Ok I appreciate your black helicopter comment because I used to fly them. Due diligence would show the 4% rule is in order to take that out and not touch your balance and be inflation protected. It will allow you to leave your initial investment to your heirs or to live forever.

Sailing quotes that the MBCBP is inheritable. If it is then to who? Spouse only? So then that is not as good as the MMIC.

Apples to apples MBCBP time horizon? Is it to spouse only? If so then we need to actuarialize spouses death age. Let’s say 85. And that is probably generous given the average age of death in US is 78ish.

Given the 85 age then time out the MMIC to 85 with a zero balance and see how much more it gives you. I expect a lot. DYODD.

Thanks for the tool. Few are dismissing the validity of the MBCBP. The major issue is that the optional nature is not proven and the impact on Mega Back Door Roth has not been clarified. Furthermore in its latest iteration it was combined with a minimum balance.

As a tool for deferring income in the last 5-10 years of a career it is a great tool. It has short term value to accumulate cash and defer income when expecting a lower tax rate in the near future. The ideal scenario would be a MBCBP with optional participation and pilot chosen contribution amounts. If we can't get past the current mandatory nature of similar plans, the right contribution amount would be substantially less than a full sweep of 415c overage. A properly structured plan would fill up a pilot to 415C limits, with a spill over into MBCBP that represents no more than 10% of retirement investing.

New version up.

https://www.dropbox.com/s/v6d0151mab...1.01.xlsx?dl=0

Version 1.01: Minor bug fixes; clarification comments added

I’ve been looking online and can’t find anything yet. I do remember, when Dalpa R&I first posted videos about the MPCBP, they said it was inheritable. I did find where, when you retire, one of the options would be to take it in a lump and roll it over. I’m emailing the R&I committee to double check the inheritance side of things.

Denny

One of the variables to be able to change should be personal contributions for the MBCP. The spreadsheet limits your personal contributions but I believe you could still contribute up to the max of $19.5k but more would spill into the plan.

I used 9% return for S&P 500, 5% distribution, 5% return MBCBP and a 5% annuity return. The annuity return would mimic the set return anything more and the cost would increase. In every annual income, currrent balance, time line, and new contribution percentage the "new w/o MBCBP" was better but only marginally in many cases the difference was negligible. What am I missing, and why would I take this money and invent a plan with additional expense that takes away control of my money and returns less than a conservative long term diversified index with 17+ years to go? I am asking in all seriousness because I may be using the tool incorrectly.

First off, thanks for the work I really appreciate all the effort you put into this.

One minor item, the Medicare line doesn't include the additional Medicare tax above $200/$250 of 0.9%. It shouldn't made a big difference since both plans will be the same.

The larger question is about the annuity. I understand ALPA has put that out as suggestion, but to really compare the plans it should be done on the same terms. You can purchase an annuity with either the MBCBP or with your taxable investments. Or you can roll your MBCBP into an IRA and take normal distributions. The comparison should be on total account value at retirement and how any remaining income/capital gains taxes will effect your distributions.

I did some quick comparisons with ending balances and a 20/25/30 year distribution. I used various conservative growth rates in retirement of 1-3%. I did two scenarios with the marginal bracket for the MBCBP at 22% and 24% (going down to the 12% bracket seems highly unlikely). Capital gains taxes on the investment account were at 15%. The taxable account came out ahead each time even with identical growth rates for the MBCBP and taxable account while working. Which makes sense because the only real difference between the two is the tax rate. It's like a Roth vs. Traditional debate. If you think rates will be higher in retirement pay now. If you think it will be lower you should defer. And add to that calculation the effect of lower capital gains rates on distributions above your basis ratio.

Great tool. May I suggest an additional row showing retirement account values deducting out the sum of personal contributions? This would be a truer column to column comparison of current book vs the new plans “value” during retirement accounting for the self vs company funding.

This probably isn't a good answer, but you could do the same thing by replacing the formulas in the "Personal contribution" row with a 0. Then it's just company dollars vs. company dollars.

Also, for those upset about the annuity thing, change the 6% to a 4% (or whatever distribution rate you took from the individual investments). That should provide the same results as rolling the MBCBP value over into the 401(k) at retirement.