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How Airline Pilots Can Break Through 401(k) Limits

Allworth helps give pilots more runway for retirement.

[Credit: Shutterstock]
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Key Takeaways:

  • High-earning airline pilots face unique retirement savings challenges, including a short peak earning window and mandatory early retirement at age 65, which can lead to 401(k) contribution limits leaving substantial income exposed to taxes.
  • A market-based cash balance plan is presented as a specialized solution, allowing pilots to contribute significantly more in a tax-deferred structure, often facilitated by using a "mega backdoor Roth" conversion to divert employer contributions.
  • This strategy helps pilots compress substantial savings into their peak earning years, immediately reduce taxable income, and achieve significant long-term tax savings, particularly benefiting those with stable, high incomes who have exhausted other retirement options.
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Most airline pilots are diligent savers. They max out their 401(k)s, capture every dollar of employer contributions, and stay on top of their investment allocations. Still, for many pilots in their peak earning years, even doing everything right may not be enough.

This is the central message of a recent webinar hosted by Allworth Airline Advisors, in which James Risalvato, a financial planner with Naval aviation experience, walks pilots through a retirement savings strategy that most have never heard of. The good news is, some airlines are already offering this plan.

Matt Herr

Matt Herr develops sponsored content for clients at Firecrown Media. He is a gearhead and motoring enthusiast with experience in tech, freight and manufacturing. He spends his free time hiking with his wife, son and German shepherds, or reading and writing hobby pieces.

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