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Defined Benefit

Qualified plans generally fall into two categories: defined contribution and defined benefit. In a defined contribution plan, like a 401(k), there is a limitation on how much you and your employees can contribute to the plan every year. There’s no limit to how large the account can grow, though.

A defined benefit plan is just the opposite, there is no limit on contributions. The business owners define the benefits the plan will pay to them and their employees through retirement. The IRS establishes a limit to this amount, which in 2022 is $245,000. Contributions are established to provide enough growth to pay the benefits “defined”. This amount is determined by an actuarial calculation every year, and is of course tax deductible.

Defined benefit plans are the next step after establishing a defined contribution plan. These plans can be of great benefit to the business owners by allowing them to put large sums of money away for their retirement in a tax-deductible fashion. Typically, these plans take the form of profit sharing and cash balance plans.

These plans are custom designed for each business so each situation is unique. An initial feasibility study is required. There is no cost for the feasibility study and these usually take 1-2 weeks.

Request A Feasibility Study

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Check the background of these investment professionals on FINRA’s BrokerCheck. 

IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax concepts, therefore you should consult your legal or tax professional regarding the specifics of your particular situation.

Investments in securities are not suitable for all investors. Investments in any security may involve a high degree of risk and should only be considered by investors who can withstand the loss of their investment. Prospective investors should  perform their own due diligence carefully  and review the “Risk Factors” section of any prospectus, private placement memorandum or offering circular before considering any investment. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA / SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA). Thornwood Financial is independent of CIS, CAM and CIA. To access Concorde’s Form Customer Relationship Summary (CRS), please click here. 

This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Laura Jocius at [email protected].

This is for informational purposes only, does not constitute as investment advice, and is not legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.

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