It is a retirement plan that provides guaranteed retirement benefits to the owners and employees of a company, provided annual premium contributions have been funded. The plan may be funded with, but not limited to, life insurance and annuity contracts.
- Larger contributions for older participants
- Tax deductions
- Availability of life insurance with tax-deductible premiums
- Annual contributions/premiums are required
- Investment experience impact contributions
Scenario: Business owner age 55; No employees; Retirement age 62; Compensation $280,000; First year maximum contribution
Defined Benefit $236,042