Frequently Asked Questions

    • What is the role of Dedicated Defined Benefit Services?

      Dedicated DB is the third party administrator. It provides the plan document, the actuarial calculations, prepares all tax forms, answers any questions that may you have and is responsible for keeping the plans in compliance with the law. It doesn’t provide investment or tax advice. Read more about Third Party Administration.

    • What laws changed to make Defined Benefit plans more attractive for small business owners?

      Section 415(e) of the Tax Code was repealed. Because of the repeal, a business owner can now use a Defined Benefit plan to build assets without taking into consideration money already accumulated in other retirement plans.

      Section 415(b)(1)(A) was amended to increase the maximum retirement benefit allowed.
      Section 415(b)(2)(C) was amended to lower the age at which the maximum retirement benefit could be received.

      2006 Pension Protection Act provides additional flexibility by allowing contributions of no more than 6.0% to a defined contribution plan, in addition to salary deferrals, without impacting the contribution to the Defined Benefit plan

      The Tax Cuts and Jobs Act (TCJA) that passed in December 2017, did not directly impact Defined Benefit plans but because it eliminated many other deductions, it increased the value of the large deductible contributions business owners can potentially make into these plans. In many cases, the deductions lower taxable income sufficiently to allow the owners of pass-through entities (sole proprietors, S corporations and partnerships) to qualify for Section 199A 20% deduction on Qualified Business Income (QBI).

      Together, these changes allow small business owners to contribute more now to a Defined Benefit plan.

    • Are loans or hardship withdrawals allowed?

      The plan does not permit hardship withdrawals. Participant loans are available in Defined Benefit plans if the employer chooses this feature.

    • Can a Defined Benefit plan be amended?

      Yes. Generally, you can amend the plan to increase the benefit formula or decrease the formula. You cannot amend up, then amend down, then amend up, then amend down, etc., since this may be viewed by the IRS as abusive.

      Following are some of the changes that can be made:

      • Change your benefit formula. You can decrease or, if you qualify, increase your benefit formula, thereby changing your contribution amount.
      • Change your retirement date or age at retirement, if you qualify.
    • What is a Defined Benefit plan?

      A Defined Benefit plan is a qualified plan in which you set a target annual retirement benefit — the amount you want to have each year when you retire. Then your annual contributions are calculated to provide that benefit. Contributions are based on current age, the average of your 3 highest years of income, your planned retirement age, and, in subsequent years, the balances you have accumulated in the plan. Annual contributions are mandatory, and a higher benefit will result in higher annual contributions. Contributions will increase or decrease as the 4 factors mentioned above change.

    • What is the role of Dedicated Defined Benefit Services?

      Dedicated DB is the third party administrator. It provides the plan document, the actuarial calculations, prepares all tax forms, answers any questions that may you have and is responsible for keeping the plans in compliance with the law. It doesn’t provide investment or tax advice. Read more about Third Party Administration.

    • What laws changed to make Defined Benefit plans more attractive for small business owners?

      Section 415(e) of the Tax Code was repealed. Because of the repeal, a business owner can now use a Defined Benefit plan to build assets without taking into consideration money already accumulated in other retirement plans.

      Section 415(b)(1)(A) was amended to increase the maximum retirement benefit allowed.
      Section 415(b)(2)(C) was amended to lower the age at which the maximum retirement benefit could be received.

      2006 Pension Protection Act provides additional flexibility by allowing contributions of no more than 6.0% to a defined contribution plan, in addition to salary deferrals, without impacting the contribution to the Defined Benefit plan

      The Tax Cuts and Jobs Act (TCJA) that passed in December 2017, did not directly impact Defined Benefit plans but because it eliminated many other deductions, it increased the value of the large deductible contributions business owners can potentially make into these plans. In many cases, the deductions lower taxable income sufficiently to allow the owners of pass-through entities (sole proprietors, S corporations and partnerships) to qualify for Section 199A 20% deduction on Qualified Business Income (QBI).

      Together, these changes allow small business owners to contribute more now to a Defined Benefit plan.

    • Are loans or hardship withdrawals allowed?

      The plan does not permit hardship withdrawals. Participant loans are available in Defined Benefit plans if the employer chooses this feature.

    • Can a Defined Benefit plan be amended?

      Yes. Generally, you can amend the plan to increase the benefit formula or decrease the formula. You cannot amend up, then amend down, then amend up, then amend down, etc., since this may be viewed by the IRS as abusive.

      Following are some of the changes that can be made:

      • Change your benefit formula. You can decrease or, if you qualify, increase your benefit formula, thereby changing your contribution amount.
      • Change your retirement date or age at retirement, if you qualify.
    • What is a Defined Benefit plan?

      A Defined Benefit plan is a qualified plan in which you set a target annual retirement benefit — the amount you want to have each year when you retire. Then your annual contributions are calculated to provide that benefit. Contributions are based on current age, the average of your 3 highest years of income, your planned retirement age, and, in subsequent years, the balances you have accumulated in the plan. Annual contributions are mandatory, and a higher benefit will result in higher annual contributions. Contributions will increase or decrease as the 4 factors mentioned above change.

    • What is the role of Dedicated Defined Benefit Services?

      Dedicated DB is the third party administrator. It provides the plan document, the actuarial calculations, prepares all tax forms, answers any questions that may you have and is responsible for keeping the plans in compliance with the law. It doesn’t provide investment or tax advice. Read more about Third Party Administration.

    • What laws changed to make Defined Benefit plans more attractive for small business owners?

      Section 415(e) of the Tax Code was repealed. Because of the repeal, a business owner can now use a Defined Benefit plan to build assets without taking into consideration money already accumulated in other retirement plans.

      Section 415(b)(1)(A) was amended to increase the maximum retirement benefit allowed.
      Section 415(b)(2)(C) was amended to lower the age at which the maximum retirement benefit could be received.

      2006 Pension Protection Act provides additional flexibility by allowing contributions of no more than 6.0% to a defined contribution plan, in addition to salary deferrals, without impacting the contribution to the Defined Benefit plan

      The Tax Cuts and Jobs Act (TCJA) that passed in December 2017, did not directly impact Defined Benefit plans but because it eliminated many other deductions, it increased the value of the large deductible contributions business owners can potentially make into these plans. In many cases, the deductions lower taxable income sufficiently to allow the owners of pass-through entities (sole proprietors, S corporations and partnerships) to qualify for Section 199A 20% deduction on Qualified Business Income (QBI).

      Together, these changes allow small business owners to contribute more now to a Defined Benefit plan.

    • Are loans or hardship withdrawals allowed?

      The plan does not permit hardship withdrawals. Participant loans are available in Defined Benefit plans if the employer chooses this feature.

    • Can a Defined Benefit plan be amended?

      Yes. Generally, you can amend the plan to increase the benefit formula or decrease the formula. You cannot amend up, then amend down, then amend up, then amend down, etc., since this may be viewed by the IRS as abusive.

      Following are some of the changes that can be made:

      • Change your benefit formula. You can decrease or, if you qualify, increase your benefit formula, thereby changing your contribution amount.
      • Change your retirement date or age at retirement, if you qualify.
    • What is a Defined Benefit plan?

      A Defined Benefit plan is a qualified plan in which you set a target annual retirement benefit — the amount you want to have each year when you retire. Then your annual contributions are calculated to provide that benefit. Contributions are based on current age, the average of your 3 highest years of income, your planned retirement age, and, in subsequent years, the balances you have accumulated in the plan. Annual contributions are mandatory, and a higher benefit will result in higher annual contributions. Contributions will increase or decrease as the 4 factors mentioned above change.

    • What is the role of Dedicated Defined Benefit Services?

      Dedicated DB is the third party administrator. It provides the plan document, the actuarial calculations, prepares all tax forms, answers any questions that may you have and is responsible for keeping the plans in compliance with the law. It doesn’t provide investment or tax advice. Read more about Third Party Administration.

    • What laws changed to make Defined Benefit plans more attractive for small business owners?

      Section 415(e) of the Tax Code was repealed. Because of the repeal, a business owner can now use a Defined Benefit plan to build assets without taking into consideration money already accumulated in other retirement plans.

      Section 415(b)(1)(A) was amended to increase the maximum retirement benefit allowed.
      Section 415(b)(2)(C) was amended to lower the age at which the maximum retirement benefit could be received.

      2006 Pension Protection Act provides additional flexibility by allowing contributions of no more than 6.0% to a defined contribution plan, in addition to salary deferrals, without impacting the contribution to the Defined Benefit plan

      The Tax Cuts and Jobs Act (TCJA) that passed in December 2017, did not directly impact Defined Benefit plans but because it eliminated many other deductions, it increased the value of the large deductible contributions business owners can potentially make into these plans. In many cases, the deductions lower taxable income sufficiently to allow the owners of pass-through entities (sole proprietors, S corporations and partnerships) to qualify for Section 199A 20% deduction on Qualified Business Income (QBI).

      Together, these changes allow small business owners to contribute more now to a Defined Benefit plan.

    • Are loans or hardship withdrawals allowed?

      The plan does not permit hardship withdrawals. Participant loans are available in Defined Benefit plans if the employer chooses this feature.

    • Can a Defined Benefit plan be amended?

      Yes. Generally, you can amend the plan to increase the benefit formula or decrease the formula. You cannot amend up, then amend down, then amend up, then amend down, etc., since this may be viewed by the IRS as abusive.

      Following are some of the changes that can be made:

      • Change your benefit formula. You can decrease or, if you qualify, increase your benefit formula, thereby changing your contribution amount.
      • Change your retirement date or age at retirement, if you qualify.
    • What is a Defined Benefit plan?

      A Defined Benefit plan is a qualified plan in which you set a target annual retirement benefit — the amount you want to have each year when you retire. Then your annual contributions are calculated to provide that benefit. Contributions are based on current age, the average of your 3 highest years of income, your planned retirement age, and, in subsequent years, the balances you have accumulated in the plan. Annual contributions are mandatory, and a higher benefit will result in higher annual contributions. Contributions will increase or decrease as the 4 factors mentioned above change.

    • What is the role of Dedicated Defined Benefit Services?

      Dedicated DB is the third party administrator. It provides the plan document, the actuarial calculations, prepares all tax forms, answers any questions that may you have and is responsible for keeping the plans in compliance with the law. It doesn’t provide investment or tax advice. Read more about Third Party Administration.

    • What laws changed to make Defined Benefit plans more attractive for small business owners?

      Section 415(e) of the Tax Code was repealed. Because of the repeal, a business owner can now use a Defined Benefit plan to build assets without taking into consideration money already accumulated in other retirement plans.

      Section 415(b)(1)(A) was amended to increase the maximum retirement benefit allowed.
      Section 415(b)(2)(C) was amended to lower the age at which the maximum retirement benefit could be received.

      2006 Pension Protection Act provides additional flexibility by allowing contributions of no more than 6.0% to a defined contribution plan, in addition to salary deferrals, without impacting the contribution to the Defined Benefit plan

      The Tax Cuts and Jobs Act (TCJA) that passed in December 2017, did not directly impact Defined Benefit plans but because it eliminated many other deductions, it increased the value of the large deductible contributions business owners can potentially make into these plans. In many cases, the deductions lower taxable income sufficiently to allow the owners of pass-through entities (sole proprietors, S corporations and partnerships) to qualify for Section 199A 20% deduction on Qualified Business Income (QBI).

      Together, these changes allow small business owners to contribute more now to a Defined Benefit plan.

    • Are loans or hardship withdrawals allowed?

      The plan does not permit hardship withdrawals. Participant loans are available in Defined Benefit plans if the employer chooses this feature.

    • Can a Defined Benefit plan be amended?

      Yes. Generally, you can amend the plan to increase the benefit formula or decrease the formula. You cannot amend up, then amend down, then amend up, then amend down, etc., since this may be viewed by the IRS as abusive.

      Following are some of the changes that can be made:

      • Change your benefit formula. You can decrease or, if you qualify, increase your benefit formula, thereby changing your contribution amount.
      • Change your retirement date or age at retirement, if you qualify.
    • What is a Defined Benefit plan?

      A Defined Benefit plan is a qualified plan in which you set a target annual retirement benefit — the amount you want to have each year when you retire. Then your annual contributions are calculated to provide that benefit. Contributions are based on current age, the average of your 3 highest years of income, your planned retirement age, and, in subsequent years, the balances you have accumulated in the plan. Annual contributions are mandatory, and a higher benefit will result in higher annual contributions. Contributions will increase or decrease as the 4 factors mentioned above change.

    • What is the role of Dedicated Defined Benefit Services?

      Dedicated DB is the third party administrator. It provides the plan document, the actuarial calculations, prepares all tax forms, answers any questions that may you have and is responsible for keeping the plans in compliance with the law. It doesn’t provide investment or tax advice. Read more about Third Party Administration.

    • What laws changed to make Defined Benefit plans more attractive for small business owners?

      Section 415(e) of the Tax Code was repealed. Because of the repeal, a business owner can now use a Defined Benefit plan to build assets without taking into consideration money already accumulated in other retirement plans.

      Section 415(b)(1)(A) was amended to increase the maximum retirement benefit allowed.
      Section 415(b)(2)(C) was amended to lower the age at which the maximum retirement benefit could be received.

      2006 Pension Protection Act provides additional flexibility by allowing contributions of no more than 6.0% to a defined contribution plan, in addition to salary deferrals, without impacting the contribution to the Defined Benefit plan

      The Tax Cuts and Jobs Act (TCJA) that passed in December 2017, did not directly impact Defined Benefit plans but because it eliminated many other deductions, it increased the value of the large deductible contributions business owners can potentially make into these plans. In many cases, the deductions lower taxable income sufficiently to allow the owners of pass-through entities (sole proprietors, S corporations and partnerships) to qualify for Section 199A 20% deduction on Qualified Business Income (QBI).

      Together, these changes allow small business owners to contribute more now to a Defined Benefit plan.

    • Are loans or hardship withdrawals allowed?

      The plan does not permit hardship withdrawals. Participant loans are available in Defined Benefit plans if the employer chooses this feature.

    • Can a Defined Benefit plan be amended?

      Yes. Generally, you can amend the plan to increase the benefit formula or decrease the formula. You cannot amend up, then amend down, then amend up, then amend down, etc., since this may be viewed by the IRS as abusive.

      Following are some of the changes that can be made:

      • Change your benefit formula. You can decrease or, if you qualify, increase your benefit formula, thereby changing your contribution amount.
      • Change your retirement date or age at retirement, if you qualify.
    • What is a Defined Benefit plan?

      A Defined Benefit plan is a qualified plan in which you set a target annual retirement benefit — the amount you want to have each year when you retire. Then your annual contributions are calculated to provide that benefit. Contributions are based on current age, the average of your 3 highest years of income, your planned retirement age, and, in subsequent years, the balances you have accumulated in the plan. Annual contributions are mandatory, and a higher benefit will result in higher annual contributions. Contributions will increase or decrease as the 4 factors mentioned above change.

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