Defined Benefit Pension Plan

A Retirement Plan with Huge Tax Savings

The defined benefit pension (DB) plan is less well-known than other retirement plans, but it is by far the most powerful retirement savings and tax cutting plan for high-income professionals.

A DB plan is an IRS-approved qualified retirement plan that allows independent professionals and consultants, individuals with self-employment income, and small business owners to make large annual tax-deferred contributions and accumulate as much as $1 - 2.5 million in just 5 - 10 years.  The contributions are deductible and can potentially reduce income tax liability by $50,000 or more annually.


High Contribution Levels = Build More Retirement Wealth Faster

With the highest allowable contributions to a qualified plan - $100,000 or more - the DB plan allows its owners to contribute 2 to even 4 times as much as they might put into a SEP or 401(k).  (Your contribution maximum is based on your age, income and years to retirement.) This higher contribution limit means that DB plan owners can quickly build a large retirement account. The following chart shows how a business owner can build a $1M retirement account in just seven years.


Advantages of a DB Plan

  • Annual tax savings of $40,000 or more potentially
  • Investments grow tax deferred, building wealth faster
  • Tax-free roll over to an IRA at retirement (or at plan termination)
  • Simplified plan set-up
  • You and your financial advisor choose the investments

Is a Defined Benefit Plan Right For You?

Typical Occupations

A DB plan is designed to meet the tax savings and retirement income needs of people who are:

  • A sole proprietor, LLC or corporation with 0-5 employees
  • 40 years of age or more
  • Earning at least $100,000 annually
  • Interested in contributing more than $50,000 annually to retirement or a higher percent of compensation than allowed in a 401(k) or SEP
  • Able to make that contribution for at least the next 3-5 years

Typical Plan Owners Include:

  • Empoyees who also receive self-employment income from a side business
  • Independent contractors, consultants, professionals and sales reps
  • Business owners with up to 5 employees
  • Self-employeed spouses of high income earners


  • Attorney
  • Construction Trades
  • Consultant
  • Dentist
  • Engineer
  • Entertainer
  • Farmer
  • Financial Advisor
  • Graphic Designer
  • Independent Corporate Director
  • Physician
  • Real Estate Agent
  • Sales Rep
  • Software Developer
  • Writer

Case Studies: Typical Defined Benefit Plan Owners

If you would like to see how much you can potentially save in taxes, try our Tax Savings Analysis Tool.  

If you would like to talk with us about whether a DB Plan is right for you, call 619-435-1701 or contact us here.

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