Aviation Continuation Pay (ACP - The Bonus)

[Runr6730]

Here’s a little tidbit about the bonus for tax season. If you take the lump sum upfront and also contribute to a Roth IRA throughout the year, the lump sum will bump your annual AGI above the threshold where you can contribute the full $5500/yr.    If you don’t watch it carefully, you’ll contribute too much and will be subject to tax penalties. 

[nunya]

Yep.  It is fixable.  

https://www.thebalance.com/what-to-do-if-you-contributed-too-much-to-your-roth-ira-3192888

If in doubt go ugly early for the Backdoor right away.

[SFG]

6 hours ago, brawnie said:

Not to get sidetracked, but tax brackets don’t work that way.  You only pay the higher rate on the dollars that exceed the tier values - taking the bonus will have absolutely no effect on the rest of your “normal” pay/“the % you are used to paying.”  It’s impossible to lose money by bringing in more income.

Yep, we're saying the same thing. "As it is, if you take one of the lump sum options you're getting forced into a much higher tax bracket losing an additional 8-11% ON MOST OF YOUR BONUS plus the % you are used to paying in taxes."

In other words, you pay the same on what you're used to... and the part of the bonus that enters the higher tax brackets (most of it) you pay more on.

Edited January 23, 2019 by Klepto
To be nicer.

[SocialD]

3 hours ago, nunya said:

Yep.  It is fixable.  

https://www.thebalance.com/what-to-do-if-you-contributed-too-much-to-your-roth-ira-3192888

If in doubt go ugly early for the Backdoor right away.

This. It doesn't hurt you to go this route if you think you'll be anywhere near the limit.    Just be cognizant of the pro-rata rule if you already have money in a traditional IRA. 

Edited January 23, 2019 by SocialD

[BADFNZ]

On 1/23/2019 at 6:05 AM, nunya said:

Yep.  It is fixable.  

https://www.thebalance.com/what-to-do-if-you-contributed-too-much-to-your-roth-ira-3192888

If in doubt go ugly early for the Backdoor right away.

Dumb question after reading this article:  If I have a Roth IRA, contribute the max, file jointly with my wife who doesn't work, am I limited to $120K or $189K?  It says individuals are limited to $120K but is that individuals filing by themselves, or would it apply to me since the IRA is in my name and I'm the only one earning an income?

[Guest]

Dumb question after reading this article:  If I have a Roth IRA, contribute the max, file jointly with my wife who doesn't work, am I limited to $120K or $189K?  It says individuals are limited to $120K but is that individuals filing by themselves, or would it apply to me since the IRA is in my name and I'm the only one earning an income?

With a combined income of less than 189k, both you and your wife would be able to contribute the $5500 to each of your IRAs.


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[Guardian]

Even if she doesn’t work you get to claim the higher income cap and contribute the max to both yours and hers. Yeah. What he said.

[nunya]

21 minutes ago, ihtfp06 said:

With a combined income of less than 189k

Minor nit: phase out starts at $193k for 2019 and maximums are $6k.

Edited January 25, 2019 by nunya

[ThreeHoler]

Finally a number divisible by 12 or 24!


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[Guest]

Minor nit: phase out starts at $193k for 2019 and maximums are $6k.

Yeah, I was assuming he was talking about making his 2018 contributions since he still has a couple months.


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[brabus]

I especially like the ANG’s approach of offering $35K to permanent AGRs, but  only offering $15K to anyone else on full time orders. AGRs need to be retained, sure, but you’re going to convince a bunch of DSGs to take multi-year orders to be the exact same as a perm AGR for al intents and purposes, with $20K less? Yep, makes sense. 

Edited January 26, 2019 by brabus

[Gazmo]

200K a year is about the start for an experienced IP ART and my unit.  It is better cheddar than AGR but its more work.

In my eyes, those that will reap the benefits of the new ART pay tables will be those building time for the majors, those who never wanted to be an airline pilot and/or those who were furloughed almost two decades ago and at the crossroads, decided to make a career out of being an ART. However, the majority of the ART youth right now in the 1LT to senior Captain range are being bit by the commercial aviation bug every time a guy like me walks into the Sq with a smile on my face knowing that after my double AFTP, I get to go home and sit on short call reserve for weeks on end without getting tapped for work and don't have to deal with the daily grind of bullshit I don't miss one bit, even if I am making almost $100,000 per year less than I could be as an ART right now. With Capt upgrades at most of the majors plummeting to the 4-6 year mark, $300,000+ per year is within reach very quickly if you want the responsibility.

[SocialD]

On 1/26/2019 at 10:01 AM, brabus said:

I especially like the ANG’s approach of offering $35K to permanent AGRs, but  only offering $15K to anyone else on full time orders. AGRs need to be retained, sure, but you’re going to convince a bunch of DSGs to take multi-year orders to be the exact same as a perm AGR for al intents and purposes, with $20K less? Yep, makes sense. 

Right!

- Does anyone in Ivory tower even listen to the commoners/step foot outside of their tower?

- I'll give them credit for nixing the one big bonus per career.

- I could work as little as 9 days/month at DAL (13 days/month counting Guard duty) and I would still be taking a 15-30k paycut to take the bonus.  This even accounts for the tax benefit of mil pay vs civ pay.

- Most of our Perm AGRs are filled by dudes still under a UPT contract, thus not eligible.

- We utilize temp AGR and ADOS to bring guys back on orders...here's hoping they'll waive the Perm AGR requirement.

- We don't need a 1:1 pay exchange.  But if you want us to come back to computer systems that barely run, epic battles with DTS, a system that seems to always be fighting you and fly the same as a part timer...it's going to have to be much better than 35k to sign on for 2-years (I understand 35k is the federal limit...by why not 1 year).

- Unless they waive the Perm AGR thing, this bonus will likely do very little to help my squadron.

- I would have jumped at a 35k/1-year bonus.

- My 2018 DAL W2 was 22k more than what I'd make if I took the bonus right now...and I only worked at DAL 9 months that year...

 

 

 

Edited January 29, 2019 by SocialD

[Uptapplicant2019]

Question, I'm currently an active duty 1lt (prior enlised) with 6 years time in service and headed to UPT in October...will I be eligible for any continuation pay after my initial 10 year UPT commitment if I'm already at 17ish years in service? 

[osulax05]

1 minute ago, Uptapplicant2019 said:

Question, I'm currently an active duty 1lt (prior enlised) with 6 years time in service and headed to UPT in October...will I be eligible for any continuation pay after my initial 10 year UPT commitment if I'm already at 17ish years in service? 

The AvB changes year to year based on retention requirements. Who knows what the specifics will be 10 years from now. 

[IDALPHA]

9 hours ago, Uptapplicant2019 said:

Question, I'm currently an active duty 1lt (prior enlised) with 6 years time in service and headed to UPT in October...will I be eligible for any continuation pay after my initial 10 year UPT commitment if I'm already at 17ish years in service? 

You’re assuming that 10 years will still be the commitment huh? 

[SocialD]

It looks like the Reserves allowed the big bonus down to 1 year sets of orders.  Maybe next year the ANG guys will pull their heads out of their asses and do the same, though I'm not very optimistic.

[brabus]

Great.  So now the question is, sign up for > 1 yr of orders at $15K/yr or just sign up for 1 yr and hope the ANG follows the RES next year re: 35K/yr?

[SocialD]

If you're going to take >1 year orders anyway, take the big bonus for 2 years...bird in the hand.  AFRC staff asked for 1 year and got it...why didn't the ANG Staff ask for the same?  I wouldn't hold out much faith that it will change next year.  

[Squirt]

13 hours ago, SocialD said:

It looks like the Reserves allowed the big bonus down to 1 year sets of orders.  Maybe next year the ANG guys will pull their heads out of their asses and do the same, though I'm not very optimistic.

Does this include MPA for a year or greater?

[Guardian]

Did anything change for guard? Can you still give up your status and get out of the bonus?

[brabus]

Yes, you can curtail your orders/turn off the bonus.  Caveats: Curtailment requires TAG approval (I haven't heard of it being denied before, but it could be), read the bonus paperwork for specifics, but there is typically some min amount of time required to avoid having to pay back bonus.  Example: You sign a 6 yr $35K bonus; it requires you to serve at least 4 years to keep that $35K/yr.  If you curtail your orders at year 2.5 you are now only eligible for the $15K bonus, which means you were overpaid $40K (received $70K, but now are only owed $30K under your new, self-imposed bonus tier).  If you serve 4 years and curtail the last 2, you keep everything.

[SocialD]

16 minutes ago, Guardian said:

Did anything change for guard? Can you still give up your status and get out of the bonus?

They lowered the limit from 3 years to 2 years for the big bonus.  Small bonus remains 15k. They further limited the type of orders, you must be perm AGR and NOT ADOS or temp AGR (you can bet stat tours are covered though...).    

Getting out of the bonus is up to TAG...you feeling lucky?  I'm not willing to go into a signed contract with full intention of breaking it AND counting on the hope that TAG will approve such a curtailment.   

[herkbum]

Yes, you can curtail your orders/turn off the bonus.  Caveats: Curtailment requires TAG approval (I haven't heard of it being denied before, but it could be), read the bonus paperwork for specifics, but there is typically some min amount of time required to avoid having to pay back bonus.  Example: You sign a 6 yr $35K bonus; it requires you to serve at least 4 years to keep that $35K/yr.  If you curtail your orders at year 2.5 you are now only eligible for the $15K bonus, which means you were overpaid $40K (received $70K, but now are only owed $30K under your new, self-imposed bonus tier).  If you serve 4 years and curtail the last 2, you keep everything.

Since it’s paid in arrears now (annually), is there a payback requirement?


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[Guardian]

Yes, you can curtail your orders/turn off the bonus.  Caveats: Curtailment requires TAG approval (I haven't heard of it being denied before, but it could be), read the bonus paperwork for specifics, but there is typically some min amount of time required to avoid having to pay back bonus.  Example: You sign a 6 yr $35K bonus; it requires you to serve at least 4 years to keep that $35K/yr.  If you curtail your orders at year 2.5 you are now only eligible for the $15K bonus, which means you were overpaid $40K (received $70K, but now are only owed $30K under your new, self-imposed bonus tier).  If you serve 4 years and curtail the last 2, you keep everything.

I haven’t done it but I heard if you remain in the unit as a part timer then when you cancel your bonus and have to pay it back that you can basically do an interest free loan back to the government and slowly pay it back. Doesn’t have to be lump sum.