Types of Retirement Plans

Looking for a retirement plan for your business?

Learn More About the Different Types of Retirement Plans

Based on careful analysis, we’ll recommend the best options for your company. These options can include one or more of the major retirement-plan types:

Defined Contribution Plans

Defined Benefit versus Defined Contribution Plans

Defined Benefit (DB) plans provide employees a guaranteed benefit. Each employee’s benefit is calculated based on individual factors such as salary history, years of service, etc. Upon termination or retirement from the company, the employee opts to receive his or her benefit as either a monthly annuity or a lump sum.

In contrast, a Defined Contribution (DC) plan does not promise a specific benefit to the employee upon retirement. Instead, the employee and/or employer contributes to the employee’s individual account under the plan. Funds in the account typically are invested by the employee from a selection of options offered by the employer. The employee receives the contributions, adjusted for any investment gains or losses, upon termination or retirement.

Both plans provide the same “portability” options: Even after employees take distributions (withdraw funds) from either type of plan, the funds can continue to grow tax-deferred in an IRA or other qualified retirement plan.

Looking for a retirement plan for your business?

Profit Sharing Plans

Profit Sharing Plans are often paired with 401k plans to provide additional benefits to both the employees and owners.

Using a profit sharing component in addition to the 401k and match can allow an individual to reach the maximum annual contribution limit of $69,000 ($76,500 for those age 50 or more).

Profit sharing contributions can be allocated to employees in a myriad of ways. Typically the profit sharing contribution is based on one or more of the following factors:

  • compensation
  • length of service to the company (tenure)
  • job function


Let us work with you to determine how best to create an effective profit sharing program for your company.

403b Plans

403b Plans are quite similar to 401k plans. However, to sponsor a 403b plan, your organization must be a non-profit, exempt from federal income tax under Internal Revenue Code Section 501(c)(3).

Because a 501(c)(3) nonprofit may also adopt a 401k plan, the organization should understand the differences between the two types of plans before deciding which type of plan is right for them.

Let us help you make the best decision for your organization.

401(K) Plans

401(k) plans offer tax benefits, flexibility, and help in employee retention, crucial for businesses. We aid in plan design, offering tax strategies, employee education, and plan maintenance tailored to company needs.

This encompasses eligibility, contributions, vesting, and profit-sharing decisions, ensuring a customized approach for each business’s unique requirements.

For organizations considering retirement solutions, understanding the specifics and support available for 401(k) plans can guide the right choice for their future.

Allow us to guide you in selecting the optimal plan for your organization’s needs.

Traditional Defined Benefit Plans

Defined Benefit Plans can be structured in many ways. The hybrid defined benefit plan, called a “Cash Balance Plan”, has become the most common type of defined benefit plan.

Because of its popularity, defined benefit plans that are not cash balance plans are typically called “traditional defined benefit plans”.

The traditional defined benefit plan provides the same maximum benefits as a cash balance plan, but the mechanics of how it works can create different funding and benefit results.

Traditional defined benefit plans may be the better option for you if you are thinking about implementing a defined benefit plan. Call us to help determine which type of defined benefit plan is right for you.

Cash Balance Plans

Cash Balance Plans (CBP) allow significant retirement savings, ideal for company owners, with potential annual savings over $300,000 based on age and income.

They provide tax-efficient strategies with dollar-for-dollar income deductions and customizable benefits for various employee levels.

Protected under ERISA, these plans ensure asset safety, even in company bankruptcy scenarios.

Let’s connect to discuss how we can address your specific needs.

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