Defined Benefit Pension Plan Eligibility

Who is a good candidate for a Defined Benefit Pension Plan?

Defined benefit plans are ideal for clients with high earned income and are either self-employed or small business owners with 4 or less full time employees.

• Age 45 or older
   
• Clients who would like to maximize their retirement contributions in excess of the limits of the Individual 401k or SEP IRA.
   
• Clients with stable and predictable income (because of the large tax deductible funding commitment). You are obligated to make annual contributions once your plan is established. Funding a defined benefit plan involves a commitment to invest significant amounts each year for the life of the plan. Within certain IRS limits, clients can decide how much of their current income they can comfortably afford to contribute to the plan, but once this annual contribution amount is established then funding a defined benefit plan is fairly rigid and must be made annually.

Defined benefit plans may be beneficial to older employees who may feel they are behind with their accumulated savings for retirement and need (or want) to make significant contributions to accumulate assets rapidly over a relatively short period of time.

Another scenario when a defined benefit plan may be a good choice is for a dual income household, with one spouse that is self employed, and is in the fortunate position of being able to live off of one income. As a result, they may be able to afford to make a retirement contribution using a significant portion the self employed spouse's income into a defined benefit plan.

Another scenario when a defined benefit plan may be a good choice is for someone that is working full time with one employer and then has a separate self employed one person consulting business. This individual may be able to contribute a significant portion of their self employed income into a defined benefit plan.

A partial listing of some of the occupations that might qualify

• Architect
• Attorney
• Consultant
• Contractor
• Dentist
• Entrepreneur
• Financial Planners
• Graphic Designer
• Independent Corporate Director
• Independent Insurance Agent
• Manufacturer's Rep
• Mortgage Broker
• Physician
• Real Estate Agent
• Software Developer

Defined Benefit Plan Frequently Asked Questions

Find answers to your questions. Visit our Defined Benefit FAQs section.

   Need Help or Advice?  |  Open a Defined Benefit Plan

Disclosures:

* The information on this page is for informational purposes only and does not constitute, and should not be construed as, professional, legal or tax advice. To determine your individual tax situation and specific needs, please consult a professional tax advisor.

* Information contained in these sections merely highlight some benefits. There are risks involved with all investments that could include tax penalties and risk/loss of principal.