business owner with solid retirement benefits

Defined Benefit Plans Can Help Provide Valuable Retirement Benefits

Defined benefit plans allow business owners to create valuable retirement benefits for themselves and their employees. In these types of plans, the employer makes annual contributions to the plan to reach a funding target and they are ideal for businesses with consistent cash flow. With defined benefit plans, contributions are made by the employer and do not allow discretionary employee contributions.

Advantages of Defined Benefit Plans for Your Business

Tax deductions for the employer
Retirement benefits are set and predictable, provided annual funding is made
Can help attract and retain employees
Higher benefit and contribution limits than 401(k) profit sharing plans
Availability of life insurance with tax-deductible premiums with income tax advantages at death
Larger contributions allowed for older participants
Can be paired with a defined contribution plan to provide flexibility for additional benefits

Points to Consider About Defined Benefit Plans

Annual contributions are required.
The employer is responsible for the investment decisions for the plan.
Participant loans are not permitted.
Vesting schedules, based on an employee’s service, can be used to grant ownership of employer contributions.

Defined Benefit Plan Options to Meet the Needs of Small Business Owners

412(e)(3) Fully Insured Defined Benefit Plan

A retirement plan that provides guaranteed retirement benefits to the owners and employees of a company.

Explore 412(e)(3) Defined Benefit Plan

Cash Balance Defined Benefit Plan

Often considered a hybrid retirement plan because it combines the guaranteed benefit, contribution limits and tax deductions of a defined benefit plan with the portability and flexibility of a defined contribution plan.

Explore Cash Balance Defined Benefit Plan