gains tax, which is a much, much smaller percentage than tax deferred money, where it’s straight income, but when we talk about how that is grows over the long term, and then a step up in cost basis, if you decide to, you know, if you pass and get a step up in cost basis, can you just talk about how powerful these truly are from a legacy planning perspective?

Zach Smith  18:38

Yeah, absolutely so. And I want to talk about the tax piece and the legacy these, these definitely are intertwined with each other, given the current tax climate we have right now. So I like the brokerage accounts second to the Roth’s. Roth’s accounts pass tax free to beneficiaries. They’re also tax free withdrawals in retirement. The brokerage accounts, once we’ve maxed the Roth, the brokerage accounts, to me, are the second best option. And Ryan hit the nail on the head. The reason I like it, from the tax perspective, is number one, you can very well control the income from the brokerage accounts if you’ve got if you’re working with a great advisor, you know they’re going to communicate with you. You know what your gains and losses and things like that are going to be? Right? You know when you’re going to sell stock. You can choose when you sell. We can choose when we don’t sell. We can sell some things at losses to offset gains, some tax loss harvesting. You have a lot of control, on an annual basis of the tax impact of these accounts, and you can plan for it. That gives us the ability to plan for it. And these can grow and grow and grow. And yes, we’re going to pay tax on earnings during the year in these accounts to maintain that after tax status. But the huge piece here is these are also a fantastic wealth transition tool as well. You get what’s called, when you pass away and your beneficiaries inherit assets, appreciated assets, you get what’s called a stepped up basis. This means that basically all the gains that you had during your lifetime are zeroed out at your death, and let’s say you leave it to your kids or. Right? If you buy a share of stock for $100 and it’s worth 1000 the day you die, the IRS is going to treat that asset as if your kids paid $1,000 for that so these, assuming you’re under the you know, $14 million IRS gift and estate tax limitation, these brokerage accounts effectively can pass tax free to your kids. They can sell an entire portfolio the day after you die, and they pay very little, if any tax at all, because of that stepped up basis.

Speaker 2  20:25

Zach,

Ryan Fleming  20:25

and I don’t want to put you on the spot here, but what’s changed with us? With you know, mutual funds pay out a little bit of capital gains each year. What? But with you invest in ETFs, they act like a stock where that’s not happening at all. So it’s changed the game. But can you talk about how that actually works, the difference between an individual account and a joint account for passing on to a spouse, versus also both spouses being passed away, and where it goes to the kids, and just what how that looks with the step up in basis.

Zach Smith  20:59

So generally, a spouse can get stepped up basis in an asset from from a spouse that we’ve seen this with houses, maybe, maybe a husband owned a house before they got married. You know, wife has her own house, and then, for whatever reason, one of them passes away and leaves it to the other. Those individually owned assets will generally get that same stepped up basis. So you’re going to see that with the brokerage accounts as well. An individual account is going to get that step up to a spouse, just like a just like a beneficiary, any other beneficiary will.

Ryan Fleming  21:28

So does it make more sense to have an individual account versus a joint account? Because of that, from a tax planning perspective,

Zach Smith  21:35

you got me on the spot, so I want to say I’m not certain. Because you know, when we’re looking at a joint account, it’s a jointly owned asset, you know, I’ll have to get back with you that on, Ryan, I’m gonna be honest with you. Don’t give the wrong answer here, but you know, it’s something we could look at and say, you know, do we partially qualify, or do we qualify for a partial stepped up basis of these assets? Right? What

Ryan Fleming  21:57

happens is, in the joint account, it’s a partial stepped up basis, versus if you had an individual account that is solely yours and your spouse is the primary beneficiary, it actually is a much better way to set things up from a tax perspective.

Zach Smith  22:12

Yeah, it certainly can be. And what we generally find too is, you know, a lot of these large balances and accounts, a lot of times, these are the ones that, many times, will get designated to be left to the kids, right? They’ll spend down maybe some of the pre tax 401, K watching the tax brackets, because these, these pre tax 401, Ks and IRAs are a horrible investment problem, or, excuse me, a horrible inheritance problem for beneficiaries. You know, Ryan’s alluded we got the 10 year rule. So, you know, if you’ve got a parent that passes away that has a million dollars in an IRA, the kids have to have that money out within 10 years, you can create massive tax problems. So many times, these Roth accounts and these brokerage accounts are what we utilize for some of the wealth transition. I

Ryan Fleming  22:53

was actually having a conversation with a FedEx pilot, and his dad was a retired FedEx pilot, and he was talking about how his dad kept talking about, hey, he lives off the pension his 401, K continues to grow. And of course, that’s going to get passed on to the children later on. And I was actually get breaking it down for him of how the tax consequence of that inherited IRA, and what that would look like, and how much he was going to end up having to give back to the government. And it was wild to watch his reaction to that. I was like, oh my god, yeah. And you get to see it. I mean, we get to see this, where this happens, and, yeah, you’re getting an inheritance, and it’s being passed on, but it’s actually a massive tax bill that really gets passed on well.

Zach Smith  23:37

And this is especially a problem for my pilots, our clients, because, you know, the pilots, you guys have high income, right? That’s part of this. You guys are high in the brackets already. So I’ve had, you know, many, many clients over the years where they inherit a million or $2 million 401, k or IRA from a parent, and they’re 50 years old, they’re in the high earning years of their career. They’re already getting into the 32% bracket. And then we now have a $2 million problem that we’ve got to have distributed over 10 years, during a period of time where they don’t need the money, their income isn’t going down, and now we’ve got to eat the tax bill, and we’re, you know, putting a lot of money on the tax return, and unfortunately, when we get to that point, there’s nothing we can do. We are we are stuck. We are stuck once that inherit that once that account is inherited. So

Ryan Fleming  24:21

sounds a lot like RMDs. It is.

Zach Smith  24:24

It’s accelerated RMDs,

Ryan Fleming  24:28

but, and that’s, and that’s the huge point about it, is no different than RMDs or an inherited IRA. You don’t have a choice. There’s no flexibility. There. It just is. And IRS, or the IRS, you know, Uncle Sam wants to get paid, and then you don’t, because of that lack of flexibility, you’re just cutting the check. And I apologize. I feel like I got us off track here with these different options. But I think that when you really start looking at Option three, which I think is a very, very desirable option, especially for younger pilots, or those what we call. Into where I’m at. We call it the messy middle you know, where your mid 40s, late 40s have a lot of time at the company. But I think option three, as beautiful as it is, it’s going to take a lot of discipline to make sure you’re doing the right thing with that 19% contribution.

Zach Smith  25:16

Yeah, and I want to bring option three into summary, so the pension will be frozen. You’ll get an 18% Inc, so Ryan and I’s general strategy for those that can budget Well, we generally suggest front loading that plan the beginning of the year, all to Roth. Make your contributions to the Roth. We’re essentially going to have a little race between you and the company to fund that 401 K, okay, so you’re going to be heavy on your contributions the beginning of the year, once you and the company have maxed out that 401 K contribution limit between your Roth contributions, the company contributions, and the mega backdoor Roth IRA, or mega backdoor in plan, then that additional 19% that they still owe you of your pay the rest of the year will come back to you as cash. Okay? We like these plans a lot. And then what we suggest, and we hit on this with the Roth and the brokerage accounts, as Ryan said, You got to be disciplined with this once you get that big jump in pay, because that 18% is coming back to you from a tax side of things, I suggest you, if you’re not doing it already, you use that money to do a backdoor Roth IRA, for you and your spouse, we can defer, you know, anywhere between 14 to $16,000 between depending on your age. Do the backdoor Roth IRA with that money, if you’re not already and then anything in excess, we defer to a taxable brokerage account. What this does is it puts you in a position where we mitigate those required minimum distributions in retirement. We set you up for long term planning to leave money to your kids, and we maintain control of the money. So that’s that is my perspective on option three, and that’s why we like this

Ryan Fleming  26:50

one and ultimate flexibility as well. If life happens, you have access to this money now,

Zach Smith  26:55

right? And the other side of this too. You know, if you retire at 65 you live another five years, your spouse may get half your pension. It may disappear if you’re not married, all right, so that pension just stops with a 401, K, a, Roth IRA, the taxable brokerage account, you still have that money to leave to your beneficiaries. It doesn’t just disappear. That can go to somebody, and you can leave a legacy in that

Ryan Fleming  27:18

manner. Absolutely, it’s interesting to see, because we work with all the other airlines and see how, you know, delta and American and all the legacy airlines lost their pension, and then it became this where we’re at now, 18 or 19% of whatever you make that is being contributed the cash balance market based cash balance plans that have started to appear here. And just see how the different airlines have different options. So we’ve seen a lot of these options before. It’s just now FedEx is actually coming to the table as we’re negotiating away our legacy pension to see see this as an option. But we’ve, we’ve watched this play out at the other airlines and with

Zach Smith  28:00

other clients. So it’s a it’s choice is good, but it is a very big decision. It is. And again, I want to emphasize this is, this is going to be very individually specific. I think, you know, by and large, I like option three a lot, but there’s going to be several, several clients that I have that option one is going to make the most sense right now. You know, it’s, it’s everybody’s situation is different. Everybody’s your savings for retirement is different. Their family situation is different. So I just wanted to make sure to put that caveat on there.

Ryan Fleming  28:32

Yeah, and just keep in mind too, like option one, it doesn’t happen a lot, but if, if you take option one, and you are using less of your money because of the pension that guaranteed income depending on your cash flow needs. When there’s a longevity question, you can choose a 50% survivor benefit. You can choose 100% survivor benefit if you want to just still have that long term payout, it’s just at a much decreased rate from what you’d actually earn. So that that is an option depending on your situation. But much like Zach says, you know, option three looks very, very desirable,

Zach Smith  29:08

yeah, absolutely, absolutely. And feel free to reach out if you’re working with us, both of us are happy to answer questions. I know that we’ve got some time on this stuff. You guys are, you know, contracts going to go to vote, and some of this stuff isn’t going to take effect until next year. So we’ve got some time to look at this. Got some time to evaluate it, and we’ll see what the final plan looks like. Many of these cash balance plans do take private letter ruling approval from the IRS. You know, as we, as we mentioned, United Airlines is waiting on it. I don’t know what the waiting period for FedEx or where they’re at in that process will look like. But this isn’t a decision we have to make tomorrow, but we certainly wanted to get some information out to every information out to everybody, so that everybody kind of understands what we’re looking at. Because this stuff, this stuff is complicated. When you’re not looking at every day, it’s it is complicated. So we were, you know, just wanted to kind of give a good explanation

Ryan Fleming  29:53

of what we got going on here. Yeah, and I do want to say that we’re trying to get as much information out to our listeners and our clients as possible. People, but we have a year like, first of all, the TA hasn’t even passed. It hasn’t even come to a vote yet. But assuming it does pass, we have a year and a half before we have to make a decision. We don’t have to make a decision on which one of these options till the end of 2027 so there’s no reason to panic. There’s no reason to like we have to talk right now, but we want to get as much information out there so you can truly digest all of this and decide and see and learn. So you know what’s the best option for you and your family?

Zach Smith  30:31

Absolutely, absolutely Well, Ryan, I appreciate you having me today. I

Ryan Fleming  30:35

appreciate you being here. Is there anything else you want to add from a tax perspective on these three options? I appreciate you taking the time to discuss this with our listeners. There anything you want to close

Zach Smith  30:46

with? I think the big picture here is the same thing you and I harp on all the time, post tax money. Post tax money, tax free growth and leaving money to kids for free. I mean, that’s our that’s our strategy,

Ryan Fleming  30:56

absolutely well, Zach, I appreciate your time. Appreciate you being here. Of course, we have our amazing host Walter Storholt here, who’s going to wrap this all up and put a nice bow on it. But thank you guys for your time. Appreciate it. If you guys have any questions, you know how to reach me, we’ll actually have all of Zach Smith and pilot tax contact information in the show notes as well. Thanks a lot. Everyone. Fly safe.

Walter Storholt  31:20

That wraps up today’s conversation with Ryan Fleming and Zach Smith. Thanks to both of them for their guidance. As you’ve heard the FedEx ta 26 retirement decision not just about choosing the highest number, it’s about understanding how all these things work together, taxes, income flexibility, Legacy planning, all of that’s going to influence what’s best for your personal situation. Just a quick reminder before we’re gone for the day, the FedEx ta 26 retirement option tool that Ryan’s created. There’s a link in the description to go, take that test. Go take that tool, and the little quiz that’s going to help you get some initial analysis of what might be best as an option for your situation. It’s 13 questions. It’s about three minutes long to complete, and it’ll give you some early answers here as you evaluate your choices. Thanks so much for watching. Don’t forget to click that link in the description of today’s show and reach out if you have any questions. We’ll continue to be talking about this in the coming months until next time. Thanks so much for joining us, and we’ll see you next time on the pilots advisor.

Speaker 3  32:22

Inc, information is for illustrative purposes only and does not constitute tax investment or legal advice. Always consult with a qualified investment legal or tax professional before taking any action.