Personal Defined Benefit Plan
Posted September 15, 2014
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This plan is somewhat exotic, but might be a good option for those business owners in their 50s but who didn’t save as much as they would have liked. The IRS allows a maximum annual contribution of about $255,000 for people in their 50s. We say “about” because the calculation is based on current age and years to retirement. For younger owners, this is not an attractive option. But a $255,000 tax deduction is.. well.. HUGE.
Total holdings in the plan are limited to $2.3 million to $2.4 million, enough to cover the maximum allowed payment in retirement of $200,000 a year. The IRS also has strict required minimum contribution rules and a steady source of income is fairly important.
Taxpayer’s Comprehensive Guide to LLCs and S Corps : 2019 Edition
This KB article is an excerpt from our book which is available in paperback from Amazon, as an eBook for Kindle and as a PDF from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles, click on the fancy buttons below or visit our webpage which provides more information at-