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R&I Update 2020 Pilot Retirement Savings Plan

This issue of the R&I Update focuses on the Pilot Retirement Savings Plan. The contents of this article are listed below. As always if you have any questions or concerns, please contact the FDX MEC R&I Committee by submitting a PDR or your Benefits Specialists, Brandy Hough or Ann Giannini, at (901)752-8749.

Thanks,

FDX MEC R&I Committee

Contents: 2020 Internal Revenue Code Limitations – Impact on Pilots Retirement Savings Plan

o Increase in FedEx Employer Nonelective Contribution Rateo 401(a)(17) - Qualified Plan Compensation Limito 402(g) - Limit on Employee Pre-Tax Elective Deferrals and Roth 401(k) Contributionso 415(c) - Defined Contribution Plan Limito 414(v) - Catch-Up Contributionso 2020 Over-contribution Scenarioso 2020 How & How Much Can I Save Scenarioso Q&A

Fidelity Resourceso The Contribution Maximizer: The FedEx PRSP 415(c) Toolo Automated Roth In-Plan Conversiono Fidelity Personalized Planning & Adviceo Fidelity Executive Services

Third Party Advisor Charles Schwab Resources

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2020 Internal Revenue Code Limitations Update – Impact on FedEx Pilots’ Retirement Savings Plan In November 2019, the Internal Revenue Service (IRS) published the cost- of- living adjustments affecting dollar limitations for pension plans under the Internal Revenue Code (IRC). The limits affect how much a pilot and/or the Company can contribute to the Pilots’ Retirement Savings Plan (PRSP), which holds the 401(k) Contributions, the Employer Nonelective Contributions and the Money Purchase Plan Account (former Pilot’s Money Purchase Pension Plan). We suggest that you read this summary of the limit increases for 2020 and refer to the IRS Notice 2019-59 for a complete explanation of the changes. This article explains the IRC Limits, how the IRC Limits affect your contributions, potential pitfalls of over contributing, and savings scenarios. This report should not be relied on for investment purposes or for tax advice. Please consult with a qualified financial consultant and tax professional.

Increase in FedEx Employer Nonelective Contribution Rate In accordance with Section 28.D.4 of the Collective Bargaining Agreement, effective January 1, 2020 the Employer Nonelective Contribution to the Federal Express Corporation Pilots’ Retirement Savings Plan (PRSP) will increase from 8% to 9% of eligible earnings, subject to IRS limits. This increased contribution rate will be reflected on your January 15, 2020 paystub.

Internal Revenue Code (IRC) Limits 401(a)(17) - Qualified Plan Compensation Limit 2019 = $280,000 2020 = $285,000 The annual compensation limit under IRC Section 401(a)(17) restricts the total amount of compensation that can be used in determining contributions to the PRSP. This affects the PRSP in two ways:

1. The 9% Company Contribution is based on your compensation, but only up to the 401(a)(17) limit. You will not receive a Company Contribution on compensation in excess of this limit. The maximum Company Contribution in any given year equals that year’s 401(a)(17) limit multiplied by the Company Contribution Percentage. For a pilot earning a compensation at or above the 401(a)(17) limit, the maximum Company Contribution is $25,650 for 2020 (it was $22,400 in 2019) at the current 9% Company Contribution rate. When a pilot's earnings exceed the

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401(a)(17) limit, the Company automatically ceases Company Contributions to the pilot's PRSP account. This often perplexes pilots the first time they earn above the limit. If you suspect a problem with your PRSP account due to the cessation of Company Contributions, check first to see if your earnings exceeded the 401(a)(17) limit. To find out how close you are to this limit, look at your TOTAL GROSS PAY YTD on your most recent pay notice and subtract the two per diems (pay notice codes of TxblPerDm and & Plt N/T PD), any expense reimbursement and tax gross-ups.

2. After-Tax Contributions (not to be confused with Roth 401(k) Contributions) are limited to the

lesser of (a) 20% multiplied by eligible earnings, or (b) the amount that takes you up to the 415(c) limit. So, for a pilot earning at or above the 401(a)(17) limit, the theoretical maximum contribution to his or her PRSP After-Tax Contribution Account is $57,000 in 2020; however, in practice this amount is lowered by the amount of any Employer Nonelective Contributions, and if elected, any Pilot Pre-Tax/401(k) Elective Deferral and/or Roth 401(k) Contributions and 401(k) Company Matching Contribution. Note: The After-Tax Contributions of up to 20% of compensation provides flexibility in the timing of contributions for all pilots and increases the savings opportunity for pilots paid less than the 401(a)(17) limit.

WARNING: It is critically important that you use EXTREME care if you contribute to After-Tax Contributions (not to be confused with ROTH 401(k) Contributions). Without careful planning and monitoring, pilot After-Tax Contributions could result in the LOSS of the 9% Company Contributions.

402(g) - Limit on Employee Pre-Tax Elective Deferrals and Roth 401(k) Contributions 2019 = $19,000 2020 = $19,500 The 402(g) limit restricts the total amount a pilot can defer into his or her PRSP Pre-tax/401(k) Account, Roth 401(k) Contribution Account, or any combination thereof. Under the terms of the PRSP, pilots may contribute up to 50% of compensation to their Pre-tax/401(k) Account or Roth 401(k) Contribution Account. This provides flexibility in the timing of contributions. Regardless of the percentage you elect, the total amount that can be contributed when adding both Pre-Tax/401(k) Elective Deferrals and Roth 401(k) Contributions together is subject to the same $19,500 402(g) limit.

Example: Pilot A’s house is being renovated. To pay for the renovations, he had to stop making Pre-Tax 401(k) Elective Deferrals and Roth 401(k) Contributions. Before the end of year and after

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renovations were completed, Pilot A then wanted to max out his 401(k) contribution for the year but was unsure whether the timing precluded him from doing so. Pilot A earns $235,000 per year and can wait until there are two months left in the year and can still contribute the maximum 401(k) contributions ($19,500) for the year. Please be mindful that the timing in this example represents just one income level. Different yearly income and variability in month-to-month income levels may create different timing.

As noted below, a pilot’s 414(v) Catch-Up Contributions provide a separate and additional $6,500 savings opportunity that does not count toward the 402(g) limit, thus permitting a pilot to contribute a maximum of $26,000 for 2020.

415(c) - Defined Contribution Plan Limit 2019 = $56,000 2020 = $57,000 The 415(c) limit restricts the total amount a pilot and the Company, in aggregate, can contribute to the pilot’s PRSP Account. The contributions that count toward this limit are: • The pilot's Pre-Tax 401(k) Elective Deferrals • The pilots after-tax Roth 401(k) Contributions • The pilot's regular After-Tax Contributions • The 401(k) Company Matching Contributions ($500) • The 9% Employer Nonelective Contributions, and • The Company’s Contributions associated with the end-of-year excess sick buyback (as defined in

CBA Section 14.E.). The excess sick buyback contribution is the last to go in. If the sick buyback causes the 415(c) limit to be exceeded for the year, the pilot is paid cash for the excess amount.

As noted below, a pilot’s 414(v) Catch-Up Contributions provide a separate and additional $6,500 savings opportunity that does not count toward the $57,000 415(c) limit, thus permitting a total of $63,500 in total contributions to the PRSP for 2020.

414(v) - Catch-Up Contributions 2019 = $6,000 2020 = $6,500 Pilots who are age 50 and older or who will turn age 50 within the 2020 calendar year are eligible to make additional "catch-up" contributions to the PRSP, which will be deposited into a Catch-Up Contribution Account. For 2020, the maximum Catch-Up Contribution amount is $6,500. Catch-Up Contributions do not count toward the 402(g) limit or the 415(c) limit described above, thus providing a separate and additional $6,500 savings opportunity.

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WARNING: Contributions into your PRSP Catch-Up Contribution Account are not turned on automatically when you become eligible. You must log onto netbenefits.com and do the following steps:

1. Click on Quick Links (on the PRSP tab) 2. Click on Contribution Amount 3. Click on Contribution Options 4. Add the % amount to the Catch-Up Contribution 5. Click Change Contribution Amount at the bottom of the page

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2020 Over-contribution Scenarios “Worst Case Scenario” for a pilot making $300,000 at a constant rate of $12,500/pay period, contributing 20% After-Tax Contributions and 50% 401(k) Contributions: Pay Period

Check Date1

Pilot 401(k)

Contribution

(Pre-Tax or

Roth)

Company

Matching

Contribution

Pilot After-

Tax

Contribution

20%

9% Employer

Nonelective

Contribution

415(c)

Remaining

$57,000

January 15 $6,250 $500 $2,500 $1,125 $46,625

January 31 $6,250 $2,500 $1,125 $36,750

February 15 $6,250 $2,500 $1,125 $26,875

February 28 $750 $2,500 $1,125 $22,500

March 15 $2,500 $1,125 $18,875

March 31 $2,500 $1,125 $15,250

April 15 $2,500 $1,125 $11,625

April 30 $2,500 $1,125 $8,000

May 15 $2,500 $1,125 $4,375

May 31 $2,500 $1,125 $750

June 15 $750 $0 ($1,125 lost) $0

June 30 $0 ($1,125 lost) $0

July 15 $0 ($1,125 lost) $0

July 31 $0 ($1,125 lost) $0

August 15 $0 ($1,125 lost) $0

August 31 $0 ($1,125 lost) $0

September 15 $0 ($1,125 lost) $0

September 30 $0 ($1,125 lost) $0

October 15 $0 ($1,125 lost) $0

October 31 $0 ($1,125 lost) $0

November 15 $0 ($1,125 lost) $0

November 30 $0 ($1,125 lost) $0

December 15 $0 ($900 lost3) $0

December 31 $0 $0

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WARNING: Be aware that Fidelity totals contributions both by calendar year and by tax year. To view your contributions by tax year, go to Statements and search YTD. At the top of the Statement there will be a section labeled “YTD Plan Year Contributions”. This section shows your contributions by Plan year. All other areas on the Fidelity website show contributions by calendar year.

1 Both Pilot and Company Contributions will be deposited with Fidelity within a few days of the check date for the pay period in question. Any Pilot or Company Contributions generated from a Dec. 31 check or the Section 14.E. Excess Sick Surplus Program will be deposited in January. This deposit counts towards the prior year’s tax limits because it is based on earnings in the prior tax year.

2 Pilot 401(k) contributions will automatically stop when the sum total of Pre-tax/401(k) Contributions and Roth 401(k) Contributions hits $19,500 in 2020.

3 The 9% Employer Nonelective Contributions will stop once a pilot's earnings exceed the 401(a)(17) limit of $285,000.

In the “Worst Case” scenario above, the pilot’s own savings filled up the 415(c) “bucket” causing insufficient room for the Company’s full 9% employer nonelective contribution, which should have been $25,650. In total, the pilot lost out on $14,400 of Company money. This pilot's $57,000 415(c) limit was filled with Pilot 401(k) Contributions of $19,500 and $25,750 of Pilot After-Tax Contributions, along with Company Matching Contributions of $500 and $11,250 in the 9% Employer Nonelective Contributions.

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“Safer-Though-Not-Completely-Safe Case Scenario” for a pilot making $300,000 at a constant rate of $12,500/pay period, contributing 3.7832% to after-tax savings and 50% to their 401(k):

Pay Period

Check Date1

Pilot 401(k)

Contribution

(Pre-tax or

Roth)

Company

Matching

Contribution

Pilot After-Tax

Contribution

3.7832%

9% Employer

Nonelective

Contribution

415(c)

Remaining

$57,000

January 15 $6,250 $500 $472.90 $1,125 $48,652.10

January 31 $6,250 $472.90 $1,125 $40,804.20

February 15 $6,250 $472.90 $1,125 $32,956.30

February 28 $750 $472.90 $1,125 $30,608.40

March 15 $472.90 $1,125 $29,010.50

March 31 $472.90 $1,125 $27,412.60

April 15 $472.90 $1,125 $25,814.70

April 30 $472.90 $1,125 $24,216.80

May 15 $472.90 $1,125 $22,618.90

May 31 $472.90 $1,125 $21,021.00

June 15 $472.90 $1,125 $19,423.10

June 30 $472.90 $1,125 $17,825.20

July 15 $472.90 $1,125 $16,227.30

July 31 $472.90 $1,125 $14,629.40

August 15 $472.90 $1,125 $13,031.50

August 31 $472.90 $1,125 $11,433.60

September 15 $472.90 $1,125 $9,835.70

September 30 $472.90 $1,125 $8,237.80

October 15 $472.90 $1,125 $6,639.90

October 31 $472.90 $1,125 $5,042.00

November 15 $472.90 $1,125 $3,444.10

November 30 $472.90 $1,125 $1,846.20

December 15 $472.90 $900 $473.30

December 31 $473.30 ($0.00)

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WARNING: Be aware that Fidelity totals contributions both by calendar year and by tax year. To view your contributions by tax year, go to Statements and search YTD. At the top of the Statement there will be a section labeled “YTD Plan Year Contributions”. This section shows your contributions by Plan year. All other areas on the Fidelity website show contributions by calendar year.

1Both Pilot and Company Contributions will be deposited with Fidelity within a few days of the check date for the pay period in question. Any Pilot or Company Contributions generated from a Dec. 31 check or the Section 14.E. Excess Sick Surplus Program will be deposited in January. This deposit counts towards the prior year’s tax limits because it is based on earnings in the prior tax year.

2 Pilot 401(k) Contributions will automatically stop when the sum total of Pre-tax/401(k) Contributions and Roth 401(k) Contributions hits $19,500 in 2020.

3 The 9% Employer Nonelective Contributions will stop once a pilot's earnings exceed the 401(a)(17) limit of $285,000.

In this scenario, the pilot’s own savings were kept to an appropriate level within the 415(c) “bucket” causing there to be sufficient room for the full Employer Nonelective 9% contribution, which was the maximum possible contribution of $25,650. The pilot lost out on $0 of Company money. The $56,000 415(c) limit was filled with Pilot 401(k) Contributions of $19,500 and $11,350 of Pilot After-Tax Contributions, along with Company Matching Contributions of $500 and $22,400 in the 9% Employer Nonelective Contributions. This last scenario is illustrative, but it’s completely unrealistic for pilots to have the exact same pay each pay period during the calendar year. In real life our pay is dynamic. So here is where the "safer-though-not-completely-safe" wording is explained. Using less than 4% for your after-tax savings rate will keep you in the ballpark of the 415(c) limit, but due to an administrative processing issue with the timing of the different contribution sources, you can still miss out on some of the 9% Employer Nonelective Contributions if you’re not vigilant. The issue stems from the fact that Pilot Contributions are calculated before the Company Contributions. Whichever type of contribution is calculated first fills up the 415(c) “bucket” first, leaving less “room” for the other contribution. Remember, when your total Pilot and Company Contributions hit the 415(c) limit, ALL contribution sources are stopped for the year. Let’s say in 2020 you earned $280,000 YTD, have been consistently contributing less than 4% in After-Tax Contributions and have already maxed out your Pilot 401(k) Contribution of $19,500. You have been diligently keeping track of your approach to the 415(c) limit and know that YTD your $19,500 in Pilot 401(k) Contributions and $10,592.96 in After-Tax Contributions, along with the $500 Company Matching Contribution and $25,200 in the 9% Employer Nonelective Contributions have your total YTD qualified contributions at $56,351. So, with the 2020 415(c) limit being $57,000, you have $649 of “room” left in your “bucket.”

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So far everything looks great. However, the administrative issue described above may be possibly lying in wait for you and, unfortunately, you won’t know until it’s too late. Let’s say you make $20,000 in your next paycheck bringing your YTD eligible earnings to $300,000. With the 2020 401(a)(17) limit of $285,000, you know that you should get a 9% Employer Nonelective contribution on the $5,000 in eligible earnings from your last paycheck, which is $450. Now for this example let’s assume you left your After-Tax Contribution rate at less 4%. With no maximum dollar limit on After-Tax Contributions other than the 415(c) limit, it is possible at less 4% contribution rate for this $20,000 paycheck to generate a $796.50 After-Tax Contribution. If you add the $450 Employer Nonelective Contribution and $796.50 pilot After-Tax Contribution together you get $1,246.50 which exceeds the $649 left in your 415(c) “bucket.” It now comes down to which contribution gets calculated first. Since the $796.50 pilot After-Tax Contribution is calculated first, it counts first against your remaining $450 415(c) “room.” This amount makes you exceeds your 415(c) “bucket” which results in the loss of the remaining $450 of Employer Nonelective Contributions. In this case, you lose out on $450 in Employer Nonelective Contributions.

Here is a possible technique to ensure that the full 9% Employer Nonelective Contributions goes into the PRSP in 2020, while still allowing you to safely max out your Pilot 401(k) Contribution and After-Tax Contribution opportunities (PROFESSIONAL ASSISTANCE ON THIS IS HIGHLY RECOMMENDED): • At the beginning of the year, initiate a safe-though-not-completely-safe less than 4% pilot

After-Tax Contribution. • Monitor your contributions and the Employer Nonelective Contributions.

o With Fidelity you can view your contributions by tax year. To do this, go to Statements and search YTD. At the top of the Statement there will be a section labeled “YTD Plan Year Contributions”. This section shows your contributions by Plan year. All other areas on the Fidelity website show contributions by calendar year.

o Your pay check stub also has YTD amounts for both employee and employer contributions. Keep track of the “room” left in your 415(c) “bucket.”

• When your earnings will exceed the 401(a)(17) limit on your next paycheck (or if you have not exceeded the 401(a)(17) by your 12/15 paycheck), estimate your earnings in that check and do the following:

o Determine the amount of eligible earnings (including vacation buyback, if applicable) that will be paid. To estimate this, take the lesser of A) 401(a)(17) limit minus eligible earnings YTD on your last pay notice, or B) your total estimated earnings (including vacation buyback, if applicable). Then multiply that lesser number by 9% for the

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possible Company Contribution amount. As a cross-check for pilots who will be exceeding the 401(a)(17) compensation limit on this next paycheck, the possible Company Contribution amount when added to the YTD Company Contributions should equal $25,600.

o Subtract the possible Company Contribution from the “room” left in your 415(c) “bucket.” Take your estimated remaining “room” in your 415(c) “bucket” after subtracting the estimated possible Company Contributions and divide it by the total amount of earnings you estimate will be on this next paycheck (including vacation buyback, if applicable). Round down to the nearest integer. This will give you a more accurate percentage to use for your Pilot After-Tax Contributions on this next check which should allow you “room” to receive the full 9% Employer Nonelective Contribution (though not guaranteed to be exact due to the possibility your pay comes in differently than you estimated). If you are a pilot who has not exceeded the 401(a)(17) compensation limit by the 12/15 paycheck and will not be exceeding 401(a)(17) for the year, you will see an increase in your calculated after-tax savings rate 4% or above. It is, of course, up to you if you want to try and increase your savings on this last check.

o By the Friday before payroll runs (schedule with run dates can be found on the FedEx intranet, keyword “payroll”), log onto netbenefits.com and perform the following steps: Click on Quick Links (on the PRSP tab) Click on Contribution Amount Click on Contribution Options Add the % amount to the After-Tax Contribution Click Change Contribution Amount at the bottom of the page

o By the Friday before payroll runs on your 1/15 paycheck, decrease your pilot After-Tax Contribution back to less than 4%. The decrease will first apply to your 1/15 paycheck.

Repeat each year considering any changes in the applicable IRC limits. Fidelity has a tool designed specifically for the FedEx Pilot Retirement Savings Plan (PRSP), the Contribution Maximizer, that will assist you in making these calculations (Reference the section “The New Contribution Maximizer” in this article to learn more).

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2020 How & How Much Can I Save Scenarios (Note: All scenarios assume a full Disability Sick and Regular Sick accounts to demonstrate the highest end of the benefit spectrum under the IRC limits.)

Scenario A: For a pilot who earns above the 401(a)(17) limit, has the highest hourly pay rate under the CBA, and contributes the maximum in all areas with focus on Pre-Tax/401(k) Contributions (remember max continuous safer-though-not-completely-safe After-Tax Contribution is less than 4%, see Over-Contribution Scenarios above), the scenario would look like this:

2019 2020 Employer Nonelective Contribution $22,400 $25,650 Company Matching Contribution $500 $500 Pilot's Pre-Tax/401(k) Elective Deferral $19,000 $19,500 Pilot's After-Tax Contribution $14,000 $11,350 Excess Sick (72 CH X EOY Pay Rate) $23,456.16 $24,160.32 TOTAL $79,356.16 $81,160.32 415(c) Defined Contribution Plan Limit $56,000 $57,000 Summary: Total Qualified Contributions $56,000 $57,000 Check cut for excess sick buyback $23,356.16 $24,160.32 * A pilot age 50 or older or who will turn age 50 during the calendar year may make a Catch-Up Contribution of up to $6,000 in 2019 or $6,500 in 2020 without affecting the above scenario. As noted in section C above, this is a separate and additional savings opportunity above the 415(c) limit of $6,000 in 2019 and $6,500 in 2020.

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Scenario B: For a pilot who earns above the 401(a)(17) limit, has the highest hourly pay rate under the CBA, and contributes only enough to receive the maximum Company Contributions, the scenario would look like this:

2019 2020 Employer Nonelective Contribution $22,400 $25,650 Company Matching Contribution $500 $500 Pilot's 401(k) Elective Deferral $1,000 $1,000 Pilot's After-Tax Contributions $0 $0 Excess Sick (72 CH X EOY Pay Rate) $23,456.16 $24,160.32 TOTAL $46,054 $51,310.32 415(c) Defined Contribution Plan Limit $56,000 $57,000 Summary: Total Qualified Contributions $47,356.16 $51,310.32 Check cut for excess sick buyback $0 $0 * A pilot age 50 or older or who will turn age 50 during the calendar year may make a Catch-Up Contribution of up to $6,000 in 2019 or $6,500 in 2020 without affecting the above scenario. As noted in section C above, this is a separate and additional savings opportunity above the 415(c) limit of $6,000 in 2019 and $6,500 in 2020.

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Scenario C: For a 12th year WB FO who at 1000 CH per year in 2019 pay is $218,210 and in 2020 pay is $226,940, earns less than the 401(a)(17) limit, and contributes only enough to receive the maximum Company Contributions, the scenario would look like this:

2019 2020 Employer Nonelective Contribution $17,456.80 $20,424.60 Company Matching Contribution ($500) $500 $500 Pilot's Pre-Tax/401(k) Elective Deferral $1,000 $1,000 Pilot's After-tax Contributions $0 $0 Excess Sick (72 CH X EOY Pay Rate) $16,339.68 $16,830.00 TOTAL $35,296.48 $38,754.60 415(c) Defined Contribution Plan Limit $56,000 $57,000 Summary: Total Contributions to Both Plans $35,296.48 $38,754.60 Check cut for excess sick buyback $0 $0 *A pilot age 50 or older or who will turn age 50 during the calendar year may make a Catch-Up

Contribution of up to $6,000 in 2019 or $6,500 in 2020 without affecting the above scenario. As noted in section C above, this is a separate and additional savings opportunity above the 415(c) limit of $6,000 in 2019 and $6,500 in 2020.

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Q&A

Q: What happens if I turn age 50 in 2020 or if I am already older than age 50? A: If you turn age 50 in 2020, or if you are already age 50 or older, you have the opportunity to save an

additional $6,500 in Pre-Tax/401(k) Contributions or Roth 401(k) Contributions in 2020, in addition to your regular $57,000 in combined pilot and Company contributions.

Q: Are there any restrictions to withdrawing from the PRSP After-Tax Contribution Account while still employed at FedEx? A: Yes. In the PRSP, your After-Tax Contributions and its earnings, if any, are available for in-service

withdrawals before you retire up to twice a year with no age restrictions. It's important to understand that the balance you have in your After-Tax Contribution Account is made up of two types of money. The money you contribute to your PRSP After-Tax Contribution Account is always considered after-tax money. The money in the After-Tax Contribution Account will grow tax deferred, which means that it grows without being taxed until it is distributed from the PRSP. So, the balance you see in the After-Tax Contribution Account, if it has earnings, is made up of both after-tax contributions and before-tax earnings. Fidelity keeps track of this accounting behind the scenes. If you request an in-service withdrawal of all or a portion of the balance from your After-Tax Contribution Account, the withdrawal will include the earnings, if there are any. The earnings, if not rolled over into another qualifying plan (e.g., an IRA) within the required time limits, will be taxable to you and could include early withdrawal penalties. The after-tax portion of the withdrawal can be rolled over to a qualified plan, or a Roth IRA, or distributed directly to you without incurring tax. You also have the option of converting your After-Tax Contributions into Roth Contributions through a Roth in-plan conversion. Please consult a tax professional for possible tax consequences.

Q: Can having the Company excess sick contribution spill out and paid to me in cash affect my

defined benefit pension plan (aka, the A-Plan)? A: Yes, if you have not yet attained your “high five.” While there are many considerations surrounding

excess sick spilling out as cash paid to the pilot, like taxability, the one that affects your pension is its “pension-ability.” Any excess sick paid to you in cash is pensionable earnings. This means that it counts towards the earnings for purposes of your pension benefit under the A-Plan. Let’s use Scenario A above to help explain this. Assume the pilot has earnings of $285,000. The $24,160.32 maximum of excess sick paid to the pilot in cash is added to the earnings used to calculate that year's pensionable earnings. The compensation that year for purposes of your pension will be $297,304 instead of $285,000! Remember the final average earnings (FAE) number that goes into your pension calculation is the average of your highest five years of pensionable earnings. This is how it

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gets the shorthand name of “high five” and the five years don't have to be consecutive. The FAE is limited by contract to $260,000, but an individual year's earnings have no limit. As soon as you have any five individual years of “pensionable" earnings that add up to $1,300,000 ($260,000 X 5), you will max out your FAE. So having Company excess sick contributions spill out and paid to you in cash can increase the pensionable earnings in a year and help you to move the date that you have maxed out your “high five” to a point earlier in your career.

Q: Does my last will and testament control who will be the beneficiary of my PRSP in the event of

my death? A: NO!! The beneficiary you designate through Fidelity will be the one who receives your PRSP when

you die. This is regardless of what your will says, even if your will is dated more recently than the

date of your last beneficiary designation with Fidelity. Don’t leave an accidental inheritance to

people you no longer like! Keep your beneficiaries up to date by checking your beneficiary

designation at regular intervals and after major life events such as marriage, divorce, birth of child,

etc. You can check your current beneficiary designation, and update as needed, at netbenefits.com.

Click on “My Profile” tab in the top row and click on the “Beneficiaries” link. There you can

designate a primary and secondary beneficiary. Note: If you are married, your beneficiary

designation under the PMPPP sub-account to someone other than your spouse is subject to spousal

consent unless you are legally separated as evidenced by a court order.

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Fidelity Resources The Contribution Maximizer: The FedEx PRSP 415(c) Tool

There have been many improvements with the transition to Fidelity. One improvement is the addition of a new tool designed to maximize your contributions without missing out on employer contributions.

This task was previously difficult and time consuming. Now, in conjunction with being able to accurately see the flow of both employer and employee contributions into your PRSP accounts on a calendar basis, the Contribution Maximizer enables you to meet your savings and retirement goals. Simply log on to netbenefits.fidelity.com.

Follow these simple instructions:

Login to netbenefits.com At the bottom of the page, find the Contribution Maximizer Click on GET STARTED tab Enter your Date of Birth: You may be eligible to make Catch-Up Contributions if you are age 50

or over at any point during the calendar year.

Enter how much you will earn for the remainder of the year (before taxes). o You can enter estimated pensionable earnings, or

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o You can use the Custom Entry feature and enter your pensionable earnings by pay period. Note: Pensionable Earnings include pay such as BLG, Draft, Volunteer, International Override, CIPPA, vacation pay, and signing bonuses. Pensionable Earnings exclude pay such as per diem, long-term disability payments, excess life premiums, and reimbursed expenses. (This is not a complete list of inclusions and exclusions.)

You can select modeling for the full year or from the most recent paycheck for which your PRSP contributions have been deposited.

Enter estimated pensionable earnings (annually or by pay period)

Select modeling for the full year or from the most recent paycheck

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Once completed click NEXT If you elect to model from your most recent paycheck, the next screen will ask for the Pilot Pre-

Tax/Roth Contributions, Pilot After-Tax Contributions, Company Matching Contributions, and 9% Employer Nonelective contributions as of the date of your most recent paycheck. You can find your most recent contribution balances by clicking on the “Need Help Finding Your Information” and follow the instructions.

Once complete click NEXT

Enter pilot and company contributions as of your last paycheck.

How to find your most recent contribution balances

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Enter your contribution percentages for your Pre-tax, Roth, Pre-tax Catch-Up (if eligible), Roth Catch-Up (if eligible), and After-Tax Contributions. To view your current elections, click on “Need Help Finding Your Information” and follow the instructions.

Once completed click NEXT The Results page will show your expected savings with these elections, along with the any

Company contributions. There will be a red warning if the elections you inputted into the modeler would cause you to lose out on company contributions.

Enter your • Pre-tax • Roth

• Pre-tax Catch-up (if eligible)

• Roth Catch-up (if eligible)

• After-tax

How to view your current elections

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The Results page will show: • your current contribution rates • the contribution rates your elected to use in the modeler. • Total annual 401(k) Contributions using your current elections • Total annual 401(k) Contributions using the rates you elected to use in the modeler • Detailed table showing the dollar amounts associated with each pay period projected

through the end of the year based on your inputs and Modeled contribution rates.

Your current contribution rates and the contribution rates your elected to use in the modeler.

Total annual 401(k) Contributions using your current elections 401(k) Contributions using the rates you elected to use in the modeler

Warning notifying you that your elections used in the modeler would cause you to lose some of the Employer Nonelective contribution (9%)

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I hope this educational article has been informative and useful. Please do not hesitate to contact the R&I Committee for any questions you may have.

Contribution impact by paycheck

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Automated Roth In-Plan Conversion With Fidelity’s Automated Roth In-Plan Conversion, you can set up your PRSP After-Tax Contribution account to automatically convert the after-tax amounts deposited after every pay period. This simplifies the process through automation instead of requiring you to call Fidelity after every pay period and limits your future tax consequences by having funds immediately converted to Roth. To set up this feature up for your account: Call Fidelity at 1.833.383.3339. Provide the email address at which you’d like to receive required tax notice Choose from the options the Fidelity representative will present for your consideration, including

account options and potential ways to reduce your tax liability

Fidelity Personalized Planning & Advice Fidelity Personalized Planning & Advice is a fee-based service, that provides ongoing management of your investments. With this service the Fidelity team will create an investment plan, put the plan into action, and track the progress against your goals. To enroll in the Fidelity Personalized Planning & Advice call a Fidelity Planning Consultant at 1.866.811.6041 or visit netbenefits.com/plan.

Fidelity Executive Services Fidelity Executive Services is a complimentary program, provided to domestic based pilots with a PRSP balance of $400,000 or more. This service provides access to a dedicated Fidelity Executive Planning Consultant who will develop a financial plan that integrates the FedEx benefits with your overall financial goals. Some of the planning and financial services provided include workplace benefits, retirement savings and income replacement, asset allocation and investment selection, planning for college and other life events, and asset protection, estate strategies, and charitable giving. There are two dedicated Executive Planning Consultants assigned to the PRSP, Will Likow and Wade Williams. Pilots will be notified and assigned a consultant when they become eligible for the service. For more information contact Fidelity at 1.833.38. FEDEX.

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Third Party Advisor As described in Section 28.D.16 of the Collective Bargaining Agreement, you may engage a third-party financial advisor to manage your account (including your individual brokerage account) under the PRSP. You are required to sign an agreement to hold harmless the Company and ALPA for any losses resulting from such engagement. Follow the steps below to add a financial advisor for the PRSP core investment line-up:

1. Log in to your account on NetBenefits at www.netbenefits.com. 2. From the Quick Links menu for the PRSP, choose Plan Information and Documents 3. Choose the Third Party Access Form for the PRSP from the available options 4. Follow the instructions on the form and return the signed and notarized form to:

FedEx Corporate Services ATTN: Retirement Services 30 FedEx Parkway, 2nd Floor Horizontal Collierville, TN 38017

Follow the steps below to add a financial advisor to BrokerageLink:

1. To allow trading access to BrokerageLink: Visit the follow link online to complete the Hold Harmless and Indemnification Agreement for appointment of a brokerage option Third Party Financial Advisor: https://fidelityinvestments.tfaforms.net/660657

2. If your Advisor does have a Registered Investment Advisor relationship with Fidelity, your Advisor will be able to provide you with a form to complete in order to allow them access to trade. If your Advisor does not have the necessary form, please have them contact Fidelity at 800.735.3756.

Note: Your advisor must have a Registered Investment Advisor relationship established with Fidelity Clearing & Custody Solutions (FCCS). If your Advisor does not have a Registered Investment Advisor relationship with FCCS, please have your Advisor call Fidelity at 800-735-3756 to initiate the process of establishing the relationship.

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Charles Schwab Resources As you may know, Charles Schwab is ALPA’s preferred financial service provider. The FedEx ALPA pilots have dedicated Schwab Executive Services Financial Consultants located in Memphis, Anchorage, Los Angeles and Indianapolis who are knowledgeable about the FedEx pilot benefits package. The Schwab Executive Services Financial Consultants provide free individual retirement and financial planning sessions to the FedEx ALPA pilots. These sessions can be held in the Charles Schwab office or over the phone. Also, the day after the MEM Retirement Seminars is reserved for FedEx ALPA pilots to meet with one of the Schwab Executive Services Financial Consultants in their Memphis office. To schedule an individual planning session after one of the MEM Retirement Seminars click here. If one of those dates does not work for you, you can contact one of the consultants directly to schedule an appointment. Below is their contact information.

MEM: Mark Floyd at (901) 752-7006 or JR Trevino at (901) 752-7009.

LAX: Bret Runyan at (310) 712-3853

IND: Joe Leighty at (317) 596-6644

ANC: Randy Maes at (907) 263-2376

To learn more about the ALPA-Schwab relationship, please visit www.schwab.com/alpa or contact one of the Executive Services Financial Consultants for FedEx ALPA pilots.