Personal Defined Benefit Plan: Your Top Questions Answered

Have questions about our Personal Defined Benefit Plan? Here are responses to some common questions.

Qualifications

The type of retirement plan your business should sponsor depends on a number of factors, including how many persons you employ in addition to yourself, your income level, your age, and when you’d like to retire.

Contributions

When your plan is set up, your expected annual contribution level will be based on your desired level of annual savings until retirement and must conform to IRS rules. To properly design the plan, you must choose an anticipated retirement age and also provide an estimate of future pay for yourself and your employees. This information is required because the IRS limits for each participant’s benefits are adjusted for age at retirement, the number of years participating in the plan, and pay earned while participating in the plan. Schwab uses this information to design a customized benefit formula for the plan.

Unexpected Events

The IRS requires that a defined benefit plan be used as a tool to provide for retirement income and not solely as a tax shelter. Under normal circumstances, you would maintain the defined benefit plan as long as you run your company and are able to make required contributions to the plan.

Assets

Plans Sponsored by a Partnership

Distributions

Fees and Services

Statutory Requirements