For anyone wishing to save on taxes, a Defined Benefit plan must be established by December 31st of the year for which they would like to save.  Contributions are due by the tax-filing deadline including extensions, but not later than eight and one-half months after the fiscal year end. Earlier is always better, but we recommend that anyone wishing to establish a plan begin the process no later than December 1.

Many professionals for whom DB plans would work very well are not familiar with them. Indeed, we have found that even many CPAs are not well versed on DB plans. The reason may be that only a very small percentage of people are in a position – in terms of age, income and employment status – to capture the large benefits that DB plans offer. Self-employed professionals in particular, are in a great position to take advantage of these plans.

No! A small business owner with 10 or fewer employees can still take advantage of a Defined Benefit plan. You as the business owner can make a large contribution for yourself and lower contributions for employees. If you have employees, call us at 619-435-1701 or email thoms@orioncapitalmgmt.com to discuss your options.

DB plans permit a wide range of investment choices, including stocks, bonds, mutual funds, exchange-traded funds and annuities. At Orion, we offer a range of globally diversified low-turnover investment options. Because the performance of the plan can cause the level of annual required contributions to fluctuate, it is generally advisable to invest the plan assets in an investment portfolio with low volatility.

They certainly can be, particularly if the plan documents need to be drawn up from scratch by your own actuary or tax attorney. We at Orion hold down the costs in this regard by using a prototype plan developed and implemented by our pension administration partner. These plan documents are already in use with existing plan owners and are familiar to the IRS. Using a prototype plan is a very cost-effective solution.

An additional point to consider is that the cost of administering the plan pales in comparison to the tax savings and retirement account accumulation our clients are able to enjoy once the plans are in place.

Yes. DB plans can also be set up to permit participant loans.