Defined Benefit Plans
With the attractiveness of benefits being defined in advance for eligible employees, this tax-deferred company retirement plan places the investment risk on the employer.
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Advantages
- Annual benefit at retirement can be as high as 100% of highest three-year-average pay, up to $210,000
- Provides guaranteed annuity payments for life
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Eligibility
- All taxable businesses, government entities and tax-exempt organizations may establish a Defined Benefit Plan
- Any employee with 1,000 hours of service within one year and who is age 21 or older must be covered; exclusions are permitted for certain employees
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Maximum total plan contribution that the employer may deduct
Contribution is limited to amount necessary to fund future benefits (maximum eligible pay per participant is $265,000)
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Maximum annual allocation to participant’s account
No individual accounts
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Maximum annual participant deferral (cannot exceed 100% of pay)
No participant contributions allowed
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Required employer contribution
Contributions based on anticipated payouts during retirement and actuarial assumptions
