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Split Funded Pension Plans

Elderly doctors workingVery often small business owners are looking for retirement planning options beyond a 401(k). And they want a retirement plan that provides them, as the owner, substantial contributions for themselves but also tax deductible contributions. Split funded pension plans may very well fit that bill. These plans have been around for decades. But it’s only been in the past 10 years their popularity has soared. Why? A split funded pension plan is a “good old fashioned” defined benefit plan, a rare things to see in these days dominated by defined contributions plans, ala 401(k).

A split funded pension plan, by design, will favor those who have many years of service, are older than the general staff and have a high income relative to the other employees. All these criteria describe the owner exactly. And that is why a split funded pension plan “favors” a business owner. In fact, it is not uncommon to see a plan where 70 to 80+% of the contribution is going toward the owner. And because of the plan design, a split funded pension plan by nature will allow substantial tax deductible contributions, typically far higher than a standard retirement plan allows. In addition, they can provide substantial retirement plan assets for the owner and possibly his key staff. These plan’s popularity has soared, and for good reason.

To download our Split Funded Pension Plan questionnaire, click here

Click here to see a sample of the potential deductions available with these plans