“Build a Better Retirement Plan”

With a Solo Insured 430 Defined Benefit Plan ?

The Pension Protection Act of 2006 (PPA’06) reshaped the retirement plan landscape, allowing for greater contribution flexibility in defined benefit plans and the combination of defined benefit plans with defined contribution plans. This allows retirement plans to be designed to provide much larger tax-deductible contributions for the owner and key employees while keeping the employee benefit costs reasonable and predictable. By incorporating elements of the new law with a 430 Defined Benefit Plan, we can help you “build a better retirement Plan”.

What is an Insured 430 Defined Benefit Plan?

The Insured 430(d) Defined Benefit Plan is a defined benefit plan that is split funded and includes pre-retirement survivor benefit funded by life insurance. The funding rules under the PPA ’06 create a wide, flexible range of deductible contributions to fund both the retirement benefits and the death benefits. The plan also provides flexibility in the choice of funding vehicles that may be used, allowing risk-averse individuals to choose guaranteed insurance and annuity products. Individuals who are more investment risk-tolerant may choose a split funded plan with other products available for qualified plan investments.

Solo Insured 430 Example

Sam, age 57, is a professional with a consulting firm as a side business. He averages in excess of $60,000 per year in his sole-proprietorship and would like to contribute as much of his side income into a retirement plan as allowed. He is tolerant to investment risk. Utilizing the new funding rules, the Insured 430 Plan produces a very flexible range of contributions.

The flexibility of the Insured 430 Plan allows for the use of whole life or universal life products; the choice is up to the plan trustee.

The Insured 430 Advantage

An insured 430 plan allows a range of contributions, with investments ranging from guaranteed products to equity-based products. Its advantages include:

• Large tax-deductible plan contributions 
• Flexible contributions if desired
• Easy to understand and communicate

Information is provided by National Pension Partners. The article is for educational propose only and should not conclude as an advice from the publisher.