Defined benefit plans offer the potential for substantial contributions, often in the six-figure range, making them ideal for business owners who want to contribute a large portion of their income toward retirement savings. These plans are more complex to set up and manage, but they provide significant tax advantages for those in higher income brackets. If you’re looking to reduce your taxable income dramatically while ensuring a secure retirement, a defined benefit plan could be the right choice.
However, the administrative costs and complexities of these plans typically make them more suited to established businesses with stable, high revenues. By funding your retirement through your business, you not only create a strong financial future for yourself but also take advantage of substantial tax savings today. Whether you choose a Simple IRA, SEP IRA, 401(k), or defined benefit plan, the right retirement account can make all the difference in achieving your long-term financial goals.