Southwest Pilot Agreement

Southwest Negotiating Committee

Highlights of the 2024 Agreement

By: Weston Pollock, Partner and Wealth Advisor, and Jack Snider, Wealth Advisor.

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Do you have questions about the new 2024 Southwest pilot agreement and how it will affect your retirement flight path? We have gathered a summary of key data about the new agreement. Please note that this is not an exhaustive summary of the provisions in the agreement, nor is it intended as advice. We recommend you speak to a Smith Anglin advisor for further advice about the Southwest Airlines pilot contract.

Primary Updates to Your 2024 Contract:

1. The Market-Based Cash Balance Plan (MBCBP) is established.

2. Profit sharing rollover options and changes to your profit sharing deferral options.

3. Increased company retirement contributions into your 401(k) plan.

4. Ratification of bonus/retro pay.

5. Increase in pilot compensation.

Market Based Cash Balance Plan (MBCBP):

• Southwest will establish a new Market Based Cash Balance Plan.

• Wages below the IRS 401(a)(17) limit of $345,000 will be eligible for qualified MBCBP credits.

• Southwest will contribute 1% of your 2024 wages to your MBCBP in 2024 and 2% per year starting in 2026.

• The MBCBP will be invested by a trust with a target allocation of 40% stocks / 60% bond mix.

• The MBCBP will offer in-service distributions beginning at age 59.5 if the account balance exceeds the accumulated pay credits. You will be allowed one in-service distribution per plan year.

Southwest Profit Sharing Plan:

• Southwest pilots with five years of service or more are eligible to transfer their profit sharing from Empower to their Schwab 401(k). This is a one-time transfer.

• When a pilot reaches age 59.5, Southwest will allow, once per calendar year, a pilot who is 100% vested to transfer some or all of the pilot’s Profit Sharing Plan account balance to their 401(k) account.

• Southwest has adjusted the profit sharing deferral rate options to 3.5%, 7%, or the actual profit sharing percentage calculated by the company for the plan year.

Southwest NEC (Non-Elective Contribution) 401(k):

The company NEC will be 15% at the date of ratification. The NEC will then increase to 17% at the second paycheck advance, but no later than 60 days after the date of ratification. It will then increase to 18% on January 1, 2026.

*Please note that the NEC contribution is based on your annual pay and could be less than the maximum contribution listed above.

Ratification Bonus/Retro Pay:

• Southwest will pay 1.5% of pilot’s 2020 year earnings, 5.6% of pilot’s 2021 year earnings, and 14% of pilot’s 2022 year earnings.

• Southwest pilots are eligible to direct their bonus pay as a contribution to their 401(k) plan.

• Tax withholding on bonus pay has yet to be released as of January 9, 2024.

Pilot Compensation:

• Southwest pilots will receive a 29.15% pay increase at the date of ratification, followed by 4% pay increases in 2025, 2026, and 2027. They will receive a 3.25% pay increase in 2028.

• See pay tables below:

Captain Pay Table

First Officer Pay Table

Your Smith Anglin advisor will provide you with further information.

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