Employers can contribute (and, therefore, deduct from taxes) signifigantly more than other types of plans such as 401k's and SEP's.
Substantial benefits can be provided – even with early retirement.
Vesting can be immediate or spread out over a five-year period.
Benefits are not dependent on asset returns.
Principal protection investments are suggested.
If you establish a defined benefit plan, you:
Can have other retirement plans.
Can be a business of any size including a single person.
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
Significant contributions, tax deductions, and benefits possible in a relatively short period of time.
Employers can contribute, (and deduct), more than under other retirement plan.
Plan provides a predictable benefit.
Plan can be used to promote certain business strategies by offering subsidized early retirement benefits.
Inexpensive to administer.
A minimum contribution is mandatory unless pre funded in early years.
Who Contributes: The employer.
Contribution Limits: Deduction limit is any amount up to the plan’s unfunded current liability.
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
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