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Defined Benefit Plans are designed usually for self-employed or small business owners to give them the ability to make very high tax-deferred contributions.
A personal Defined Benefit Plan works best in our opinion for individuals in their highest earning years and who are age 50 or over. These individuals will need to make annual contributions of $90,000 or more for at least five years.
Defined Benefit Plans are designed for high earning individuals to increase their retirement assets in a very aggressive manor over the age of 50 years old, individuals who participate in these plans are typically highly compensated business owners or key employees in their highest income years.
Personal Defined Benefit Plans allow for the highest contribution limits in the IRS code, however, there are high costs and administrative requirements which require hiring a Third-Party Administrator (TPA).
Actuarial calculations provided by a Third-Party Administrator (TPA)
Requires annual funding based on the Third-Party Administrator (TPA) and actuarial calculations
IRS filing fees
Form 5500 with a schedule SB annual filing with IRS
Defined Benefit Plan | Internal Revenue Service (irs.gov)
Penalty-free distributions may be allowed upon retirement or termination of service under certain circumstances.
There are certain circumstances where you can avoid the 10% IRS penalty and take distributions before age 59 ½ years old. Rollover assets into an IRA or new employer plan