Welcome to Executive Benefit Plans, Inc.

 
Main Link Column
Select this link Retirement Plans
Select this link Strategies
Select this link Employee Benefits
Select this link Individual Benefits
Select this link Participant Info
Select this link White Papers
Select this link Consulting Service
Select this link Proposal Request
Select this link Administration
Select this link Contact
Select this link News
Select this link Blog
Select this link Home

 

Defined Benefit Plans

Choosing a Retirement Plan: Defined Benefit Plan

Highlights:

According to the Pension Benefit Guaranty Corporation, there are about 38,000 insured defined benefit plans today compared to a high of about 114,000 in 1985.  They go on to state that this decline was due primarily to plans with 100 or fewer participants.  One possible reason for this decline is the complexity and cost required by many of these plans.

Still, a defined benefit plan may be an option to consider when reviewing retirement plans.  Why?  Among the reasons are:

  • Employers can generally contribute (and, therefore, deduct) more than to other types of plans.

  • Substantial benefits can be provided – even with early retirement.

  • Vesting can be immediate or spread out over a seven-year period.

  • Benefits are not dependent on asset returns.

If you establish a defined benefit plan, you:

  • Can have other retirement plans.

  • Can be a business of any size.

  • Need to annually file a Form 5500 with a Schedule B.

  • Have an enrolled actuary determine the funding levels and sign the Schedule B.

  • Benefits cannot be retroactively decreased

Information List:

Pros and Cons:

  • Significant benefits possible in a relatively short period of time.

  • Employers can contribute (and deduct) more than under other retirement plans.

  • Plan provides a predictable benefit.

  • Plan can be used to promote certain business strategies by offering subsidized early retirement benefits.

  • Most costly type of plan.

  • Most administratively complex plan.

  • An excise tax applies if the minimum contribution requirement is not satisfied.

Who Contributes:  Generally, employer contributions.  Sometimes, employee contributions are either required or voluntary.

Contribution Limits:  Deduction limit is any amount up to the plan’s unfunded current liability (see an enrolled actuary for further details).

Filing Requirements:  Annual filing of Form 5500 is required.  An enrolled actuary (not an enrolled agent) needs to sign the Schedule B of Form 5500.

Participant Loans:  Permitted.

In-Service Withdrawals:  Not permitted.

Other Similar Articles:

See Chart  |  Contact Us  |  Proposal Request

Source:  www.IRS.gov

Retirement Plans

Select this link Consulting Services

Select this link Qualified Plans

   Select this link Savings Calculator

   Select this link   401k

   Select this link Safe Harbor 401k

   Select this link Roth 401k

   Select this link SIMPLE 401k

   Select this link Profit Sharing

   Select this link Money Purchase

   Select this link Defined Benefit

   Select this link Cash Balance

   Select this link Prohibitive Transactions

   Select this link Contribution Limits

Select this link Other Plans

   Select this link IRAs

   Select this link 419(e)

   Select this link SEPs

   Select this link SARSEPs

   Select this link SIMPLE IRA

Other Links

Select this link Tests

    Select this link ACP Test

    Select this link ADP Test

Select this link Restatements

Select this link Amendments

Select this link Mistakes

Select this link Catch-up

Select this link Funding Limits

Select this link EGTRRA Q&A

Select this link Conduit IRA

Select this link Pricing

Select this link Quote

Select this link White Papers

Select this link FAQs

Select this link Glossary

 

 

Information is provided for review and consideration only. Please consult legal and tax advisors for practical advice pertaining to your business and personal situations.

This page was last reviewed and/or updated on Friday, August 13, 2010 10:46 AM

 
Privacy Statement - Executive Benefit Plans, Inc. Copyright 1996 - 2009 All Rights Reserved - Legal Statement
Website Powered by UHSystems