United Airlines Pilots: Navigating the 2025 Market-Based Cash Balance Plan

As a financial advisory practice working closely with United Airlines pilots, we understand how critical it is to stay ahead of changes in your retirement benefits. The Market-Based Cash Balance Plan, or Cash Balance Plan (CBP) when approved will be one of the most impactful updates to your retirement strategy—and with the 2026 IRS limits now projected, it’s time to revisit how this plan fits into your financial future.

What Is the Cash Balance Plan?

The CBP is United Airline’s proposed supplemental retirement account designed to capture spillover contributions that exceed IRS limits in your traditional 401(k) plan. It works alongside your Retirement Account Plan (PRAP) and is especially relevant for high-earning pilots.

Given the long delays in the process, and the current 2025 restrictions to the spillover, this writing addresses the proposed agreement of the CBP and spillover rationale for 2026.

Key IRS Limits and UAL Contract provisions for 2026

Here are the updated thresholds and IRS limits that determine how much can go into your 401(k) and that will spill over.

United will be contributing 18% of your compensation in 2026. Most of this contribution will flow into your PRAP, with excess spilling over into your CBP and/or RHA.

United’s will contribute 18% of the pilot’s compensation to your PRAP, and this will potentially max out at $64,800 (18% x $360,000 compensation). For pilots over 50 years old, the maximum United Contribution into the PRAP will be the lower of the $64,800 United contribution limit or when the combined pilot AND employer contribution amount reaches $80,000, whichever limit hits first. (The 2026 415c limit is $72,000 and allows for an $8k catch-up for over age 50 and $11,250 for ages 60-63.)

Once the limit is reached, the pilot’s contributions are stopped, and the company contribution will continue with all flows going into the spill over. The company contribution of 18% of compensation will continue with no upper limit imposed.

The pilot will have the choice on where the spillover flows; either the RHA (Retiree Health Account) and or the CBP (Cash Balance Plan)

Why the MBCBP Matters for Pilots

With recent contract updates, many United pilots are earning well above the PRAP limits. The CBP offers a way to:

– Defer taxes on contributions and growth.

– Contribute significantly more than traditional retirement accounts potentially up to $200,000 annually depending on age and income

Strategic Planning Tips

Here are three common strategies we are advising pilots to optimize their retirement savings with the CBP:

1. Maximize Contributions Early: Contribute aggressively to your 401(k) and CBP. Front load the pilot contributions so that the $80,000 415c limit is reached quickly, allowing for a large amount of company contributions to spill over.

2. Identify the recommended percentage of spill-over that will flow into the CBP and to the RHA. For those pilots with Tri-Care for life, we have a lower recommended RHA threshold.

3. Consider the value of making pilot contributions to the pre-tax account, or to the after-tax Roth account. For the year beginning in 2026, most pilots will be required to contribute their catch-up contribution to their Roth account. (Those with compensation over a specific amount.)

Watch Out for These Pitfalls

– Underutilizing the CBP: Pilots earning under ($360,000) may not see immediate benefits, but planning can still make it valuable.

– Tax Implications: With SECURE Act 2.0 changes, catch-up contributions for high earners will be required to be Roth contributions starting in 2026, so plan accordingly.

– Furlough Risk: While notice periods have improved, having a robust emergency fund remains essential.

Final Thoughts

The CBP is a powerful tool for United pilots to build long-term wealth and retirement security. Whether you’re a seasoned captain or a new hire, understanding how to leverage this plan can make a significant difference in your financial trajectory.

If you’re unsure how to navigate these changes, we are here to help. Let’s build a retirement strategy that works for you. Click here to get started