As a small business owner, you have plenty of options if you want to provide a qualified retirement plan for your company. But now there’s a new kid on the block.
Strategy: Consider the defined benefit 401(k) plan (DB(k)). This hybrid plan blends advantages of a traditional pension plan with a regular 401(k).
Why haven’t you heard more about the DB(k)? The authority for this new type of plan, which becomes available on Jan. 1, 2010, was buried deep within the massive Pension Protection Act of 2006. But interest in DB(k) plans is expected to heat up during the coming year.
Here’s the whole story: With a defined benefit plan, such as a traditional pension plan, contributions are based on your salary, age and years of service. The company sets aside actuarially determined contributions on behalf of the employees each year. For 2010, the contributions can’t fund an annual retirement benefit exceeding $195,000 (see box...(register to read more)
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