CLIENT CENTER REP / ADVISOR CENTER

Retirement FAQ

AFA

How does American Financial Advisors assist their Pilot-Clients?

Can American Financial Advisors provide guidance on the Equity Distribution to an IRA Rollover?

Which A Plan Annuity Option should I select at retirement?

Investment Option for AA Plan

Does AFA provide advice on the new investment options for the AA Non-Pilot 401(k) Plan?

What do I have to do to receive individualized 401(k) asset allocations from AFA?

How much can I contribute to my AA 401(k) plan?

What is “C Excess CO Cont”?

When can I take withdrawals from my 401(k)?



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How does American Financial Advisors assist their Pilot-Clients?

American Financial Advisors’ Financial Planning Team provides the following assistance to our pilot-clients.


  • “Equity Distribution to IRA Rollover” analysis
  • Pre-retirement planning.
  • Regular Investment updates focused on pilot-specific financial planning topics.
  • Assistance with retirement process and forms.
  • Assistance with the rollover of your 401(k) plan
  • Developing a written Investment Policy Statement based on your objectives.
  • Establishing asset allocation and rebalancing of investment accounts as needed.
  • Money management of retirement investment portfolios using low-cost asset class funds.
  • Monthly account statements and Quarterly performance reports.
  • Access to the AFA Financial Planning Team including Certified Financial Planner ™, MBA, and CFA (Chartered Financial Analyst) Professionals.

AFA’s Pilot-Clients receive financial planning advice which includes but is not limited to:


  • Estate planning/Legacy Planning.
  • Tax reporting – realized/unrealized gain/loss statements, etc.
  • Survivorship planning.
  • Social Security Analysis.
  • Insurance Planning
  • Retiree Medical Insurance options.

In addition to the monthly Schwab statements our clients receive, AFA provides client access to our own web portal which allows access to weekly account updates and detailed quarterly reports, specific to your account(s). These reports are very informative and show returns compared to relative benchmarks, along with up to date asset allocation.


AFA also conducts quarterly webinar reviews that our clients can log onto. These webinars cover all details of the investment accounts and many salient financial points. For those clients whose schedules do not afford them the ability to attend the live webinars, we provide login instructions to listen to a replay of the webinar when their schedule permits.


AFA clients will receive a comprehensive Financial Flight Plan (FFP). This document is uploaded to our systems and kept up to date with any changes in your financial or family picture. The FFP is a true “go to” document for you and your family.


You will have constant access to our entire financial planning and investment team. This access includes three Certified Financial Planners, and a Chartered Financial Analyst. With access to your Financial Flight Plan, we are always ready to assist you with financial planning and estate planning questions. All AFA clients can call our Chartered Financial Analyst who heads up the investment team with any investment questions they may have. All of us can be reached by simply calling our toll free phone number. Our entire team is also available to respond to email questions you may have as well.


Since the Certified Financial Planner™ professionals at American Financial Advisors are able to assist you with your financial planning needs, feel free to contact us if you have any questions or concerns. Your AFA Financial Planning team can be reached at 888-679-9779 at the following extensions and email addresses:


Leslie Kelly, CFP®, AIF®: Ext 1 or lkelly@AFAdvisors.com

Joan Morales: Ext 6 or jmorales@AFAdvisors.com

Matt Boyce, CFP®: Ext 2 or mboyce@AFAdvisors.com

Bill Mertes, CFA: Ext 5 or wmertes@AFAdvisors.com

Mark Bras, CFP®, MBA: Ext 3 or mbras@AFAdvisors.com

Jim Cable: Ext 8 or jcable@AFAdvisors.com

Alex Bras: Ext 4 or abras@AFAdvisors.com



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Can American Financial Advisors provide guidance with the Equity Distribution to IRA Rollover?


Yes. As of 5/15/16 American Financial Advisors has assisted more than 200 AFA Pilot-Clients with the Equity Distribution Rollover. To date, AFA Pilot-Clients have rolled-over more than $5 million in Equity Distribution assets, which potential tax refunds and/or credits of more than $1.4 million.


At this time, we are only able to assist AFA Pilot-Clients with the Rollover of Equity Distribution assets. We are able to assist new Pilot-Clients who become AFA Pilot-Clients through the Equity Distribution Rollover process. Generally, the minimum account balance for becoming an AFA Pilot-Client is $100,000. Assets rolled-over from the Equity Distribution can be applied to this account minimum. We will work with new AFA Pilot-Clients on an individual basis to determine if it is possible to become a client through the Equity Distribution Rollover process.


AFA starts the Equity Distribution Rollover by requesting Equity Distribution information. This information is available on the Computershare website and the AA Notice Letters. Once we have received this information we analyze the Rollover options through AFA’s Equity Distribution to IRA proprietary worksheet (ED-IRA analysis).


The ED-IRA analysis will indicate the maximum number of AAL shares and/or cash which could be rolled-over to an IRA. We will also provide you with an estimate of the tax refund/credit by rolling-over Equity Distribution assets.


AFA will set up the required accounts and will provide you with the forms to facilitate a Rollover of Equity Distribution assets. We will monitor the entire Rollover process to ensure it is completed prior to the Rollover deadlines.


Once the Equity Distribution Rollover has been completed, we will send several documents which can be provided to your Tax Professional/CPA. If your Tax Professional/CPA has additional questions, we will be able to contact your Tax Professional/CPA directly.



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Which A Plan Annuity Option should I select at retirement?


The Frozen A Plan offers a variety of annuity payment options which can be selected at retirement. How you will receive your A Plan benefit depends, in part, on whether you are married or single when commencing A Plan benefits. A Plan benefits can only commence following retirement from AA. The Normal Form of Payment is the default payment, the form that will be used if you do not choose a payment option. Monthly annuity payments can be payable as early as your Benefit Commencement Date. Pilots who want to receive an optional form of payment must submit a Pension Benefit Election Form (PBEF) with the flight office prior to their Retirement date (the PBEF can be filed after your retirement date but we recommend that the PBEF be completed and filed prior to the Benefit Commencement Date). Married pilots must have their spouse's written agreement to select any form of payment other than a Joint and Survivor Annuity with the current spouse as the joint annuitant.


American Financial Advisors uses a proprietary A Plan Benefit Analyzer to provide the AFA Pilot-Clients with guidance regarding the A Plan options.


Normal Forms of Payment (Default Form of Payment): For married pilots, the Normal Form of Payment is a 50% Qualified Joint and Survivor Annuity. For single pilots, the Normal Form of Payment is a Single Life Annuity.


Optional Forms of Payment: In addition to the Normal Forms of Payment, the A Plan offers the following optional forms of payment:


  • Qualified Optional Survivor Annuity (married pilots only)
  • Joint and Survivor Annuity (50%, 66.7%, 75%, and 100% annuity options)
  • Guaranteed Period Option
  • Single Life Annuity (married pilots only)
  • Insurance Planning
  • Level Income Annuity Option


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Investment Options for AA 401(k) Plan


American Financial Advisors provides semi-annual 401k rebalance instructions to the AFA Pilot-Clients. This is one of the financial planning services provided by AFA.


AFA’s recommended investments are based on several factors including internal costs and correlation between the selected asset classes. Most recommended investment options are selected from Tier 2, complemented by two of the Tier 3 investment options.


The following funds are used in AFA’s recommended 401k asset allocation. The percentage allocated to each fund will vary based on the personalized Investment Policy Statement (IPS).


--% Stock/--% Bond (--/--) AA 401(k) Portfolio

US Bond Index Fund --%
US Large Cap Growth Stock Index Fund --%
US Large Cap Value Stock Index Fund --%
US Small Cap Growth Stock Index Fund --%
US Small Cap Value Stock Index Fund --%
International Developed Markets Stock Index Fund --%
Emerging Markets Stock Index Fund --%
Diversified Bond Fund --%
Inflation Protection Fund --%


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Does AFA provide advice on the new investment options for the AA Non-Pilot 401(k) Plan?

Yes. AFA provides 401(k) asset allocation advice to all AA employee groups. The procedures are very similar to the checklist used by our AFA Pilot-Clients. The AFA recommended 401(k) funds for AA employees, other than AA Pilots, are indicated below. The percentage allocated to each fund will vary based on the recommended individualized asset allocation.

--% Stock/--% Bond (--/--) AA 401(k) Portfolio

US Bond Index Fund --%
US Large Cap Growth Stock Index Fund --%
US Large Cap Value Stock Index Fund --%
US Small Cap Growth Stock Index Fund --%
US Small Cap Value Stock Index Fund --%
International Developed Markets Stock Index Fund --%
Emerging Markets Stock Index Fund --%
Diversified Bond Fund --%
Inflation Protection Fund --%


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What do I have to do to receive individualized 401(k) asset allocations from AFA?

The process is very easy. Start with completing AFA’s online Risk Questionnaire. Using checklists, AFA’s Financial Planning Team will guide you through the process.

For AA Pilots go to: http://www.afadvisors.com/pilots/ips

For all other AA employees go to: http://www.afadvisors.com/personal/ips



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How much can I contribute to my 401(k) plan?


There are numerous 401k contribution limitations: $18,000, $6,000, $24,000, $54,000, $60,000 and $270,000.

We hope the information below will clarify these limitations. The information enclosed below is of a general nature and may not apply to your particular situation. We strongly suggest contacting a tax or financial planning professional prior to making any tax, investment, retirement, estate planning or insurance decisions. The information contained in this statement does not constitute tax advice. Additional information regarding the American Airlines, Inc. 401k Plan for Pilots can be found in the Plan Summary Plan Descriptions (SPD). All information is subject to change without notice. If there is any conflict between this summary and Plan/IRS documents, the terms of the Plan/IRS documents govern.


The information enclosed below is of a general nature and may not apply to your particular situation. We strongly suggest contacting a tax or financial planning professional prior to making any tax, investment, retirement, estate planning or insurance decisions. The information contained in this statement does not constitute tax advice. Additional information regarding the American Airlines, Inc. 401k Plan for Pilots can be found in the Plan Summary Plan Descriptions (SPD).


There is an annual personal maximum contribution limit on the total pre-tax or Roth salary deferral into all 401k Plans, including the AA 401k Plan. This elective deferral limit is $18,000 for 2017. For pilots age 50 or older, the elective deferral limit is increased by an additional $6,000 for 2017 (Catch-up contributions). After-tax 401k contributions are not included in this limit.


Generally, all elective deferrals you make to all 401k plans in which you participate must be considered to determine maximum limits.


The Internal Revenue Code (IRC) also limits the contributions that can be made to all defined contributions plans. This limit is referred to as the “annual additions” or 415 limit. The 415 limit for 2017 is 100% of gross income or $54,000, whichever is less. The 415 limit does not apply to “Catch up” contributions resulting in an annual maximum possible contribution to all AA Defined Contributions Plans of $60,000 in 2015 and 2016 for pilots age 50 or older.


During 2017, if you are older than age 50 and max out your personal contributions to the 401k Plan ($24,000) prior to reaching any of the maximum contribution limits, you would reach the 415 limit once you exceed $225,000 in earnings. 16% of your earnings above $225,000 would be paid to you directly and would be taxable.


The amount of employee compensation that can be considered in calculating contributions to defined contributions plans is $270,000 for 2017. Above this limit all 401k contributions will stop for the remainder of the year. This includes the 16% AA contribution as well as all personal contributions. Reaching the annual IRC salary limit will result in AA’s 16% contribution to be paid as income..


401k Catch-Up Contributions


If you reach age 50 during the year, you are allowed to make extra contributions to the 401k called "Catch-up" contributions. You must designate these “Catch-up” contributions in the “Catch-up contribution amount” block of the 401k website (the link can be found on the 401k webpage under “Contribution Amount”-“Contribution Amount and Catch-up Contributions”). If you do not designate a percentage in this block, you will not have any catch-up contributions. The maximum you can contribute in catch-up contributions is $6,000 for 2017. Catch-up contributions can be made to the Before-Tax and Roth 401k. It is not possible to make catch-up contributions to the After-Tax account.


Important change: The way Catch-up contributions are made will change as of 1/1/16. In the previous 401k plan, Catch-up contributions could not be made until $18,000 in personal contributions was made (LAA only). As of 1/1/16, this restriction no longer applies. Make sure you review your contribution allocation.


For example, if you have not yet reached the $18,000 in regular contributions but have selected a 5% regular contribution rate and a 20% Catch-up contribution rate, $4,000 will be withheld from your monthly paycheck in 401k contributions if you earn $16,000/mo. ($800 in regular contribution and $3,200 in Catch-up contributions)..


As of 1/1/16, monthly 401k contributions will be based on both the regular 401k contribution rate as well as the Catch-up contribution rate


From www.netbenefits.com/aa: When you make a catch-up election, the amount that you elect is deducted from your pay each pay period, until you reach the catch-up yearly limit. You can take advantage of catch-up if you will reach age 50 or older by the end of the calendar year.


If you make catch-up contributions to your 401k plan, you should see two lines on your monthly pay statement, as indicated below..


401k Super Saver

Super Saver +50


401k Contributions on Monthly Paycheck


401k Contributions can be found in various places on the monthly pay-statement.


Regular and “Catch-up” 401k Contributions are indicated under the title “PRE TAX DEDUCTIONS” or “AFTER TAX DEDUCTIONS” as follows:


C 401K-Super Saver (limit of $18,000)

C 401K-Super Saver +50 (limit of $6,000)


AA’s 16% contributions (until reaching an IRC limit) can be found under the title “INFORMATIONAL ONLY” as follows:


C Co Cont AA Plt


AA’s 16% contributions (after reaching an IRC limit; these contributions are taxable income) can be found under the title “OTHER – TAXABLE” as follows:



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What is “C Excess CO Cont”?


Many Pilot-Clients have contacted us regarding the “C Excess CO Cont” line on their monthly paycheck.


AA’s 16% 401k contributions become taxable income once you reach either of several IRC contribution and/or income limits. The 401k limit could have been $54,000 (total contribution limit when making no Catch-up contributions), $60,000 (total contribution limit when making $6,000 in Catch-up contributions) or $270,000 (income limit).


The dollar value after “C Excess CO Cont” represents the 16% AA Contribution rate paid to you as taxable income in lieu of 401k contributions, once IRC and/or income limits are reached during the calendar year.


Source: www.irs.gov ; www.netbenefits.com/aa


Disclaimer: Posted information is subject to change. In case of conflict with posted information, official plan documents govern.



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When can I take withdrawals from my 401(k)?


401(k) In-Service Withdrawal (ISW). AA Pilots who are older than 59.5 have the opportunity to transfer 401(k) assets from the AA 401(k) Plan to a Rollover IRA and/or Roth IRA. As of 11/1/15, pilots on LTD (at least 6 months on LTD status) could be eligible for an ISW as well.


Following the transfer of the 401(k) Plan to Fidelity, the In-Service Withdrawal options have changed. The wire transfer option is no longer available. The ISW must be done by phone (1-800-354-3412).


Contact American Financial Advisors for personalized ISW instructions.

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201 South Orange Avenue - Suite 1005
Orlando, FL 32801

Toll Free: 888-679-9779
Office: 407-207-9006
Fax: 407-207-0106