Defined Benefit Plans
Defined benefit plans provide a fixed, pre-established benefit for employees at retirement. Employees often value the fixed benefit provided by this type of plan. On the employer side, businesses can generally contribute (and therefore deduct) more each year than in defined contribution plans. However, defined benefit plans are often more complex and, thus, more costly to establish and maintain than other types of plans.
- Can have other retirement plans
- Can be a business of any size
- Need to annually file a Form 5500 with a Schedule B
- Have an enrolled actuary determine the funding levels and sign the Schedule B
- Can’t retroactively decrease benefits