While the word is that defined-benefit plans are no longer in favor, they can still provide a tax savings for the right client.“A lot of the press would lead you to believe that defined-benefit plans are on the way out,” said Karen Shapiro, chief executive of Dedicated DB, a San Mateo, Calif.-based provider of such plans. “But for some small-business owners, it’s a terrific tax strategy.”

“With a defined-benefit plan, the owner funds the plan. One of the reasons they’ve fallen out of favor with large corporations is that they have moved to 401(k) plans, where they get individual employees to contribute, and sometimes, but not always, the company does a match,” she said. “Since the owner makes the contribution, he gets the deduction.”

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access