Retirement Plans: Defined benefit, cash balance plans Dedicated DB

Retirement Plans

As the “go-to” experts on retirement plans for the profitable 1 to 10 employee company, Dedicated DB specializes in traditional Defined Benefit and Cash Balance defined benefit plans. These plans offer the largest allowable deductible contributions to a retirement plan, averaging $100,000+ each year.

Owner-only business?
Learn more about OnePersonPlus defined benefit plans Company with employees?
Learn more about OwnersPlus Cash Balance +401(k)

How Much Can You Save?

Defined Benefit and Cash Balance plans allow clients the largest yearly retirement contributions — averaging $133,000 based on 2015-2017 first year contributions — while saving huge amounts in taxes. Our unique programs are designed for high-income self-employed individuals and businesses with 2 to 10 employees. Depending on the situation, business owners may be able to save over $2.6 million for retirement in just 10 years. The plans’ open architecture allows assets to be invested in mutual funds, bonds, equities, annuities, or any other marketable securities that advisors and clients select.

Maximum Annual Contribution Estimates by Owner Age and Income *

Age:

35

40

45

50

55

60

65

Income

Annual Contribution

$50,000

$17,600

$22,000

$30,000

$36,400

$44,200

$44,900

$39,600

$100,000

$35,300

$44,000

$60,100

$72,900

$88,400

$89,800

$79,200

$150,000

$53,000

$66,100

$90,200

$109,400

$132,700

$134,700

$118,900

$200,000

$70,700

$88,100

$120,300

$145,900

$176,900

$179,600

$158,500

$250,000

$88,400

$110,200

$150,400

$182,400

$221,100

$224,500

$198,100
Good Prospects for DB Plan

Notes

  • Contributions may be increased by adding a 401(k) to a defined benefit plan
  • For younger clients, contributions can be increased by funding the benefits over the first ten years

This chart makes the following assumptions. If the actual situation differs, the contribution may be different.

  1. Retirement Age: The later of age 62 or 5 years of participation in the plan
  2. Business Start Date: January 1, 2019
  3. Entity Type: Corporation; Contributions might differ for sole proprietors
  4. Income Type: W-2

 

FIND OUT HOW MUCH YOU CAN SAVE

What is a Defined Benefit Plan?

A defined benefit plan is an IRS-approved retirement plan that allows qualifying small business owners to make significant tax-deductible contributions each year. Cash balance plans are a type of defined benefit plan. The contribution amount for these plans is calculated based on a number of factors:

  • Current age — the older the client, generally, the larger the allowed contribution
  • Years of employment in the business
  • Compensation, which can be the average of the client’s 3 highest years
  • Planned retirement age — usually at least 5 years from the year the plan is adopted
  • A formula that takes into account what percent of compensation the business owner wants to receive as a benefit in retirement and how much of current income they can comfortably afford to contribute to the plan. We work with you to make sure this amount will be appropriate for the next several years.
  • And, in subsequent years, the calculation takes into account the accumulated balances in the Trust’s investment account

These plans must be opened by end of the fiscal year, generally December 31st and contributions are required each year.

COMPARE DEFINED BENEFIT & DEFINED CONTRIBUTION PLANS

Choosing the Right Plan for the Business

The best plan for a profitable small business will depend on the number of employees and the owner’s cash flow outlook.

OnePersonPlus Defined Benefit Plan logo

OnePersonPlus is a traditional defined benefit plan best suited for owner-only and family businesses. Business owners contribute $100,000+ on average each year toward retirement wealth which is tax deferred. In certain situations, they can combine this plan with a OnePerson(k) to increase contributions and flexibility.

Learn More
OwnersPlus Cash Balance Plan logo

OwnersPlus Retirement Program combines a cash balance defined benefit plan with a safe harbor 401(k)/profit sharing plan. The program allows business owners with a few employees to make large deductible contributions for themselves, up to $200,000 or more while controlling the total cost of employee retirement benefits.

Learn More
OnePerson K 401(k) logo

With lower contribution limits than defined benefit plans, this plan is a good option for owner-only or family companies that need the flexibility of making optional contributions each year.

Learn More

Estimate contribution and deduction with our DB calculator Try it now

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