On Feb 5, 8:33*am, "Walter Cohen" <w_co...[at]hotmail.com> wrote:
- quote -

continue to fund it. DB plans are subject to very different rules,
some of which include mandatory funding (whether you have the cash or
not) and the continuation of the plan into the future. You CANNOT
open a DB plan and fund it sporadically. You MUST fund it based on
actuarialy assumptions.

The best way I've found to to describe the funding requires is to
compare the fund to the big lotteries. When you win the lottery you
can take an annuity - a fixed check for a specified period - or you
can take a lump sum. The lump sum is ALWAYS less than the annuity
payout. The theory goes like this - how much money do you need to
have set aside today to make regular payments of $X for Y years?

Defined benefits plans calculate the benefit - how much do you want to
draw per month at what age for how many years? Once you know that,
you can back into how much MUST be set aside, at given rates of return
(somewhere near the 3% mark) so that when you start drawing against it
you will be able to get a set check for a period of time.

Because the BENEFIT is defined, the contributions are also fixed and
not easily changed.

DBs are GREAT - IF you have the resources to fund them.

Good luck,
Gene E. Utterback, EA, RFC, ABA

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I have a small C corporation and a defined contribution pension plan (money
purchase and profit sharing plans).
I'm always looking for additional means to shield any profits and fund the
maximum (or at least more...) for my retirement.
I'm wondering if I could additionally open and fund a defined benefit plan
for year 2007.

Thanks.
Walter

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >