Overcoming Objections

I already have a retirement plan.
Unless it is a defined benefit plan like OnePersonPlus it doesn't allow contributions of more than $49,000 each year and $54,500 if you're over 50 or greater than 25% of your income. If you want to make larger contributions and take larger tax deductions, you need OnePersonPlus.

My income fluctuates year to year. I can't predict my yearly income.
Choose a contribution amount (and retirement benefit) level you're comfortable with this year and in future years. Annual contributions to a define benefit plan are mandatory, but you can add a 401(k) to your defined benefit plan for added flexibility. In good years when you want to contribute more, you can fund both the defined benefit and 401(k) plans. And in years when you want to contribute less, just contribute to the defined benefit plan.

Large contributions sound good to me, but I'm 38 and don't plan to retire for at least 20 years.
The allowable contribution to a defined benefit plan is determined by your income, age and years to retirement. It might be possible to design your plan so that annual contributions are increased by funding the benefits over the first ten years. Let us run a feasibility study for you.

I don't want to make large contributions for my employees.
Yearly contributions for employees are based on the same criteria as the contributions for you: mainly age, compensation and the investment performance of the account. If you have older, highly paid employees, you will make larger contributions than if you have younger, not-so-well paid employees. It depends on your specific situation.

However, the IRS allows you to set minimum requirements for participation in the plan. For example, you can require employees to be at least age 21 or work at least 1000 hours annually. With this scenario, if your practice employs younger, part-time workers, you do not need to make employee contributions. In many cases the bulk of the contributions go to the owner.

It seems awfully complicated.
Dedicated Defined Benefit Services LLC, the firm that provides administrative services for the plan takes care of all the paperwork and red tape. They keep the plan in compliance with government regulations and they prepare all the forms. All you or your tax advisor need to do is provide updated information each year.

Do I have to retire on the plan's specified retirement date (year)?
No. The plan's retirement date is one of the assumptions used to establish the amount of money to be funded each year. You can amend the plan to change the retirement date or simply keep working and take the benefits later if you let us know early in the year. Contact us as soon as your plans change and we can make the appropriate amendments.

When can I retire?
You can stop the plan at any age and roll the present value of the benefits over to an IRA to begin receiving distributions. Routinely, however, the plans go for a minimum of five years and the earliest retirement date is age 62.

What if my income is lower one year?
Under the new Pension Protection Act rules you can amend a plan to decrease benefits but the amendment must occur before someone has accrued 500 hours of service for the year. To have maximum flexibility in amending the plan, you would contact Dedicated DB as early in the plan year as possible.

You can always amend your plan formula down for future years but, depending on when you amend the plan, you may still be required to make the contribution for the current year.

Also, you have until 8 1/2 months after the end of the year to fund the plan which will give you additional time to make your contribution.