By Mike Cordak, RICP®
The Delta 401(k) Retirement Plan for Pilots is a retirement savings program that offers a variety of wealth management options, including government bond funds, stock index funds, and lifecycle funds.
This plan provides tax-deferred growth on contributions and offers matching contributions from the government. Delta pilots can contribute pre-tax or after-tax dollars to the 401(k), and withdrawals can be taken tax-free under certain conditions.
Let’s dig into how this plan works and how Delta pilots like you can optimize it.
Investment Choices
First, you should know that the Delta 401(k) Retirement Plan for Pilots offers a broad range of investment choices, allowing Delta pilots to customize their investment portfolio to their individual risk tolerance and investment goals.
Take a look at this summary outline of the investment options available for this plan:
- S Fund: Provides a steady and low-risk investment by investing in short-term government securities
- F Fund: Provides a diversified approach to equity investing by investing in a blend of large-cap, mid-cap, and small-cap stocks
- G Fund: Invests in government securities with a fixed rate of return, offering a guaranteed return
- C Fund: Offers a lower-volatility, more conservative investment choice by investing in a variety of government bonds
- I Fund: Provides exposure to international markets by investing in global stocks
- Common Stock Index Fund: Invests in a wide range of common stocks, providing access to the overall stock market.
Matching Contributions
Delta Air Lines matches a portion of pilots’ contributions to the plan, providing an additional boost to their retirement savings. The specific matching rate may vary over time, so it’s important to check with Delta for the current matching contribution.
Tax Incentives
The Delta 401(k) Retirement Plan for Pilots offers significant tax incentives for Delta pilots, including:
- Option for a Roth 401(k): Delta pilots have the option to fund a Roth 401(k), in which contributions are made using after-tax money and withdrawals are tax-free.
- Tax-deferred growth: Until money is withdrawn from the 401(k), earnings and investment gains are not taxed.
- Loan repayment: If you take a 401(k) loan, the interest you pay on the loan is tax-deferred.
- Rollover to other retirement plans: You can roll over funds from your 401(k) to another qualified retirement plan, such as an IRA, without incurring taxes.
Managing Your Delta 401(k) Retirement Plan for Pilots
To make the most of your 401(k) as a Delta pilot, consider the following:
- Diversification: Spread your investments across multiple funds to reduce risk.
- Regular contributions: Contribute to the 401(k) regularly to get the most out of compound interest.
- Rebalancing: Periodically review your portfolio and adjust your allocations to maintain your desired risk level.
- Seek professional advice: If you’re unsure about investment strategies, consult a financial advisor.
We Can Help
For Delta Air Lines pilots, the Delta 401(k) Retirement Plan for Pilots is an excellent retirement savings option. For pilots striving to make wise decisions and build a solid financial future, be on the lookout for relevant tax incentives, matching contributions, and investment possibilities.
A great way for both new and seasoned Delta pilots to navigate options and optimize 401(k) choices is to partner with a professional on their financial journey. In addition to my knowledge and experience as a financial advisor, I’m also a Delta Air Lines pilot. That makes Optimum Wealth Management, LLC your go-to resource for getting the most out of 401(k) offerings.
To schedule a complimentary meeting, get in touch online, call (678) 778-2694, or email mcordak@optimumwlth.com.
About Mike
Mike Cordak is founder and owner of Optimum Wealth Management, a Georgia-Registered Investment Advisor serving the financial, retirement, and wealth planning & management needs of airline pilots—from hiring all the way through the transition to retirement and beyond. As a Delta pilot himself for more than two decades, Mike’s goal is to cultivate authentic life-long relationships with pilots to help them and their families create, grow, and preserve their wealth. As someone familiar with the pilot lifestyle and their unique goals and concerns, he offers a different investment strategy than the average advisor. Combining a fee-only business model with a fact-based tactical investment management style, he creates an environment that allows him to fulfill his mission of bringing clients financial peace.
Mike received his finance degree from Gies College of Business – University of Illinois Urbana-Champaign before pursuing a career as a pilot. After losing the defined-benefit plan at his airline in 2006, he entered the financial industry, inspired to create his own firm and take control of his finances to pursue financial stability after retiring as a pilot. He obtained the Retirement Income Certified Professional® designation, which means he has a legal and ethical duty to put clients’ interests first.
Mike and his wife, now empty nesters, love getting together with their kids as often as their schedules allow. Outside of reading financial news, he enjoys flying his own plane, golfing, hiking, skiing, and playing tennis and pickleball. He also can be found enjoying good wine and food, spending time at the beach, or traveling to foreign countries. He also has an interest in the Atlanta Mission, which helps out homeless people, the Woodstock City church, and contributes to various young people going out on mission trips and working on college campuses. To learn more about Mike, connect with him on LinkedIn.
