412i Defined Benefit Plan
Small, successful and established business owners with steady, consistent income may want to consider a 412i defined benefit plan as a means to accumulate funds for retirement.
Retirement income continues to be a top concern for many successful small business owners and professionals. Due to the contribution limitations on defined contribution qualified plans such as profit sharing plans or 401k plan, business owners may find that defined contributions plans cannot adequately meet their retirement needs and the retirement needs of their employees. Additionally, the uncertain investment environment in recent years has caused some small business owners and professionals to seek guaranteed interest rate solutions for retirement.
That's where the 412i Defined Benefit Plan can help.
A 412i Plan is a type of defined benefit qualified plan that offers attractive advantages:
- Tax-deductible contributions and tax-deferred growth of assets;
- Potentially larger tax deductions for the business than those provided by traditional defined benefit plans;
- Plan benefits are calculated based upon the guarantees in the individual life insurance and annuity contracts in the plan;
- No complex minimum funding requirements usually associated with other types of qualified plans.
A well-structured 412i plan will incorporate both life insurance and annuities, for diversity, with the majority of the contributions going to the annuities. It will also provide for up to 75% or more of the total contribution for the business owner(s), while providing an additional means for all employees to acquire more retirement funds. And, a 412i plan can be used in conjunction with other company-sponsored retirement plans.