Airline Pilots

What's actually at stake

The expensive mistakes here are structural and they are mostly irreversible.

The 415(c) overflow. When annual additions hit the ceiling, employer contributions above it stop, spill into a nonqualified plan, or convert to taxable cash — depending on the contract. Assuming the plan handles it costs tax-advantaged capacity no later contribution recovers.

409A election timing. Nonqualified deferral elections fall under Section 409A, which generally requires the election before the year the money is earned. Miss the window and the deferral is gone for that year. Changing a distribution election typically means pushing it out five more years. And the balance is an unsecured promise from the employer — behind secured creditors if the carrier files.

The medical certificate. The income is conditioned on it. Loss-of-license benefits and disability policies define disability, offset each other, and cap benefit periods in ways that only matter on the day they matter. Coverage bought at 40 determines what exists at 52, and none of it improves after a diagnosis.

The age-65 date. Federal rules bar pilots from scheduled Part 121 operations after 65. The date is known decades out, which makes underpreparation a planning failure rather than bad luck. The gap years that follow — last trip to first required minimum distribution, which under current law begins at 73 or 75 depending on birth year — are the highest-leverage tax window most pilots get, and it arrives once.

Stacked employer risk. Seniority is neither portable nor diversifiable. Add employer stock, deferred comp, and a pension from the same carrier, and four correlated exposures sit on one company.

What we do for you

1. Map the A Fund, the B Fund, and everything above the ceiling. We read your plan documents — benefit or cash balance formula, contribution percentages, vesting, after-tax provisions, and what happens to dollars above 415(c) — then build the year's contribution sequence. That includes the 2026 rule requiring catch-up contributions to be Roth for anyone whose prior-year FICA wages exceeded $150,000, which covers most pilots at major carriers.

2. Treat the nonqualified plan as a credit decision. Excess plans defer tax. They also lend money to your employer, unsecured. We size the deferral against total employer exposure, set the distribution election with the five-year change rule in view, and calendar the 409A window so it is never missed by default. The decision comes down to how much unsecured employer credit belongs on a balance sheet already carrying seniority and a pension from the same place.

3. Build the income floor against loss of license. We inventory what the union plan, the carrier plan, and any individual policy pay — definition of disability, benefit period, offsets, and whether proceeds arrive taxable — and put a dollar figure on the gap before the medical becomes a live question.

4. Plan the compressed window and the gap years. Peak earnings arrive late, shortening the runway and concentrating the tax burden. We model accumulation and drawdown as one problem, then map the post-65 window — Roth conversions, gain realization, Social Security timing, IRMAA thresholds — before the first distribution locks anything in.

5. Turn variable pay into a system. Credit hour pay, overrides, premium time, and profit sharing arrive irregularly. Standing rules — savings percentage, withholding reconciliation, where a large lump lands — mean the decision gets made once, not every spring.

6. Stress-test the furlough case. Liquidity outside retirement accounts, fixed costs covered in months rather than in reassurance, and what an extended non-flying stretch does to the plan.

How the relationship works

A conversation. Thirty minutes — carrier, seat, seniority, what is on your mind.
Documents. Plan summaries, nonqualified election forms, disability and loss-of-license policies, tax returns, statements — read before we comment.
Findings. What the structure does, where the ceiling binds, and where the irreversible decisions sit on the calendar — yours whether or not you engage us.
Implementation and ongoing review. Custody sits at Schwab, Fidelity, or Raymond James — assets held by the custodian, not by us — and the plan is reviewed against each contract change and tax year.

Related guides

The A Fund, the B Fund, and the age-65 cliff — plan structure and the ceiling, in depth.
How much of my net worth should be in my employer's stock? — concentration when career, pension, and deferred comp sit at one company.
Glossary — plain-language definitions for 415(c), 409A, cash balance, and the rest.

Talk to us

If this sounds like your situation, book a 30-minute call. We will ask about your carrier and your seniority, then tell you plainly whether we are the right firm for it. It's a conversation, not a pitch.

Book a call →

Lake House Private Wealth Management — Yardley, PA. Independent fiduciary. A dba of MGO One Seven, LLC, an SEC-registered investment adviser. Recognized in USA TODAY Best Financial Advisory Firms 2026.

Questions we hear most often

Do I need to leave my current advisor to have this conversation?

No. Plenty of first meetings are second opinions. We will tell you if what you have is working — and say so directly if it is not.

What does it cost?

[FEE FIGURE TBD], and you get the number before you send a document. No commissions, no product sales, no third-party compensation. The schedule is in our Form ADV Part 2A.

Is there a minimum?

Our stated minimum is [FEE FIGURE TBD] — a starting point, not a wall. A mid-career pilot building a plan is a different conversation than a captain two years from 65.

Do you work with pilots at my carrier?

We work across carriers and treat no contract as the template. We read yours rather than assume it.

I am not close to retirement. Is it too early?

The decisions with the longest tails — coverage bought while healthy, the contribution structure in the peak years, the 409A elections — get made early. Whether to engage now comes down to which of those is in front of you.

This page is educational and does not constitute investment, tax, or legal advice, nor a recommendation regarding any security, plan election, or insurance product. Airline retirement plan terms, nonqualified plan provisions, and loss-of-license benefits vary by carrier and by contract year and change over time. Tax law and IRS limits change annually. Any decision about a plan election, deferral, or coverage should be made with advisors who have reviewed your actual plan documents, policies, and tax situation. Registration as an investment adviser does not imply a certain level of skill or training.