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Defined Benefit Plan

The defined benefit plan is authorized by the Internal Revenue Code. The Plan’s annual contribution is determined by solving for a lump sum amount that will be sufficient to provide the defined monthly income at retirement. The monthly retirement benefit is a function of income and has statutory limitations that change annually. The defined benefit plan may be funded with, but not limited to, life insurance and annuity contracts.

Reasons to adopt a Defined Benefit Plan for your business:

Provides a defined retirement benefit
Attract and retain employees
Reduce your business taxes
Larger contributions compared to 401(k) & Profit Sharing Plans
Vesting schedule available

Considerations when adopting a Defined Benefit Plan:

Annual funding is required
Adequate cash flow is necessary to fund the contribution
Employer bears investment risk
Employee demographics impacts the contribution

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.