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Sole Proprietors close to retirement with relatively low incomes ($100,000 or less) can contribute up to 100% of income by using previous years' income to establish higher contributions. Your 60 year old client who doesn't need her current income for living expenses plans to retire in five years. Her highest three consecutive years' income averaged $80,000 (net of expenses and after payment of self-employment taxes).
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The Pension Protection Act struck language from IRS proposed regulations that prohibited using income earned in years before the defined benefit plan is established for purposes of determining maximum benefits. Since the regulations were proposed nearly two years ago, most defined benefit plans were designed without including compensation prior to the establishment of the plan for determining benefits and contributions. This lowers the income bar and makes defined benefit plans potentially suitable for clients with only $60,000 - $100,000 in average net income.
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