What is a DB Plan?
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Defined Benefit Plans (DB Plans) are traditional pension plans that allow for much larger contributions than 401(k) or profit sharing plans. For example, contributions to a DB plan can be on the order of 4 times as large as contributions to a 401k plan, or even larger.
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Defined Benefit Plans "define" the benefit to be paid in the future at the selected "retirement" date. The future benefit is limited by IRS rules, rather than the annual contribution. In contrast, 401(k) plans limit the annual contribution rather than the future benefit at retirement.
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DB plans can be adopted by sole proprietors, partnerships, corporations – any small business!
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Our DB plans are pre-approved by the IRS. If you choose, you can also obtain individualized IRS approval of your particular plan after adoption.
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Business owners should generally be over age 45 for a DB plan to make sense.
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DB plans are eligible for participant loans of up to $50,000.
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The contribution to a DB plan in a given year typically ranges from zero to several hundred thousand dollars.