
Defined Benefit Plan Overview:
Who Can Offer This Plan:
Any size business.
Advantage:
Allows employers to contribute more than other retirement plans. Allows employers
to provide substantial predictable, retirement benefits based on a formula in the
plan. Can produce a substantial retirement fund in a few years and is appropriate
for employers who can make contributions based on actuarial calculations of the
amounts necessary to pay the promised benefit.
Administrative Expense:
Higher than defined contribution plans.
Administrative Complexity:
High.
Funding:
Generally employer contributions.
Annual Contribution Limits:
Employer's maximum and minimum contribution is determined actuarially and must be
sufficient to pay the participant's benefits as they come due in future years.
Loans
Generally not a feature of the plan.
In-service Withdrawals:
Not permitted.
Vesting:
Immediate or may vest over years of service not to exceed seven years.
Note:
Defined Benefit Plans are not included in the Select a Plan Section. The gathering
of information necessary to help you determine the appropriateness of this plan
for your business falls outside the scope of this site. We encourage you, however,
to discuss with your accountant or other financial advisor whether a defined benefit
plan would be a good option for your employees. To learn more about defined benefit
plans please visit http://www.dol.gov/elaws/pwbaplan.htm.