Defined Benefit Plan

Setting up a Defined Benefit Plan for Retirement 

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 (

Withdrawal Rules from a Personal Defined Benefit Plan?

Penalty-free distributions may be allowed upon retirement or termination of service under certain circumstances.

  • Required Minimum Distribution (RMD) withdrawals or distributions must start by age 70½ (if you were born before July 1, 1949) or age 72 (if you were born on or after July 1, 1949).
  • You are required to take Required Minimum Distributions even if you are still employed.
  • You may receive your benefit payout by rolling assets into an IRA, setting up an annuity, or receiving a lump-sum distribution.
  • There is a 50% penalty on the total amount of the distribution if the amount is less than required or is not taken. Distributions before age 59½ are subject to the IRS 10% penalty on the total distribution.

Withdrawal Penalty Exceptions

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

  • Termination of employment at or after age 55
  • Death or disability
  • Qualified birth and/or adoption expenses
  • Non-reimbursed medical expenses exceeding 7.5% of adjusted gross income
  • Withdrawals made in equal installments over the account holder’s life expectancy