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Accelerate Your Retirement Savings with a

Defined Benefit Plan for High-Income Earners 

How to rapidly increase your retirement with dramatic tax savings.

Do you check the “high-income earner” box?

 

Are you at least 35 years old?

 

It might be time to consider a Defined Benefit Plan if you
want to save an unlimited amount each year tax deductible.

When you’re a small business owner, independent professional, consultant, or self-employed individual, your daily work and operating your business is all-consuming. 

Of course, you’ve thought about retirement. And you’ve probably saved some. But with retirement on the horizon—five to fifteen years in the future—maybe you’re concerned you reinvested too much into your business and haven’t saved enough in your retirement account.  

You have some catching up to do, and a Defined Benefit Plan for high-income earners can help you do that. 

A Defined Benefit Plan for High-Income Earners Is:

Retirement Tax Strategy

A Defined Benefit Plan is a specialized retirement tax strategy for high-income professionals, small business owners and individuals with self-employment income. If you qualify, you can make up ground quickly for your retirement, saving more and paying less taxes now.

Additional Savings

A small business Defined Benefit Plan allows the small business owner and self-employed individual to set aside additional savings when it makes the most sense to do so – in the years when your profits are greatest, for example. But that’s also when taxes may be a big concern.  

Retirement Accelerator

We like to call the Defined Benefit Plan a retirement accelerator because it allows participants to make large tax deductible contributions each year, so clients keep more of their earnings. Lots more. And as a result, their retirement wealth accumulates much faster. 

A Defined Benefit Plan has multiple benefits: 

  • It is an alternative retirement savings option that allows high-income earners to double down on how much they save for retirement.
  • High-income earners can lower their tax burden dramatically.
  • Investors can claim a greater sense of control over where they direct their retirement investments.

 

A Defined Benefit Plan has multiple benefits: 

  • It is an alternative retirement savings option that allows high-income earners to double down on how much they save for retirement.
  • High-income earners can lower their tax burden dramatically.
  • Investors can claim a greater sense of control over where they direct their retirement investments.

Defined Benefit Plans vs

Traditional Retirement Savings Vehicles 

The Older You Are, the More You Can Contribute.

Defined Benefit Plans allow high-income earners an opportunity to make contributions that are typically in excess of the limits allowed under traditional retirement savings plans, such as 401(k)s or profit-sharing plans. 

In general, the older you are, the more you can contribute.

Tailored Strategies

You can accelerate your retirement with these higher contributions, but you must commit to contributing annually. This commitment to an annual contribution can be scary for small business owners, particularly if they typically experience income fluctuation from year to year. However, because of changes in regulations through the Pension Protection Act of 2006, there are many tools and strategies that we can build into your plan for flexibility.

We help design a plan that can be modified when your situation changes.

Huge Tax Advantages

Along with the relatively fast rates of wealth accumulation that a Defined Benefit Plan provides, you can reap tremendous tax benefits.

Defined Benefit Plans may allow the highest tax deductible contributions in an IRS-approved retirement plan, often 2-3 times what can be contributed to other plans.

And when it’s time to retire, your assets typically are rolled over to an IRA or other defined contribution plan and continue to grow tax deferred until withdrawn.

Tailored Strategies

You can accelerate your retirement with these higher contributions, but you must commit to contributing annually. This commitment to an annual contribution can be scary for small business owners, particularly if they typically experience income fluctuation from year to year. However, because of changes in regulation through the Pension Protection Act of 2006, there are many tools and strategies that we can build into your plan for flexibility.

We help design a plan that can be modified when your situation changes.

Tax Advantageous

Along with the relatively fast rates of wealth accumulation that a Defined Benefit Plan provides, you can reap tremendous tax benefits.

Defined Benefit Plans may allow the highest tax-deductible contributions in an IRS-approved retirement plan, often 2-3 times what can be contributed to other plans.

And when it’s time to retire, your assets typically are rolled over to an IRA or other defined contribution plan and continue to grow tax deferred until withdrawn.

How It Works  

A Defined Benefit Plan promises a specific annual benefit in retirement. To customize the benefit, we work with the business owner to decide what percent of their annual income they want to have at retirement, or what percent of current income they can comfortably afford to contribute to the plan, up to the maximum allowable amount.

Currently, you can contribute an unlimited amount each year.

An annual contribution amount is required by the business owner to accumulate sufficient savings to pay out the benefit, though it can be customized depending on the year.

Your annual contribution is calculated using formulas designed by actuaries, based on:

  • Current age — the older the business owner, the larger the annual contribution needed to reach any specific benefit target because the owner will have fewer years to contribute.
  • Compensation — Eligible compensation differs based on the type of business.
  • Planned retirement age — usually at least 5 years from the year the plan is adopted.

Assets may be invested in mutual funds, bonds, equities or other marketable securities. Investments with low volatility are generally recommended.

How It Works 

A Defined Benefit Plan promises a specific annual benefit in retirement. To customize the benefit, we work with the business owner to decide what percent of their annual income they want to have at retirement, or what percent of current income they can comfortably afford to contribute to the plan, up to the maximum allowable amount.

Currently, regulations set the maximum annual benefit at $245,000.

An annual contribution amount is required by the business owner to accumulate sufficient savings to pay out the benefit, though it can be customized depending on the year.

Your annual contribution is calculated using formulas designed by actuaries, based on:

  • Current age — the older the business owner, the larger the annual contribution needed to reach any specific benefit target because the owner will have fewer years to contribute.
  • Compensation — Eligible compensation differs based on the type of business.
  • Planned retirement age — usually at least 5 years from the year the plan is adopted.

Assets may be invested in mutual funds, bonds, equities or other marketable securities. Investments with low volatility are generally recommended.