Defined Benefit Plan Administration in Massachusetts

Defined Benefit Plan Administration Can Deliver High-Quality Pensions to Your Employees

Employer-sponsored pension plans can significantly enhance employees’ compensation packages. A strong plan rewards loyal employees for their years of service, and it can help attract highly qualified prospective employees. Hiring a firm that specializes in defined benefit plan administration makes it easy for businesses to provide high-quality pension plans for their employees.

What is a Defined Benefit Plan?

A defined benefit plan is an employer-funded pension plan. Employees’ payments are based on their average annual income and time with the company, and their benefits are expressed as a percentage of their annual income. Employees can receive their benefits as a lump sum or monthly payments that last for their lifetime, or they can roll their benefits over to an IRA account.

Unlike a direct contribution plan, such as a 401(k) or profit sharing plan, contributions to a defined benefit plan are often made by the employer. In direct contribution plans, employers may contribute to the plans, but employees also typically have to contribute as well. These contributions may be used to lower a business’ tax burden.

What Types of Investments Can Defined Benefit Plans Invest In?

In general, defined benefit plans can invest in most market-based investments that individuals would consider. Plans are usually able to purchase stocks, bonds, mutual funds, real estate investment trusts (REITs), and government securities.

There are a few prohibited transactions. For example, plans can’t purchase houses for trustees, plan sponsors, or participants to live in, and collectibles like stamps, coins, and artwork aren’t allowed under certain circumstances. These are relatively uncommon circumstances, though, and there are many allowed investments for plans to use to reach their goals.

What Businesses Can Offer a Defined Benefit Plan?

Almost any business can offer its employees a defined benefit plan. Sole proprietors, partnerships, and corporations can all typically sponsor a plan.

While most businesses are able to sponsor a defined benefit plan, it’s not always the best type of plan to offer. Generally speaking, defined benefit plans are well-suited for established small businesses. Larger companies may want to consider other types of plans, such as direct contribution plans.

To find out whether a defined benefit plan would most benefit their employees, business owners should talk with a defined benefit plan administration firm. They’re able to discuss the costs associated with and advantages of this type of plan, and they can also recommend another type of plan if there’s a better choice.

What Does Defined Benefit Plan Administration Involve?

A defined benefit plan administration firm helps small businesses, which usually have limited resources, set up and run a defined benefit plan. They help businesses design a plan to meet their particular needs and get the legal paperwork for the plan in order. Once the plan is in place, an administration firm generally takes care of managing the plan and providing reports about its performance. They also can help determine what employees’ payments should be based on their average salary, years with the company, and chosen form of compensation.

This material is for informational purposes only. All statements herein are subject to the provision, exclusions and conditions of the applicable policy. For an actual description of all coverages, terms and conditions, refer to the insurance policy. The Feingold Companies is a full-service organization in which offers insurance and employee benefit services through affiliated companies. All individuals listed are affiliated with The Feingold Companies and offer insurance and employee benefit services through Feingold Insurance Agency, Feingold Financial Management and Feingold Employee Benefit Services. Saul Feingold, David Dimenstein, Jed Brandes, Elisa Lindley, Velma Almeida & Carlos Ortiz offer securities through Cambridge Investment Research, Inc., a broker dealer member FINRA/SIPC . Advisory services through Cambridge Investment Research Advisors, Inc. a Registered Investment Adviser. The Feingold Companies are not affiliated with Cambridge Investment Research, Inc. Connor MacNeil is not affiliated with Cambridge Investment Research Advisors, Inc. to offer securities or advisory services. Please be advised that the above referenced New Lakeside and Dudley Insurance Agency only offers insurance related products and services. This office does not contain individuals who are licensed or registered to sale or promote securities related products. If you are interested in receiving securities related products and services please visit or contact our Worcester Office location only. This communication is strictly intended for individuals residing in the states of AZ, CA, CO, CT, DC, FL, GA, IA, IL, MA, ME, MI, MN, NC, NH, NJ, NM, NV, NY, OH, PA, RI, SC, TN, TX, VA. No offers may be made or accepted from any resident outside the specific state(s) referenced. Copyright 2021. All Rights Reserved

DEFINED BENEFIT PLAN ADMINISTRATION

Defined Benefit Plan Administration Can Deliver High-Quality Pensions to Your Employees

What is a Defined Benefit Plan?

What Types of Investments Can Defined Benefit Plans Invest In?

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What Businesses Can Offer a Defined Benefit Plan?

What Does Defined Benefit Plan Administration Involve?

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