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412 Fully Insured Defined Benefit Plan

The 412 Fully Insured Defined Benefit Plan is a defined benefit plan and is authorized by the Internal Revenue Code. The Plan’s annual contribution is determined by solving for a guaranteed lump sum amount that will be sufficient to provide a desired monthly income at retirement. The monthly retirement benefit is a function of income and has statutory limitations that change annually. The 412 Fully Insured Defined Benefit Plan is funded solely with life insurance and annuity or annuity only contracts offering minimum guaranteed interest rates. The minimum guarantees provided by the insurance contracts ensure the income at retirement.

Reasons to adopt a 412 Fully Insured Defined Benefit Plan for your business:

Provide guaranteed retirement benefits to owners & employees (provided annual premium contributions have been funded)
Attract and retain employees
Reduce your business taxes
Larger initial contributions
Vesting schedule available

Considerations when adopting a Fully Insured Defined Benefit Plan:

Annual level premiums are required
Adequate cash flow is necessary to fund the premium contribution
Employee demographics impacts the premium contribution
Participant loans are statutorily not allowed

Lafayette Life Insurance Company provides services to pension plans as outlined in a separate Administrative Services Agreement, and issues life insurance and annuity products that may be used as funding options. Lafayette Life does not serve as plan administrator, nor does Lafayette Life or its representatives provide ERISA, legal or tax advice. The client’s personal or legal tax advisors should always be consulted and relied upon for advice.