Comparison of
Deductions under Different Types of Retirement Plans
Comparison of
Deductions under Different Types of Retirement Plans
The chart below illustrates the differences between annual funding levels that can be achieved in Defined Contribution (DC) and Defined Benefit (DB) plans. In a DC plan there is no minimum and, except for catch up contributions at or after age 50, the maximum is independent of current age or retirement age. In a DB plan, there is typically a range between the minimum and maximum contributions and both levels are sensitive to age. The older a participant is and the closer he is to retirement, the higher the contributions.
The chart above illustrates funding for calendar year 2009 based on a single participant making at least $245,000 and a DB plan providing the maximum benefit permitted under IRC 415, valued using a 4 month look back yield curve.