Do I have the steady annual income needed to cover required annual Defined Benefit plan contributions?
The IRS has strict required minimum contribution rules. Should investment losses occur, your required contributions may increase as well. It is important to have steady income to meet these needs. Remember, a Defined Benefit plan is not like a profit sharing plan, in which a sponsor can suspend contributions in certain years. If the sponsor contributes less than required, the IRS will impose excise taxes, possibly disqualify the plan and possibly disallow past tax deductions.
Related Questions
- When I wish to retire and terminate the Defined Benefit plan, what will happen if I have more assets in the plan than are needed to pay benefits?
- Can the partners maintain separate accounts for their Defined Benefit plan contributions?
- Are the annual fees for administration of the Defined Benefit plan deductible?
