Wealth &
Protection Planning

Defined Benefit Plans

A defined benefit plan identifies the specific benefit that will be payable to you at retirement. Your basic retirement benefit is usually based on a formula that takes into account factors like the number of years a participant works for the employer (years of service) and the participant's salary. Your retirement benefit is generally provided in the form of regular payments over your lifetime beginning at what the plan calls "normal retirement age," which is typically age 65. This stream of periodic payments is generally known as a pension or sometimes called an annuity.

Defined benefit plans can help the self-employed and small business owners save aggressively for retirement by allowing very high contribution levels.

Contributions to a defined benefit plan are based on what is needed to provide definitely determinable benefits to plan participants. Actuarial assumptions and computations are required to figure these contributions.

For 2018, the annual benefit cannot excceed the lesser of:

  • 100% of the participant's average compensation for his or her highest 3 consecutive calendar years, or
  • $220,000

The dollar amounts are subject to cost-of-living adjustments in future years.

Contact a STRIVE Wealth Advisor for more information about Defined Benefit Plans. 

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