As provided for in the Letter of Agreement reached early last year between AFA and the company, Flight Attendants will be given the ability to determine how they will receive their Profit Sharing payment.  The company has agreed to provide Flight Attendants the option to receive their Profit Sharing as a tax-deferred payment to the Direct Contribution Plan, and/or on an after tax basis into a Roth 401(k) plan account, and/or cash or in any combination thereof.

The Profit Sharing Program came about during bankruptcy negotiations in 2005, where AFA engaged management in the concept of Profit Sharing.   Profit Sharing is Contractually provided for when adjusted pretax earnings reach the benchmark of exceeding $10 million for the year. Fifteen percent (15%) of United’s pretax earnings form a pool that is distributed pro-rata to all eligible Flight Attendants. All Flight Attendants who have completed one year of service as of December 31^st of the year for which pre-tax earnings are being measured will receive a distribution from the cash pool based on her/his considered earnings in the year the profit is achieved.

The company has completed the necessary programming to provide Flight Attendants the ability to designate how they wish to receive their annual Profit Sharing payment.  This special election will only apply to Profit Sharing and will not affect the Defined Contribution plan deferrals from your regular pay.  Flight Attendants can chose their election percentages on United’s Flying Together website by clicking “All About Me” and then “Profit Sharing Elections” from the menu on the left hand side of the page.  Elections must be on file no later than January 22, 2013 and changes to these elections can be made at any time until 2359 Central Standard Time (Chicago) on January 22, 2013.  

Flight Attendants have the option to allocate their 2012 Profit sharing by indicating the percentage of the Profit Sharing payment to be directed:

• On a before tax basis to the company sponsored 401(k) plan, and/or
• On an after tax basis to a Roth 401(k) plan account, and/or
• Any unallocated percentage will be paid to the Flight Attendant in cash, subject to applicable taxation and withholding. 

Flight Attendants may elect to defer Profit Sharing in any combination of percentages to the 401(k), Roth 401(k) or cash.

Note:  These contributions will no longer be considered Employer Contributions.  Instead, these will be considered Employee Contributions subject to the applicable maximums established by U.S. law. The 2013 401(k) maximum contribution is $17,500 and the maximum 401(k) catch-up contribution per year for those over 50 years old will remain the same - $5,500 over the standard contribution limit in 2013 for a total of $23,000.

Flight Attendants who do not make a special election for their Profit Sharing will receive the entirety of their Profit Sharing payment as taxable cash compensation.  Profit sharing cash compensation is subject to applicable taxation and withholding which for U.S. taxpayers is at the federal supplemental (higher) rate.

Based on IRS Rules, anyone who has received a hardship withdrawal from their 401(k) account during the last six months, will be unable to defer any portion of the Profit Sharing Distribution to the 401(k) account.

Internationally based Fight Attendants in FRA, HKG, LHR or NRT who do not have company contributions in the U.S. Flight Attendant 401(k) plan will have their Profit Sharing payment through the normal payroll process, subject to taxation.  LHR based Flight Attendants participating in the U.K. Group Stakeholder Plan, which has features very similar to the U.S. 401(k) plan, will have their profit sharing directed into this account only if they elect to do so.  Members outside of the U.S. who are enrolled in the floor rate program receive appropriate floor exchange rates when Profit Sharing payments are received through the normal payroll process.

Points of Emphasis
On the companies website there is an updated Profit Sharing Q&A for 2012.  Within that Q&A there is a section entitled 2012 Profit Sharing Plan for International Based Co-Workers.  It cannot be stressed enough that the information contained in this section does not apply to Internationally based Flight Attendants.  Flight Attendants are US payrolled employees and it is for this reason that this section does not apply to us. 

As a further clarification, the floor exchange rate will apply s-UA Internationally domiciled Flight Attendants based on the particular currency of their country, if necessary, provided this payment is received through the normal payroll process.

Additional information will be provided at the end of January 2013 when the company releases the 2012 year-end financial report.