HIGHLIGHTS OF DEFINED BENEFIT PLANS

• Any business, whether a C Corporation, S Corporation, partnership, sole proprietorship, self-employed can establish a Defined Benefit Plan. You set the eligibility requirements at the time the plan is established. If they wish, the employer can restrict individuals with less than 2 year service, union members, non US citizens, part-time workers etc., from being eligible for the plan.
• Plan is established so that the amount of the employee's retirement income is fixed, defining the benefit in advance by the plan's benefit formula
• The employer's contribution must be determined actuarially and be sufficient to enable the fund to meet its liabilities as they come due in future years
• Plan assets are not allocated to individual accounts
• Employer must meet minimum funding requirements, dictated by the benefit formula and calculated annually by an actuary
• Amount needed to fund monthly benefit at normal retirement age. Annual benefit from the plan may not exceed the lesser of 100% of participant's compensation or $180,000
• Plan has full ERISA requirements and annual IRS 5500's series of filings
• Procedures are available for fully funded Defined Benefit Plans to be terminated and rolled into other less expensive, less administratively complex and perhaps more appropriate and efficacious retirement plans.
• Additionally, procedures are available for under-funded Defined Benefit Plans to be frozen in place and alternatives instituted so as to mitigate the future liability problem associated with under-funded plans
• Can be coupled with Profit Sharing Plans.