Effective Plan For Your Better Retirement Life

Strategic Solutions

The most expensive and complicated retirement plan for the self-employed, the defined benefit plan is most appropriate for someone with a mountain of money to save for retirement.

Employers can save a maximum of $195,000 per year. But you need an actuary to determine the amount that can be contributed, which adds to the cost of the plan.moneypuzzle

Smart Strategy

In contrast, the Solo-K, SEP and SIMPLE IRAs allow more flexibility by allowing employers to reduce contributions in a year with poor cash flow.

Due to their expense and complexity, defined benefit plans are slightly out of fashion. According to the Pension Benefit Guaranty Corp., there are 38,000 defined benefit plans today compared to 114,000 in 1985. Despite their waning popularity, they can still be a good option for business owners who want to save the most money on a tax-deferred basis as possible.

  • Who can open one: Any employer of any size.
  • Cost and complexity: High.
  • Employer contribution limit: Up to $195,000, but the actual amount is determined by a formula used to calculate the benefit an employee earns for retirement. An actuary determines the amount to be contributed to the plan.
  • Employee contribution limit: Not applicable.
  • Annual reporting requirements: Yes.

Effective Plan For Your Better Retirement Life
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