Individual (Solo) Defined Benefit
An Individual Defined Benefit plan could be the right choice for, you if you are self-employed or a small business owner near retirement and can contribute at least $80,000 a year. This plan allows you to put away the most possible money and it provides the largest tax deductions for older employers.
An Individual Defined Benefit plan targets a desired level of retirement income and allows you to save aggressively to get there. Defined benefit plans promise a specified benefit at retirement, for example, $1000 a month at retirement. The amount of the benefit is often based on a set percentage of pay multiplied by the number of years you work while maintaining the plan. As the employer, you must be careful, because your contributions are mandatory and must be sufficient to fund the monthly benefit.
Contribution amounts are adjusted each year to help you reach your goal. Administration costs for these plans are larger and can run up to $2,000 per year for the actuarial calculations and the required IRS filings and certifications. Contact Scott Brookes, AIF®, for more information.
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