Frequently Asked Questions

    • What money can I use for contributions?

      Contributions must be made by the business that is sponsoring the plan. A sole proprietor may have more than one source of money but in no event can the sole proprietor deduct more than the net income generated from the business that is sponsoring the plan.

    • Are there minimum funding requirements for Defined Benefit plans?

      Dedicated Defined Benefit Services works with the business owners and their advisors in setting up the plan to determine an amount that will be comfortable to contribute for the next few years. Each subsequent year, based on changes in income, the prior year’s funding, investment performance and other information provided by the business owner, Dedicated DB will calculate a contribution range for the current tax year which establishes the minimum funding for the current year.

       

    • What factors determine how much I can contribute in subsequent years?

      • Actual investment earnings vs. the assumed interest rate
      • Changes in compensation
      • Changes in the maximum benefit limits
      • Changes in the funding rates as determined by the IRS

      These are inter-dependent. For example, if assets earn more than the assumed rate (decreases the contribution) and compensation increases (increases the contribution), we may get the same contribution amount as the previous year.

    • How do I know how much money must be contributed each year to the OnePersonPlus® Defined Benefit plan?

      Dedicated Defined Benefit Services will inform you annually of contribution requirements for the coming year. At the end of the year, Dedicated DB again will remind you to fully fund the contribution before filing your taxes.

    • What is the maximum amount I can contribute to a Defined Benefit plan?

      There is no specified limit — the limit is on the allowable benefit, not the contribution.

      • The benefit is the amount your plan will pay out annually in retirement.
      • The contribution is what you pay in each year while participating in the plan to accumulate enough to make the pre-determined annual benefit.
      • The accumulation, also called the benefit commitment, is the total amount in the plan at retirement.
        Unlike defined contribution plans (e.g., 401(k)s, SEPs, SIMPLEs, etc.) which have limits on the amount that can be contributed, defined benefit plans have limits on the benefit that can be paid out.

      There are two separate limits on the benefit, either of which may apply:

      • 01) 100% of compensation, reduced pro rata for years of service less than 10.
      • 02) $230,000, reduced pro rata for less than 10 years of participation in the plan.
        • This limit is further reduced actuarially if benefits begins prior to age 62
        • This limit is increased actuarially for benefits beginning after age 65. For this reason, contributions for older participants can be much higher.

      Contributions to Fund Maximum Benefit

      Age Retirement Age Maximum Benefit Contribution
      45 62 $230,000 $155,600
      50 62 $230,000 $187,800
      52 62 $230,000 $202,400
      55 65 $230,000 $226,600
      60 65* $115,000 $229,500

      * Since the participant only has 5 years of participation, the maximum benefit is limited to 50% of the maximum benefit payable at age 65 ($230,000).

    • Can my contribution amount be reduced after I set up my plan?

      Yes. This can happen in several ways. You can always amend your Defined Benefit plan formula down for future years (but, depending on when you amend the plan, you may still be required to make the contribution for the current year). If your compensation decreases, your annual required contribution may decrease. If your investment performance is greater than the assumed interest rate, your contributions will also decrease.

    • When is my annual contribution due?

      The deadline for pension plan contributions is no later than 8 1/2 months after the close of the plan year. For the contribution to be deductible, you must make it on or before the due date of your tax return (with extensions).

    • Is my annual contribution limited to a percentage of income like a SEP or Profit Sharing plan?

      No. Your annual contribution is determined as a function of age, compensation, investment performance, actuarial assumptions, and maximum benefit allowed. An actuary calculates the amount that you must fund each year.

    • Is my contribution mandatory?

      Yes. A contribution is required each year to fund the benefit promised at retirement. However, the plan benefit formula can be amended for future years and thus increase or decrease the contribution amount.

    • What money can I use for contributions?

      Contributions must be made by the business that is sponsoring the plan. A sole proprietor may have more than one source of money but in no event can the sole proprietor deduct more than the net income generated from the business that is sponsoring the plan.

    • Are there minimum funding requirements for Defined Benefit plans?

      Dedicated Defined Benefit Services works with the business owners and their advisors in setting up the plan to determine an amount that will be comfortable to contribute for the next few years. Each subsequent year, based on changes in income, the prior year’s funding, investment performance and other information provided by the business owner, Dedicated DB will calculate a contribution range for the current tax year which establishes the minimum funding for the current year.

       

    • What factors determine how much I can contribute in subsequent years?

      • Actual investment earnings vs. the assumed interest rate
      • Changes in compensation
      • Changes in the maximum benefit limits
      • Changes in the funding rates as determined by the IRS

      These are inter-dependent. For example, if assets earn more than the assumed rate (decreases the contribution) and compensation increases (increases the contribution), we may get the same contribution amount as the previous year.

    • How do I know how much money must be contributed each year to the OnePersonPlus® Defined Benefit plan?

      Dedicated Defined Benefit Services will inform you annually of contribution requirements for the coming year. At the end of the year, Dedicated DB again will remind you to fully fund the contribution before filing your taxes.

    • What is the maximum amount I can contribute to a Defined Benefit plan?

      There is no specified limit — the limit is on the allowable benefit, not the contribution.

      • The benefit is the amount your plan will pay out annually in retirement.
      • The contribution is what you pay in each year while participating in the plan to accumulate enough to make the pre-determined annual benefit.
      • The accumulation, also called the benefit commitment, is the total amount in the plan at retirement.
        Unlike defined contribution plans (e.g., 401(k)s, SEPs, SIMPLEs, etc.) which have limits on the amount that can be contributed, defined benefit plans have limits on the benefit that can be paid out.

      There are two separate limits on the benefit, either of which may apply:

      • 01) 100% of compensation, reduced pro rata for years of service less than 10.
      • 02) $230,000, reduced pro rata for less than 10 years of participation in the plan.
        • This limit is further reduced actuarially if benefits begins prior to age 62
        • This limit is increased actuarially for benefits beginning after age 65. For this reason, contributions for older participants can be much higher.

      Contributions to Fund Maximum Benefit

      Age Retirement Age Maximum Benefit Contribution
      45 62 $230,000 $155,600
      50 62 $230,000 $187,800
      52 62 $230,000 $202,400
      55 65 $230,000 $226,600
      60 65* $115,000 $229,500

      * Since the participant only has 5 years of participation, the maximum benefit is limited to 50% of the maximum benefit payable at age 65 ($230,000).

    • Can my contribution amount be reduced after I set up my plan?

      Yes. This can happen in several ways. You can always amend your Defined Benefit plan formula down for future years (but, depending on when you amend the plan, you may still be required to make the contribution for the current year). If your compensation decreases, your annual required contribution may decrease. If your investment performance is greater than the assumed interest rate, your contributions will also decrease.

    • When is my annual contribution due?

      The deadline for pension plan contributions is no later than 8 1/2 months after the close of the plan year. For the contribution to be deductible, you must make it on or before the due date of your tax return (with extensions).

    • Is my annual contribution limited to a percentage of income like a SEP or Profit Sharing plan?

      No. Your annual contribution is determined as a function of age, compensation, investment performance, actuarial assumptions, and maximum benefit allowed. An actuary calculates the amount that you must fund each year.

    • Is my contribution mandatory?

      Yes. A contribution is required each year to fund the benefit promised at retirement. However, the plan benefit formula can be amended for future years and thus increase or decrease the contribution amount.

    • What money can I use for contributions?

      Contributions must be made by the business that is sponsoring the plan. A sole proprietor may have more than one source of money but in no event can the sole proprietor deduct more than the net income generated from the business that is sponsoring the plan.

    • Are there minimum funding requirements for Defined Benefit plans?

      Dedicated Defined Benefit Services works with the business owners and their advisors in setting up the plan to determine an amount that will be comfortable to contribute for the next few years. Each subsequent year, based on changes in income, the prior year’s funding, investment performance and other information provided by the business owner, Dedicated DB will calculate a contribution range for the current tax year which establishes the minimum funding for the current year.

       

    • What factors determine how much I can contribute in subsequent years?

      • Actual investment earnings vs. the assumed interest rate
      • Changes in compensation
      • Changes in the maximum benefit limits
      • Changes in the funding rates as determined by the IRS

      These are inter-dependent. For example, if assets earn more than the assumed rate (decreases the contribution) and compensation increases (increases the contribution), we may get the same contribution amount as the previous year.

    • How do I know how much money must be contributed each year to the OnePersonPlus® Defined Benefit plan?

      Dedicated Defined Benefit Services will inform you annually of contribution requirements for the coming year. At the end of the year, Dedicated DB again will remind you to fully fund the contribution before filing your taxes.

    • What is the maximum amount I can contribute to a Defined Benefit plan?

      There is no specified limit — the limit is on the allowable benefit, not the contribution.

      • The benefit is the amount your plan will pay out annually in retirement.
      • The contribution is what you pay in each year while participating in the plan to accumulate enough to make the pre-determined annual benefit.
      • The accumulation, also called the benefit commitment, is the total amount in the plan at retirement.
        Unlike defined contribution plans (e.g., 401(k)s, SEPs, SIMPLEs, etc.) which have limits on the amount that can be contributed, defined benefit plans have limits on the benefit that can be paid out.

      There are two separate limits on the benefit, either of which may apply:

      • 01) 100% of compensation, reduced pro rata for years of service less than 10.
      • 02) $230,000, reduced pro rata for less than 10 years of participation in the plan.
        • This limit is further reduced actuarially if benefits begins prior to age 62
        • This limit is increased actuarially for benefits beginning after age 65. For this reason, contributions for older participants can be much higher.

      Contributions to Fund Maximum Benefit

      Age Retirement Age Maximum Benefit Contribution
      45 62 $230,000 $155,600
      50 62 $230,000 $187,800
      52 62 $230,000 $202,400
      55 65 $230,000 $226,600
      60 65* $115,000 $229,500

      * Since the participant only has 5 years of participation, the maximum benefit is limited to 50% of the maximum benefit payable at age 65 ($230,000).

    • Can my contribution amount be reduced after I set up my plan?

      Yes. This can happen in several ways. You can always amend your Defined Benefit plan formula down for future years (but, depending on when you amend the plan, you may still be required to make the contribution for the current year). If your compensation decreases, your annual required contribution may decrease. If your investment performance is greater than the assumed interest rate, your contributions will also decrease.

    • When is my annual contribution due?

      The deadline for pension plan contributions is no later than 8 1/2 months after the close of the plan year. For the contribution to be deductible, you must make it on or before the due date of your tax return (with extensions).

    • Is my annual contribution limited to a percentage of income like a SEP or Profit Sharing plan?

      No. Your annual contribution is determined as a function of age, compensation, investment performance, actuarial assumptions, and maximum benefit allowed. An actuary calculates the amount that you must fund each year.

    • Is my contribution mandatory?

      Yes. A contribution is required each year to fund the benefit promised at retirement. However, the plan benefit formula can be amended for future years and thus increase or decrease the contribution amount.

    • What money can I use for contributions?

      Contributions must be made by the business that is sponsoring the plan. A sole proprietor may have more than one source of money but in no event can the sole proprietor deduct more than the net income generated from the business that is sponsoring the plan.

    • Are there minimum funding requirements for Defined Benefit plans?

      Dedicated Defined Benefit Services works with the business owners and their advisors in setting up the plan to determine an amount that will be comfortable to contribute for the next few years. Each subsequent year, based on changes in income, the prior year’s funding, investment performance and other information provided by the business owner, Dedicated DB will calculate a contribution range for the current tax year which establishes the minimum funding for the current year.

       

    • What factors determine how much I can contribute in subsequent years?

      • Actual investment earnings vs. the assumed interest rate
      • Changes in compensation
      • Changes in the maximum benefit limits
      • Changes in the funding rates as determined by the IRS

      These are inter-dependent. For example, if assets earn more than the assumed rate (decreases the contribution) and compensation increases (increases the contribution), we may get the same contribution amount as the previous year.

    • How do I know how much money must be contributed each year to the OnePersonPlus® Defined Benefit plan?

      Dedicated Defined Benefit Services will inform you annually of contribution requirements for the coming year. At the end of the year, Dedicated DB again will remind you to fully fund the contribution before filing your taxes.

    • What is the maximum amount I can contribute to a Defined Benefit plan?

      There is no specified limit — the limit is on the allowable benefit, not the contribution.

      • The benefit is the amount your plan will pay out annually in retirement.
      • The contribution is what you pay in each year while participating in the plan to accumulate enough to make the pre-determined annual benefit.
      • The accumulation, also called the benefit commitment, is the total amount in the plan at retirement.
        Unlike defined contribution plans (e.g., 401(k)s, SEPs, SIMPLEs, etc.) which have limits on the amount that can be contributed, defined benefit plans have limits on the benefit that can be paid out.

      There are two separate limits on the benefit, either of which may apply:

      • 01) 100% of compensation, reduced pro rata for years of service less than 10.
      • 02) $230,000, reduced pro rata for less than 10 years of participation in the plan.
        • This limit is further reduced actuarially if benefits begins prior to age 62
        • This limit is increased actuarially for benefits beginning after age 65. For this reason, contributions for older participants can be much higher.

      Contributions to Fund Maximum Benefit

      Age Retirement Age Maximum Benefit Contribution
      45 62 $230,000 $155,600
      50 62 $230,000 $187,800
      52 62 $230,000 $202,400
      55 65 $230,000 $226,600
      60 65* $115,000 $229,500

      * Since the participant only has 5 years of participation, the maximum benefit is limited to 50% of the maximum benefit payable at age 65 ($230,000).

    • Can my contribution amount be reduced after I set up my plan?

      Yes. This can happen in several ways. You can always amend your Defined Benefit plan formula down for future years (but, depending on when you amend the plan, you may still be required to make the contribution for the current year). If your compensation decreases, your annual required contribution may decrease. If your investment performance is greater than the assumed interest rate, your contributions will also decrease.

    • When is my annual contribution due?

      The deadline for pension plan contributions is no later than 8 1/2 months after the close of the plan year. For the contribution to be deductible, you must make it on or before the due date of your tax return (with extensions).

    • Is my annual contribution limited to a percentage of income like a SEP or Profit Sharing plan?

      No. Your annual contribution is determined as a function of age, compensation, investment performance, actuarial assumptions, and maximum benefit allowed. An actuary calculates the amount that you must fund each year.

    • Is my contribution mandatory?

      Yes. A contribution is required each year to fund the benefit promised at retirement. However, the plan benefit formula can be amended for future years and thus increase or decrease the contribution amount.

    • What money can I use for contributions?

      Contributions must be made by the business that is sponsoring the plan. A sole proprietor may have more than one source of money but in no event can the sole proprietor deduct more than the net income generated from the business that is sponsoring the plan.

    • Are there minimum funding requirements for Defined Benefit plans?

      Dedicated Defined Benefit Services works with the business owners and their advisors in setting up the plan to determine an amount that will be comfortable to contribute for the next few years. Each subsequent year, based on changes in income, the prior year’s funding, investment performance and other information provided by the business owner, Dedicated DB will calculate a contribution range for the current tax year which establishes the minimum funding for the current year.

       

    • What factors determine how much I can contribute in subsequent years?

      • Actual investment earnings vs. the assumed interest rate
      • Changes in compensation
      • Changes in the maximum benefit limits
      • Changes in the funding rates as determined by the IRS

      These are inter-dependent. For example, if assets earn more than the assumed rate (decreases the contribution) and compensation increases (increases the contribution), we may get the same contribution amount as the previous year.

    • How do I know how much money must be contributed each year to the OnePersonPlus® Defined Benefit plan?

      Dedicated Defined Benefit Services will inform you annually of contribution requirements for the coming year. At the end of the year, Dedicated DB again will remind you to fully fund the contribution before filing your taxes.

    • What is the maximum amount I can contribute to a Defined Benefit plan?

      There is no specified limit — the limit is on the allowable benefit, not the contribution.

      • The benefit is the amount your plan will pay out annually in retirement.
      • The contribution is what you pay in each year while participating in the plan to accumulate enough to make the pre-determined annual benefit.
      • The accumulation, also called the benefit commitment, is the total amount in the plan at retirement.
        Unlike defined contribution plans (e.g., 401(k)s, SEPs, SIMPLEs, etc.) which have limits on the amount that can be contributed, defined benefit plans have limits on the benefit that can be paid out.

      There are two separate limits on the benefit, either of which may apply:

      • 01) 100% of compensation, reduced pro rata for years of service less than 10.
      • 02) $230,000, reduced pro rata for less than 10 years of participation in the plan.
        • This limit is further reduced actuarially if benefits begins prior to age 62
        • This limit is increased actuarially for benefits beginning after age 65. For this reason, contributions for older participants can be much higher.

      Contributions to Fund Maximum Benefit

      Age Retirement Age Maximum Benefit Contribution
      45 62 $230,000 $155,600
      50 62 $230,000 $187,800
      52 62 $230,000 $202,400
      55 65 $230,000 $226,600
      60 65* $115,000 $229,500

      * Since the participant only has 5 years of participation, the maximum benefit is limited to 50% of the maximum benefit payable at age 65 ($230,000).

    • Can my contribution amount be reduced after I set up my plan?

      Yes. This can happen in several ways. You can always amend your Defined Benefit plan formula down for future years (but, depending on when you amend the plan, you may still be required to make the contribution for the current year). If your compensation decreases, your annual required contribution may decrease. If your investment performance is greater than the assumed interest rate, your contributions will also decrease.

    • When is my annual contribution due?

      The deadline for pension plan contributions is no later than 8 1/2 months after the close of the plan year. For the contribution to be deductible, you must make it on or before the due date of your tax return (with extensions).

    • Is my annual contribution limited to a percentage of income like a SEP or Profit Sharing plan?

      No. Your annual contribution is determined as a function of age, compensation, investment performance, actuarial assumptions, and maximum benefit allowed. An actuary calculates the amount that you must fund each year.

    • Is my contribution mandatory?

      Yes. A contribution is required each year to fund the benefit promised at retirement. However, the plan benefit formula can be amended for future years and thus increase or decrease the contribution amount.

    • What money can I use for contributions?

      Contributions must be made by the business that is sponsoring the plan. A sole proprietor may have more than one source of money but in no event can the sole proprietor deduct more than the net income generated from the business that is sponsoring the plan.

    • Are there minimum funding requirements for Defined Benefit plans?

      Dedicated Defined Benefit Services works with the business owners and their advisors in setting up the plan to determine an amount that will be comfortable to contribute for the next few years. Each subsequent year, based on changes in income, the prior year’s funding, investment performance and other information provided by the business owner, Dedicated DB will calculate a contribution range for the current tax year which establishes the minimum funding for the current year.

       

    • What factors determine how much I can contribute in subsequent years?

      • Actual investment earnings vs. the assumed interest rate
      • Changes in compensation
      • Changes in the maximum benefit limits
      • Changes in the funding rates as determined by the IRS

      These are inter-dependent. For example, if assets earn more than the assumed rate (decreases the contribution) and compensation increases (increases the contribution), we may get the same contribution amount as the previous year.

    • How do I know how much money must be contributed each year to the OnePersonPlus® Defined Benefit plan?

      Dedicated Defined Benefit Services will inform you annually of contribution requirements for the coming year. At the end of the year, Dedicated DB again will remind you to fully fund the contribution before filing your taxes.

    • What is the maximum amount I can contribute to a Defined Benefit plan?

      There is no specified limit — the limit is on the allowable benefit, not the contribution.

      • The benefit is the amount your plan will pay out annually in retirement.
      • The contribution is what you pay in each year while participating in the plan to accumulate enough to make the pre-determined annual benefit.
      • The accumulation, also called the benefit commitment, is the total amount in the plan at retirement.
        Unlike defined contribution plans (e.g., 401(k)s, SEPs, SIMPLEs, etc.) which have limits on the amount that can be contributed, defined benefit plans have limits on the benefit that can be paid out.

      There are two separate limits on the benefit, either of which may apply:

      • 01) 100% of compensation, reduced pro rata for years of service less than 10.
      • 02) $230,000, reduced pro rata for less than 10 years of participation in the plan.
        • This limit is further reduced actuarially if benefits begins prior to age 62
        • This limit is increased actuarially for benefits beginning after age 65. For this reason, contributions for older participants can be much higher.

      Contributions to Fund Maximum Benefit

      Age Retirement Age Maximum Benefit Contribution
      45 62 $230,000 $155,600
      50 62 $230,000 $187,800
      52 62 $230,000 $202,400
      55 65 $230,000 $226,600
      60 65* $115,000 $229,500

      * Since the participant only has 5 years of participation, the maximum benefit is limited to 50% of the maximum benefit payable at age 65 ($230,000).

    • Can my contribution amount be reduced after I set up my plan?

      Yes. This can happen in several ways. You can always amend your Defined Benefit plan formula down for future years (but, depending on when you amend the plan, you may still be required to make the contribution for the current year). If your compensation decreases, your annual required contribution may decrease. If your investment performance is greater than the assumed interest rate, your contributions will also decrease.

    • When is my annual contribution due?

      The deadline for pension plan contributions is no later than 8 1/2 months after the close of the plan year. For the contribution to be deductible, you must make it on or before the due date of your tax return (with extensions).

    • Is my annual contribution limited to a percentage of income like a SEP or Profit Sharing plan?

      No. Your annual contribution is determined as a function of age, compensation, investment performance, actuarial assumptions, and maximum benefit allowed. An actuary calculates the amount that you must fund each year.

    • Is my contribution mandatory?

      Yes. A contribution is required each year to fund the benefit promised at retirement. However, the plan benefit formula can be amended for future years and thus increase or decrease the contribution amount.

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