Fly By Night: R&I Committee – Enhanced Catch-Up Contribution February 2026

You're listening to Fly By Night, a podcast by FedEx pilots for FedEx pilots, brought to you by the FedEx Master Executive Council of the Airline Pilots Association. And now, here's your host, MEC Communications Chair, Captain Chris Lee. My guest today is R&I Committee member, Captain Toby Klein. Thanks for stopping by the podcast, Toby. A hot topic we've heard about recently in R&I is the enhanced catch-up contribution. And my understanding is that's now coming to the PRSP. Can you talk to the pilots about that? Absolutely, Chris, and thanks for having me. I love talking about the PRSP. Yes, starting March 1st, 2026, this year, in our PRSP, pilots turning age 60 to 63 are going to have an opportunity to save even more under our catch-up provisions of the 401k plan. Now, in the year that a pilot turns age 60, 61, 62, or 63, they're going to be able to save an additional $3,250 over the standard age 50 catch-up of $8,000. So this is going to allow us to have a combined total of $11,250 in catch-up contributions for the year. Now, that doesn't mean $8,000 plus $11,000. It's just $11,250 or $8,000 based on your age. A little bit wonky there, though, is that If you turn age 64, you're going to lose that enhanced catch-up, and it's going to go back to the 8,000. So just to be clear, if a pilot turns 64 at any point during the year, even if that's in November or December, they would be considered ineligible for that entire year. Yeah, that's exactly right. If you turn 64 any time in the year then that year you going to only have catch Can you talk to the pilot some about how this came to be and provide some background on the enhanced catch-up option? Sure, Chris. This all started with the enhanced catch-up option from the Secure 2.0 legislation. Now, currently in our CBA, if you're 50 plus, you have a catch-up option, and now with this enhanced catch-up, it was going to be added when the next CBA was negotiated. However, ALPA was able to negotiate the implementation date sooner, which is now going to be March 1st of this year, instead of pilots needing to wait for the new CBA to come onto the property. Getting this in early gives pilots a few good opportunities to invest early in the year, but also because it's more money, it's going to give them more time in the year to save that extra money if they need to. Okay, can you talk to the pilots about how to turn on these catch-up contributions? Yes. We can elect these catch-up contributions from inside our netbenefits.com portal under the Contributions tab. You'll see it there. Also, just of note, if you have a retail Fidelity account, your regular Fidelity login will get you there as well. Now, neither FedEx nor Fidelity is going to automatically turn this on for you when you turn 50 or 60 through 63. So now's a good time just to log in. Make sure you have set correctly the percentage that you want. For catch-up, you can select between 0% and 30% of your paycheck. And the good thing is that once you've reached your limit of either $8,000 or $11,250 based on your age, it's going to shut off automatically so you can't over-contribute. Will these contributions interfere with the company's non-elective contribution? No, the good news here is that it will not affect your free 9% non-elective contribution. You can lose out on the free money from the company by making these catch contributions When it comes to catch contributions can pilots choose to direct those as either pre or Roth All right this is a little foot stomper here Starting this year in the PRSP, any pre-tax catch-up contributions are now going to be based on a pilot's previous year's FedEx income. So I'll note that there are some exceptions of this rule, but most of our pilots are going to be precluded from making any pre-tax contributions based on their income. Now, this includes both the $8,000 age 50 limit and the $11,250 enhanced catch-up for pilots age 60 to 63. That can be a little bit confusing, a little bit in the weeds there, but if you want more details on the phase-out limits and exceptions, you can go to our 2026 PRSP update for the granular details. But the big fun stomper here is that for most pilots, you're only going to qualify for Roth catch-up contributions based on your income. Are these contributions indexed for inflation? Yes, both the $8,000 and the $11,250 limits are indexed to inflation, so hopefully they should generally increase over time. But as to why pilots are locked out of pre-tax contributions based on their income or why 64-year-olds are excluded, unfortunately, that's just the way the law is written. Can you remind pilots the difference between pre-tax and Roth? Yes, pre-tax contributions defer marginal rate income taxes. they're going to grow tax-deferred, and then marginal rate income taxes are going to be paid in retirement on withdrawals. Now, with Roth contributions, they incur the marginal income tax rates now, but then they grow tax-free, and withdrawals are tax-free in retirement. I will note that deciding between a pre-tax or Roth includes a lot of factors, so we here at R&I recommend the advice of a financial advisor to help you make that decision Now I will say if your income precludes you from contributing any catch contributions as pre the only remaining PRSP option to contribute pre which is going to defer your taxes is the 402G limit contribution, and that's $24,500 this year. Well, Toby, thanks for taking the time to stop by. Any final thoughts? Yes, Chris, I do want to encourage every pilot to check out that 2026 PRSP update that we put on the R&I page there under the education tab at fdx.alpha.org. It's going to address issues like this new enhanced catch-up that we have with the income phase-out. It's also going to discuss things like maximizing your PRSP with after-tax contributions, or maybe converting after-tax contributions to Roth, which is a big foot stomper, age 50 catch-up contributions, ensuring that you don't crowd out free company contributions, and more. It's a great PRSB resource, and as a reminder, I just want to make sure that you know that you've got to be careful with after-tax contributions because those can crowd out company contributions, but what we're talking about here today with catch-up, they won't. I also want to encourage pilots that if you have any further questions about any of this, please reach out to us. We geek out on the PRSB. We love this stuff. We're happy to answer your questions about it. You can call us, start us, or go to the R&I website on fdx.alpha.org. the benefit specialists here are great and they'd be happy to talk to you as well but the big thing to remember today though is march 1st we should have that new enhanced catch-up option in the prsp thanks again toby and thanks for listening if you have any questions please go to our website fdx.alpha.org and utilize the dart link and as always be safe out there and we'll see you next time . . .