Defined Benefit Plans

A Defined Benefit Plan is considered a traditional pension plan because it guarantees a monthly pension benefit for the life of the participant. This type of plan favors older employees with longer terms of service.



  • Can provide key employees with much larger contributions than allowed in Defined Contribution plans.
  • It is the only type of Qualified Plan that guarantees income for life.


Defined Benefit Plans are Ideal for ...

  • Employers who are older and have more service than other employees.
  • Employers wishing to maximize contributions.
  • Employers with substantial resources.
  • Employers with stable income.



  • Higher annual administrative costs
  • Required contributions
  • May require PBGC premiums



Following is an example of a Defined Benefit Plan

  Age Wages Annual
% of Total % of Wages
Doctor 60 100,000 145,248 92.6% 145.0%
Part-timer 21 14,627 247 0.2% 1.7%
Nurse 41 46,356 3,450 2.2% 7.4%
Receptionist 32 29,652 1,138 0.7% 3.8%
Nurse 42 44,948 3,975 2.5% 8.8%
Nurse 38 44,714 2,786 1.8% 6.2%
Subtotal   180,297 11,596 7.4%  
Grand Total   280,297 156,844 100.0%  


How Complicated are Defined Benefit Plans?

Without the proper administrative services, a Defined Benefit Plan can turn into a nightmare for the plan sponsor. An integral part of the complexities of a Defined Benefit Plan is determining the correct actuarial assumptions that will maximize the objectives of the employer. The key to the design of a Defined Benefit Plan is meeting the needs of the specific company and its employees, without making the plan any more complicated than necessary.

Your plan will run smoothly and efficiently if it receives the careful and consistent attention of experienced actuaries and plan administrators, with advanced computer support systems, working closely with your office staff. Our services include all functions necessary for the smooth operation of your plan, including Plan Design, Documentation, Employee Communication, and Complete Administration.

We have the expertise to determine if this type of Plan is for you!