Can the partners maintain separate accounts for their Defined Benefit plan contributions?
No. The DB plan will maintain only one account for all the plan assets. However, for the purpose of the annual contribution, assets per partner will be tracked, and the amount of the annual contribution per partner will be provided to the partnership for deductibility purposes. When a partner retires, all the assets in the plan may be used to pay that partner’s benefit. Because assets are pooled to pay all benefits under the plan, partners need to agree on the investment policy before they decide to open a Defined Benefit plan.
Related Questions
- Under a Defined Benefit plan, are the employee contributions with interest representative of the value of the pension?
- Do I have the steady annual income needed to cover required annual Defined Benefit plan contributions?
- If a Defined Benefit plan is terminated, are there any additional required contributions?
