Defined Benefit Retirement Planning

Wealth accumulation and retirement savings become more important as businesses prosper and owners begin dreaming of retirement.

Meet the 412(e)(3) defined benefit plan.

What are the 412(e)(3) defined benefit plans and why is everyone talking about them? It may surprise you to know that 412(e)(3) defined benefit plans have been around for over 50 years. Two factors that have contributed to the interest in 412(e)(3) plans are, the market risk associated with the stock market compared to an annuity contract with guaranteed minimum interest rates, and retirement is rapidly approaching for all the “baby boomers.”

Advantages of the 412(e)(3) Defined Benefit Plans

– Guaranteed benefits (provided that annual, level premiums have been paid.)
– Tax deductions
– Larger contributions for older employees
– Availability of life insurance with tax-deductible premium


– Requires annual funding
– The plan sponsor must have cash flow to fund at the beginning of the plan year
– Participant loans are not permitted

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