High-Impact Tax Strategy for High Income Individuals

A Retirement Plan That Delivers Huge Tax Savings

A Defined Benefit (DB) plan is an IRS-approved qualified retirement plan that allows small business owners and self-employed professionals to make large annual tax-deductible contributions that can save them tens of thousands of dollars in taxes each year. Over the life of a Defined Benefit plan, a plan owner can potentially cut hundreds of thousands of dollars in taxes while rapidly and tax-efficiently building a multi-million dollar nest egg.

For example, a 52-year old small business owner making $450,000 per year in income can potentially cut his/her tax bill by over $80,000 and save $227,000 for retirement every year.

What is a Defined Benefit plan?

Defined Benefit plans have been around for decades. In years past, large corporations used to fund Defined Benefit plans to pay for their employees' retirement. A company would contribute a certain amount each year to a plan during an employee's working years to build up the plan to a point that it would be able to pay a set (defined) benefit to that employee during each year of his/her retirement.

Today the maximum annual benefit that a Defined Benefit plan can target to be distributed annually as a 'benefit' to an employee in retirement is $210,000. Thus, in order to be able to distribute $210,000 annually on an ongoing basis, the plan must have much more in assets than that. Today the IRS limit on how big a Defined Benefit plan can grow is $2.5 million. Learn more about Defined Benefit plans here, on the Internal Revenue Service (IRS) website.

**With our process, a plan owner is essentially both the company (that funds the Defined Benefit plan with tax-deductible contributions) and the ultimate owner and beneficiary of the plan assets in retirement.**


Defined Benefit Plans Offer a Number of Advantages


Larger Contribution Levels. DB plans have the highest allowable, tax-deductible contribution limits of qualified plans - $100,000 or more. This means a DB plan owner could contribute 2 to even 4 times more than he/she could put into a SEP-IRA or 401(k)

  • In this example, a 52-year old earning $300,000 can put over 3x as much in a DB plan alone as she could in a SEP-IRA or 4x as much in DB Plan combined with a 401(k).

Defined Benefit Plan Retirement Plans Tax Savings

Huge Tax Savings. The high contribution levels of DB plans allow plan owners access to larger tax deductions than possible with SEP-IRAs or 401(k)s. These deductions can add up big tax savings - $40,000 or more every year.

  • In this example, a 52-year old freelance consultant with an annual income of $450,000 can potentially cut his/her tax bill by close to $70,000 or over $80,000 in a single year by forming a Defined Benefit plan

Defined benefit retirement plan save on taxes

Rapid Wealth Creation
. The assets you contribute to a DB plan grow tax-deferred. This growth, combined with the higher contribution limits for DB plans, allow you to build a large retirement fund more quickly than you could with other retirement plans.

  • A 50-year old business owner could put $125,000 in a DB plan every year and build a retirement nest egg of $1,000,000 in just 7 years.defined benefit plan retirement plan million dollar nest egg

Easy Rollover: Tax-free rollover to an IRA at retirement (or at plan termination).

Simple Set-up: We walk you through the process from start to finish.

Flexible Investments: We work with you to develop an investment strategy suitable for your circumstances.


Defined Benefit Plans Work Even If You Have Employees

For professionals who have 10 or fewer employees, a specific type of DB plan provides an excellent solution.

A Cash Balance Defined Benefit plan combined with a Safe Harbor 401(k)/Profit Sharing plan allows the owner access to the highest allowable contribution to a qualified plan — $200,000 or more annually — and allows them to capture the tax savings from the contribution. The 401(k)/profit sharing plan offers a valuable bonus to employees, and keeps the required contributions on their behalf limited and controllable. Owners and employees have different contribution rates (see estimates below).

defined benefit plan cash balance plan


Ready to join other high-income professionals and see how much you can save?

Calculate My Tax Savings


Read more to find out if you qualify to take advantage of a DB Plan?

Is a DB Plan Right For Me?