Originally Posted by
bugman61
You do realize that it’s a “targeted” 5% return, not guaranteed, right? If the market tanks then your MBCBP tanks too. There’s nothing fancy about the investments in the MBCBP. It’s a container for tax deferred money that is nominally yours and someone else controls.
That's not correct. If the plan is set up with a 5% return, it pays 5%. If the actual market return is higher, the excess earning go into a reserve fund. The next time the market return is less than 5%, the reserve fund is used to fill out the 5%. If there's a string of bad luck and the reserve fund runs out, the company is required to use operating cash to fill it out. Since this process happens every year, the program is always fully funded.