Originally Posted by
Bucking Bar
Another way to explain this is:
Day one Min Balance in a MBCBP, $300,000
Day two, someone retires with $300,000 having contributed nothing - company pays all
15th of the month, after 401K is full, pilots' excess is routed into the MBCBP
Pilot retires the second year after the contract - they get $300,000 but $290,000 was funded by the company and $10,000 funded by the pilot's excess which is routed into the MBCBP
Pilot retires seven years from now. They get the $300,000 but it has been completely funded by their own excess, and so on, company contributes $0.
Minor math correction.
Assuming $10,000 annually is contributed by 401k excess in equal monthly increments (it will actually be back loaded reducing accumulation), it takes 220 months (18+ years) at 5% projected rate of return to reach $300,000.