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Can I contribute to both a 401k plan and a Defined Benefit Plan?

Mar 01, 2012 by Dominic from Decatur, IL in  |  Flag
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Dominc,

the short answer is yes.
Caveat Emptor on the defined benefit plan as you really need to know what you are getting into. I assume you are a business owner and that you want to put away as much pretax money as possible (i.e. well more than 49k per year). If your company has maintained consistant earnings and you believe you can fund a defined benefit plan for a minimum of five years, then it is definitely worth consideration. Consider quoting a plan of this nature with more than one advisor and at least three vendors. Defined benefit plans can be life insurance based, but they do not have to be. Additionally, consider consulting with an ERISA attorney so that you have a thorough understanding of how a plan like this works and what the ramifications are should something go awry. Hope that is somewhat helpful.

Here is a link they may interest you on cash balance 401k plans: http://www.dol.gov/ebsa/FAQs/faq_consumer_cashbalanceplans.html

Comment   |  Flag   |  Mar 01, 2012 from Lowell, MI

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