Originally Posted by tennisguru

I just ran some basic, dirty numbers through an investment calculator. Both cases were run starting with a $0 balance and a hypothetical $1000 DC excess per month, for 25 years.

For the MBCBP, I assumed the whole $1000 would go in at a 5% annual rate of return. That yielded $585k after 25 years.

For the non-MBCBP, I assumed $600 going into the investment, so a 40% loss to taxes and dues. With the 25 year time horizon, it takes an 8.5% annual rate of return to match the $585k of the MBCBP. Obviously the better you do over 8.5% the less sense the MBCBP makes. A 10% return nets you $740k. 11% is $864.

With a 30 year time horizon, a 7.8% return beats the MBCBP. At 15 years you'd need 11.25%, and a someone with a 10 year horizon needs 15%.

None of my calculations take into account dividend/capital gains taxes along the way for the non-MBCBP, but that's probably closer to a wash when you factor in that the MBCBP account will be taxed as ordinary income on withdrawals. And of course if the MBCBP fails to average 5% that makes it much easier to beat over the long term.