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A defined benefit pension plan is an employer sponsored retirement program where the amount you receive at retirement is based on a formula. This formula contains variables such as compensation, number of years you have worked for the employer and whether you retired early or not. The employer is required to make contributions quarterly so that enough money will be in the plan to pay the future benefits.
Defined benefit pension plans are best suited to certain situations; first, where the business owner is considerably older than the average age of employees and the owner has not begun saving for retirement; and second, where the business has consistent cash flows to fund the required contribution. This situation will provide for a nice retirement benefit for the business owner and considerable tax benefits.
To obtain further information about Defined Benefit Pension Plans, Contact Us to schedule a no charge, no obligation meeting.
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