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View Diary: Oh Noes!!--Phil Mickelson (R-Golf) Might Retire, Citing (Incorrectly) Tax Hikes on Top 1%--Boo-hoo. (302 comments)

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  •  Ian, in the transcript for the interview... (10+ / 0-)

    ... with Phil M. There was an interesting question:

    Q.  Well, I mean I understand the 60 percent part of the equation, but in the TOUR's plan, you guys put about as much money aside as you want.  It's treated differently under tax laws than most anybody else's tax plans.  Where most people can only put away $45,000 or $50,000, you guys can put as much away as you want.  And so at the end you guys end up with a much larger pot of gold than most people can.
    PHIL MICKELSON:  But when it comes out, it's still taxed at the same 62 percent rate.
    So I looked up the PGA retirement plan on teh google and found this article (please note that this article is pretty old, but it sounds like it is still in force (per posts on other sports sites) - but the numbers are bigger now).

    It sounds like Lefty's crocodile tears are even more crocodile-y than they first appear:

    The fundamental difference between the PGA Tour's plan and those of the other sports leagues such as the NFL, NBA, Major League Baseball, and the NHL is in the way the tour's plan is funded. Player payouts in the NFL, NBA, MLB, and NHL pension programs come solely from television revenue invested by the league. Those programs are designed to be safety nets for players who didn't earn large salaries or have long careers. A baseball player needs just 43 days of major league service to qualify for a $34,000 annual benefit. The NFL's plan covers every player who played at least four seasons in the league, and the NBA covers those who played at least five. The NHL pays a pension to players who played in at least 160 games.

    The PGA Tour's program works more like a deferred-compensation plan than a pension. Funds for the pension -- $28.5 million out of a purse of $250 million in 2005 -- are allocated by the PGA Tour Policy Board from the tour's annual revenue. "Players give up compensation in the short run for these programs to be as good as they are," says Beman, who was commissioner from 1974 to '94. "There's always a negotiation about how much you can do in terms of funding it, but the players recognized this was the best for everybody. It's also an advantage not to be dealing with a player-union situation, like the other leagues."

    Essentially, a player's pension account is seeded with money he would have otherwise collected by making cuts when he was playing, augmented by performance and participation bonuses and then distributed to him after he retires. However, the player has to maintain a certain level of performance to collect all of the cash at retirement. The player-contribution component, coupled with a dramatic increase in purse sizes during the last 10 years, has made a core group of high-achieving tour players wealthier than they already are -- at least on paper.


    The tour manages its pension much like a corporation would a 401(k) or deferred-compensation plan. The money a player earns in the program stays on the PGA Tour's books until it is disbursed, at age 50 if a player has retired from competitive golf, or at 60 if the player stays active on the Champions Tour. Rank-and-file players don't have any control over the amount of money allocated to the pension program each year or how the pension money is paid out -- in equal installments depending on when the player retires. However, they can control the mix of investments in their accounts, choosing from a menu of 12 Policy Board-vetted alternatives ranging in risk from equities to fixed-income bonds.

    How you think this may play into your calculations above would interest me.  It sounds to me that the player could defer winnings into a retirement account - which could work more like Mr. Romney's earnings than earnings that you or I would make (I'm assuming you're not a gazillionaire hedge fund manager), is my thinking correct?

    I haven't been here long enough to be considered a Kossack, does that mean that I'm just a sack?

    by Hey338Too on Mon Jan 21, 2013 at 08:23:14 AM PST

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