412(i) Defined Benefit Pension Plan Part II
Lets look at the 412(i) plan and how it saves you on your tax bill. A 412(i) defined benefit plan is not for everyone. This plan is meant for individuals who own established businesses that have an excess of surplus income at the end of every year. 412(i) plans need to have consistent contributions annually. It is very hard to change the amount of money that you contribute every year if your company has an off year income wise.
I want to use an example of a client that I was working with last month. Joe businessowner has a law firm that takes in about $800,000.00 annually. He has two people working in his office. One is a secretary and one is a younger attorney that helps him with some cases. Joe had a tax bill of around $320,000.00 a year. By implementing a 412(i) plan it reduced his tax bill to $230,000.00. Most of the $90,000.00 he saved went into his own retirement plan (412(i). Tomorrow I will go into how this plan was worked up.
Dustin Weaver ACS PCS AAPA
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