Do you have a 401(k) or other defined contribution retirement plan at your company? Consider an approach from the days of yore.
Strategy: Set up a defined benefit plan (e.g., a pension plan) to supplement your existing plan. This type of plan often benefits senior employees, like a company’s founder, who want to save more in a short time than they can with other plans.
Although some experts consider defined benefit plans to be “dinosaurs,” this is still a viable option for small business owners, despite a few drawbacks.
Here’s the whole story: With a defined contribution plan, the company specifies an annual amount to be contributed on behalf of each participating employee. In contrast, a defined benefit plan—like the traditional pension plan—identifies the amount of the benefits to be paid to plan participants upon retirement. It can provide for larger contributions over a short period of time.
How do you determine the amou...(register to read more)