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Old 10-16-2007, 02:43 AM   #21
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I read briefly the plan docs at the link I found. Igsoy, go to that link as it seems to have lots of detail on understanding the plan---and up-to-date.

I suppose one question that occurs to me (as father of a 23 yo musician) is: Would she be better of getting her performing gigs via AMF union, and thereby get AMF pension contributions to this plan?

Or would she be better off getting her own performing gigs NOT via union, and getting the employer to pay a fee equal to union gig rate PLUS amount they would pay for pension. Then she would simply fund her own IRA/Keogh retireplan(s)?

Not an easy question for sure. Would she get as much work not via union as she would thru union? Don't know. Would she get the better rates on her own gor gigs as she would thru union? Don't know.

IGSOY---if you are considering alternatives, you might want to compare:
Incorporate so you can contribute to AMF pension for yourself-----or incorporate so you can fund your own Keough plan(or SIMPLE IRA, or others). If you go Keough route, you are NOT limited to performance gig fees, but could also include teaching income, etc.

Bedtime. Tomorrow I will read more on AMF pension and share thoughts when I am more lucid.
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Old 10-16-2007, 02:44 AM   #22
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Originally Posted by RetireeRobert View Post
Somehow, I am thinking even if a person self-employs/incorporates, there must be some limit (IRS rules) on how much of earnings can go into pension as contribution.

Yes, that is right, they told my friend she could do 15%. We are talking about music, here, noone is getting rich. She books her string quartet year round for weddings so actually has a much greater potential for contributing than I would, most of my work is as an employee of various venues and is already covered under the show or orchestral pension percentages. So as an employer, I would just have a small amount of church gigs that I book and some summer park concerts.
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Old 10-16-2007, 03:10 AM   #23
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Originally Posted by RetireeRobert View Post
Or would she be better off getting her own performing gigs NOT via union, and getting the employer to pay a fee equal to union gig rate PLUS amount they would pay for pension. Then she would simply fund her own IRA/Keogh retireplan(s)?

Not an easy question for sure. Would she get as much work not via union as she would thru union? Don't know. Would she get the better rates on her own gor gigs as she would thru union? Don't know.

Well being in the union never got anyone more work, you get that by contacts and reputation and being available at the right time, but not being in the union could be keeping her from getting more work. Someone she played with may give a contractor her name to fill in for a gig, but they check and she is not a member, so they can't hire her.

It also depends on where she is located. In some cities the union does not hold as much sway as others. Seattle comes to mind.

Regarding getting better rates on her own, union members can charge as high as their services are worth in the market, they just can't charge less than scale. Whether the gig is a union contract gig or just a pickup group, you are not allowed to work for less than scale, or play in a group where anyone else is paid less than scale. The scales for concerts are generally pretty reasonable, and many people with respected groups would charge higher than that anyway.

One note in the pension vs. Keough/401k debate is some states do not tax pension income in retirement, but they do tax 401k. I could be getting this wrong, but I think I read it somewhere.
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Old 10-16-2007, 02:46 PM   #24
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I read through the plan description and info available at the plan's homesite. I believe the following are true statements about the plan:

The only covered employment is via union negotiated jobs, and the employer makes the pension plan contribution. Contributions to the plan from musicians cannot be accepted unless the musician is self-employed and incorporated or an LLC

I did not find any provision for withdrawal of accumulated contributions by the musician before retirement.

Vesting in the plan entitles the musician to a retirement benefit at earliest retirement age of 55 or any age after that. Normal retirement age is 65.

The musician can elect a single lifetime pension, or if married can elect a joint lifetime payout with the beneficiary to get 50% at death of plan member.

There was some indication that at retirement the musician could elect instead of the lifetime pension, a lumpsum which could be elgible for rollover to an IRA. But I did not find discussion of how the lumpsum amount would be determined, if it would include accumulated earnings or not, or if it would be a discounted future value of the allowable lifetime payments stream.

The pension payout rate is subject to periodic change, and the most recent change seems to have been in 2004. That change was downward.


THOUGHTS:
If a musician is routinely performing in covered employment anyway, and contributions are being made on his behalf to the plan, the pension is a welcome benefit in addition to social security.

If a musician is contemplating incorporating in order to make self-employed contributions to the plan as well, it might be wise to instead make such additional retirement savings to a personal IRA plan if under age 55.
A muscian age 55 or older may want to incorporate (or LLC) and make self-employed contributions to the AFM plan.

Why the age distinction? It appears from the way the plan operates that the older musicians get the same payout per $100 of contributions as younger members---but they get it sooner. They recover their contributions sooner and "profit" sooner (get pension payouts in excess of what they contributed---their breakeven point is reached faster).

Because the plan payout rates have changed periodically, it is impossible to make longterm projections of what younger musicians can expect at retirement. Because withdrawals form the plan can only be made at retirement, younger musicians would be wise to keep their money fully under their own control in IRA's.
And because the way the plan operates, it appears it is set up to encourage "adverse selection" by older musicians-----ie, the 55 and older make as many self-employed contributions as they can to the plan to garner additional benefits at retirement. This "adverse selection" cannot go on forever without affecting plan payout rates. Sooner or later, the payout rates would have to drop again to pay for it. The younger musicians would be stuck with these lower rates.

Summary: At any age, consider the AFM pension (on work you do anyway) a nice supplement to SS.
If you are 55 or over, go for the addition self-employed AFM plan contributions. You reach breakeven fast enough to more than recover these extra buy-ins.
If you are under 55, forget the extra AFM plan buyins. Take that extra money for retirement and put it in IRA that is under your 100% control.
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