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Hi Everyone!
I have a 401K, self directed, maxed out to the IRS maximum. I am in a group which incorporated for tax pass through. One of the employees (everyone is an employee) asked me if we can contribute more via 412i and 419af6 (defined benefit plans). I have no idea how they may benefit us. Any help would be appreciated! Thanks!
Tymmo
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Greetings, Tymmo, and welcome. You asked:

I have a 401K, self directed, maxed out to the IRS maximum. I am in a group which incorporated for tax pass through. One of the employees (everyone is an employee) asked me if we can contribute more via 412i and 419af6 (defined benefit plans). I have no idea how they may benefit us.

A defined benefit plan is a qualified plan established by the employer. It is the traditional company pension plan. It is called "defined benefit" because the ultimate retirement benefit is definite and determinable as a dollar amount or as a percentage of wages. To determine these amounts, defined benefit plans usually base the benefit calculation on a combination of years of employment, wages, and/or age. These plans are funded entirely by the employer, and the responsibility for the payment of the benefit and all risk on monies invested to fund that benefit rests with the employer. Funding of the plan is considered a business expense for tax purposes.

Your firm may have both a defined contribution and defined benefit plan. If you want the latter for your firm, you will have to set one up with a provider. Be aware they are not in the least a cheap way to go.

Regards..Pixy


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