I opened a OnePersonPlus Defined Benefit plan and put away $150,000 last year and another $120,000 this year and it’s all a deduction. I figure at least 30% of it is a gift from the IRS.*
How Much Can You Save?
Defined Benefit and Cash Balance plans allow clients the largest yearly retirement contributions — averaging $133,000 based on 2022-2025 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 $3.4 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.
Typical Annual Contribution Estimates by Owner Age and Income *
|
Age: |
35 |
40 |
45 |
50 |
55 |
60 |
65 |
| Income | Annual Contribution | ||||||
| $50,000 |
$22,700 |
$27,600 |
$35,200 |
$42,100 |
$50,200 |
$50,700 |
$44,700 |
| $100,000 |
$45,500 |
$55,200 |
$70,400 |
$84,200 |
$100,500 |
$101,400 |
$89,400 |
| $150,000 |
$68,300 |
$82,800 |
$105,700 |
$126,300 |
$150,800 |
$152,200 |
$134,100 |
| $200,000 |
$91,100 |
$110,500 |
$140,900 |
$168,400 |
$201,100 |
$202,900 |
$178,800 |
| $250,000 |
$113,900 |
$138,100 |
$176,200 |
$210,500 |
$251,400 |
$253,600 |
$223,500 |
| Good Prospects for DB Plan | |||||||
The OwnersPlus Cash Balance Program gives me an extra $200,000 to invest and gives my employees a boost too.*
We increased our W-2 income to max out our retirement savings. With a OnePersonPlus defined benefit and a 401(k), we’ll add $500,000 each year for the next 5 years.*
As a realtor, my income is never the same from year to year. With a OnePerson (k), I save about $50,000 in good years but I don’t have to do anything when business is slow.*
We’re four partners with vastly different needs – our Cash Balance plan is customized to fit us.*
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 three highest years
- Planned retirement age — usually at least five 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
Ideally, defined benefit plans should be opened and funded within 8.5 months of the plan year end. Although technically, the plan can be opened by the employer’s tax return due date plus extension, an additional excise tax will apply if opened after 8.5 months of the year end.
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 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 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
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. For individuals age 60-63 the super catch-up of up to $11,250 is available.
Learn More