Individual Defined Benefit Plan

If you are a baby boomer with a succesful small business or professional practice, a secondary source of significant income or your spouse has earnings you can afford to sock away, the Individual Defined Benefit Plan might be your answer to a significant retirement nest egg. If you are already contributing the maximum allowable amount to a 401(k) Plan or some other type of tax-advantaged retirement plan but the savings are not enough to build the wealth you want for later years or your not making a significant dent in your current tax burden, the Individual DB could be a far better way to accomplish these objectives.

Key Benefits:

The Individual DB allows the highest possible contributions of any qualified plan, increasing the annual amount you can save for retirement by thousands of dollars. The maximum benefit in an Individual DB is $195,000 in 2009 for retirement- the cost of funding that benefit can be as much as four times more than you can contribute to other plan types.
Contributions are determined by an actuary and will vary according to an individual’s income, age and circumstance.
Since employer contributions are a tax-deductible business expense, the more you save for retirement, the more you save in taxes.
With your larger base of contribution dollars, this plan’s tax deferral of investment income can supercharge the growth of your retirement nest egg.
How much you contribute, where you put your money, what you do with your savings when you retire…..you are given flexible choices in all these important areas.
The money you save and invest is aimed at producing a specific level of income at retirement, the same way a corporate pension plan does. In this case, however, you control how much that benefit will be.