MBCBP implementation announced…
#202
Gets Weekends Off
Joined APC: May 2022
Posts: 208
I know you’re smarter than this, but the 1.85% is a one-time savings, not an annualized return. The simple math that you posited is not connected to reality. For someone with 30 years, to even make a rough estimate, I would need to divide 1.85% by 30 which gives an annualized .061% savings; using you’re example would give something close to a 4.41% return on the MBCBP. Essentially negligible.
However, if you’re close to the 59.5 in-service withdrawal eligibility then maybe the 1.85% is a bigger share of what returns you have left. For those of us with more than 5 years to that age, there’s no way we can add that 1.85% as an annualized return.
However, if you’re close to the 59.5 in-service withdrawal eligibility then maybe the 1.85% is a bigger share of what returns you have left. For those of us with more than 5 years to that age, there’s no way we can add that 1.85% as an annualized return.
Everyone keeps referencing 4.5% returns, but has anyone looked at what the 10 year return was at any other time in history? If we were having this conversation in 2021, we would all be looking at the same fund having over 8% annualized 10 year returns. Seems like right now is the worst possible time in recent history to be evaluating this fund because of the last 2 years in the bond market.
In other words, a dollar invested today has a much greater chance over 30 years of earning more than 4.5% than one that was invested in 2013 and sold in 2023.
#203
Roll’n Thunder
Joined APC: Oct 2009
Position: Pilot
Posts: 3,837
While I tend to agree that mathematically you can’t just stack those two numbers, don’t you also save the 1.85% every year on all new contributions? Therefor it is not simply a one time event divided by 30. In addition, you have 1.85% more principal to compound with future returns, so the straight line math really doesn’t play out like you have illustrated either.
Everyone keeps referencing 4.5% returns, but has anyone looked at what the 10 year return was at any other time in history? If we were having this conversation in 2021, we would all be looking at the same fund having over 8% annualized 10 year returns. Seems like right now is the worst possible time in recent history to be evaluating this fund because of the last 2 years in the bond market.
In other words, a dollar invested today has a much greater chance over 30 years of earning more than 4.5% than one that was invested in 2013 and sold in 2023.
Everyone keeps referencing 4.5% returns, but has anyone looked at what the 10 year return was at any other time in history? If we were having this conversation in 2021, we would all be looking at the same fund having over 8% annualized 10 year returns. Seems like right now is the worst possible time in recent history to be evaluating this fund because of the last 2 years in the bond market.
In other words, a dollar invested today has a much greater chance over 30 years of earning more than 4.5% than one that was invested in 2013 and sold in 2023.
For comparison, over the exact same time span, the S&P went from 1286 to 4229, a 328% increase.
#204
Gets Weekends Off
Joined APC: Dec 2013
Posts: 2,303
I’m still confused on how this works. Does the company 401k contribution limit at $330k go up every year? If I make my own contributions and make $330k will the company excess/spill money happen before making $330k (so by contributing ANY money when I plan to make $330k am I forcing money into the MCBP?)? In a year when I make over $330k can I wait until hitting $330k and then start making personal contributions to the 401K? I guess I’m just wondering how someone who makes under $330k and how someone who makes over $330k can limit the amount that goes into the MCBP - while still maxing out the 401k.
#205
Roll’n Thunder
Joined APC: Oct 2009
Position: Pilot
Posts: 3,837
I’m still confused on how this works. Does the company 401k contribution limit at $330k go up every year? If I make my own contributions and make $330k will the company excess/spill money happen before making $330k (so by contributing ANY money when I plan to make $330k am I forcing money into the MCBP?)? In a year when I make over $330k can I wait until hitting $330k and then start making personal contributions to the 401K? I guess I’m just wondering how someone who makes under $330k and how someone who makes over $330k can limit the amount that goes into the MCBP - while still maxing out the 401k.
If you earn over 330k it is impossible to not get spill cash since every dollar over that amount will get the 16% paid out as spill. In this scenario the only way to minimize spill is to limit your personal contributions to 13,200.
And these limits are adjusted each year by the IRS, to answer your first question. So next year all of this will change slightly. Sometimes some numbers aren’t adjusted, but generally most of them will be. If one isn’t adjusted it tends to be the personal contribution cap. So I’d expect the 66,000 overall cap and the 330,000 income cap to bump up at a minimum. Also the math will change no matter what because next January we go from 16% to 17% DC.
#206
Where are you seeing 8% returns? I just pulled up LIRIX from June 2011 to June 2021. Started at 9.86 and ended at 14.76, so basically right at 50% over 10 years, or dead on the expected 5% annual return.
For comparison, over the exact same time span, the S&P went from 1286 to 4229, a 328% increase.
For comparison, over the exact same time span, the S&P went from 1286 to 4229, a 328% increase.
#207
Gets Weekends Off
Joined APC: May 2022
Posts: 337
#208
I started putting my extra cash in dividend stocks. Right now they make a couple hundred a month. Not sure it’s smart but it’s was just another tentacle in the retirement plan. Not sure I’m in for the MBCBP as I like what I’ve got going on. Plus, I can invest in Phillip Morris where I doubt BlackRock will.
#209
Roll’n Thunder
Joined APC: Oct 2009
Position: Pilot
Posts: 3,837
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