Instead of determining an annual contribution each year, a defined benefit plan promises to pay a specific benefit at retirement. For example: 50% of average compensation for life.

Each year the amount of the contribution is determined based on the amount that is necessary to pay the promised retirement benefits. The employer is generally required to make contributions to a defined benefit plan each year.

• The maximum annual benefit in 2007 a participant may receive at
  retirement is $180,000.
  
  
• The employer may tax-deduct the entire required contribution each year.

Who is a defined benefit plan right for?

• Small businesses seeking large tax-deductions.
  
  
• Businesses seeking to attract and reward long-term employees.
  

Defined Benefit Plans Client Brochure	Build a Better Retirement Plan

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