Defined Benefit Plans Can Help Provide Valuable Retirement Benefits for Business Owners and their Employees

Provide Guaranteed Retirement Benefits With a 412(e)(3) Fully Insured Defined Benefit Plan

A fully insured defined benefit plan is a retirement plan that provides guaranteed retirement benefits to the owners and employees of a company. As with all defined benefit plans, the employer makes annual contributions to the plan to reach a funding target.

These plans are funded exclusively with annuities or a combination of annuities and whole life insurance to create a guaranteed retirement income benefit.

Advantages of a 412(e)(3) Defined Benefit Plan

Advantages of a 412(e)(3) Defined Benefit Plan

  • Tax deductions for the employer
  • Retirement benefits are guaranteed, provided annual funding is made
  • Can help attract and retain employees
  • generally allows for the highest contribution amounts compared to other defined benefit plans
  • Larger contributions permitted for older participants
  • Employer transfers Investment risk to the insurance company
  • Income tax advantage at death
  • Portable: The employee’s vested benefit is paid at termination or retirement.
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