How It Works
A defined benefit plan is a pension plan that allows significantly higher contributions than a 401(k). The contribution limit is based on your age and income, with older, higher-earning business owners able to contribute $200,000-$300,000+ per year. All contributions are tax-deductible to the business and grow tax-deferred.
Who Qualifies
- High-income business owners (40+)
- Consistent income year over year
- Few or no employees (or willing to fund employee benefits)
- W-2 income from business of $250K+
Key Requirements
- Actuarial certification required
- Annual funding commitment
- Must include eligible employees
- Ongoing administration and compliance
Documentation Needed
Plan document, actuarial certification, annual Form 5500 filing, trust agreement, contribution documentation.