A:

At a very high income level (say from $300,000 plus per year), you may be able to contribute and deduct the $100,000 contribution each year, or possibly more. However, as you may already know, defined-benefit plans involve complex calculations and usually require the assistance of a competent plan administrator to make sure the contribution amounts are accurate. The plan administrator will take several factors into consideration, which include whether you have employees, the average compensation you earn over a certain number of years, the number of years left for retirement and your average compensation. IRS Publication 560 includes some good basic guidance, but it may be necessary to engage the services of a tax professional, just to be on the safe side.

This question was answered by Denise Appleby
(Contact Denise)

Hot Definitions
  1. Free Cash Flow - FCF

    A measure of financial performance calculated as operating cash flow minus capital expenditures. Free cash flow (FCF) represents ...
  2. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  3. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  6. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
Trading Center