In this episode, our host, Certified Financial Planner™ and GA pilot, Timothy P. Pope explains a new option for Southwest pilots, taking their NEC as Roth starting in 2026. He covers what NEC is, how Secure 2.0 made Roth employer contributions possible, and how Southwest is rolling this out.

Tim walks through what changes when you elect Roth NEC, including how it shows up on your W-2, what happens with federal income tax and FICA, and why some pilots could be under withheld if they do not plan ahead. He also shares simple examples to frame the decision, how tax bracket and time horizon matter, and how pilots at other airlines can use in plan Roth conversions even if they do not have a Roth NEC election.

What You'll Learn from This Episode

• What NEC is for Southwest pilots and how it fits into overall retirement benefits.
• How Secure 2.0 opened the door for Roth employer contributions and why Southwest is early to adopt.
• What changes when NEC is taken as Roth, including W-2 reporting and the lack of automatic income tax and FICA withholding.
• Why combined tax rate, years until retirement, and other income sources all matter when you consider Roth NEC.
• How pilots at other majors can still convert NEC to Roth through in plan conversions, and why paying tax from outside assets is usually preferred.
• Why Roth NEC is a tool, not a default answer, and why this episode is education, not personalized tax or investment advice.

Resources:

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This episode is sponsored by: Beacon Relocation

Beacon Relocation is a real estate firm helping pilots and air traffic controllers save money on their real estate transactions. By tapping into their network of over 1500 real estate agents across the country, pilots can save 20% of the real estate agent’s commission towards your closing cost on the sale or purchase of your home. Visit https://www.beaconrelocation.com/ to learn more. 

Timothy P. Pope is a Certified Financial Planner™and principal owner of 360 Aviation Advisors, LLC (“360 Aviation Advisors”), a registered investment advisory firm. Investment advisory services are provided through 360 Aviation Advisors, in its separate and individual capacity as a registered investment adviser. Podcast episodes are provided through Pilot’s Portfolio, in its separate and individual capacity.

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