Pension plans are best for businesses with more than ten employees, and are valuable for attracting and retaining top employees.

Traditional pensions are commonly referred to as Qualified Plans, and there are two types: Defined-Benefit and Defined-Contribution. Defined-Benefit Plans are funded by employer contributions and are guaranteed by the Pension Benefit Guaranty Corporation (PBGC). Employee-sponsored retirement plans such as 401(k), 403(h) and 457 plans are called Defined-Contribution plans. Defined-Contribution plans are funded in large part by employee contributions and are not guaranteed by the PBGC.

Defined Benefit Plan

  • Maximum Contribution - Amount needed to provide an annual benefit not larger than the smaller of $160,000 or 10% of the participant's average compensation for his or her highest three consecutive calendar years.
  • Maximum Deduction - Based on actuarial assumptions and computations.

Talk to your tax advisor to learn more about how pension plans can benefit your business.

Defined Contribution Plan

  • Maximum Contribution
    • Money purchased: smaller of $40,000 or 100% of the participant's compensation.
    • Profit sharing: smaller of $40,000 or 100% of participant's compensation.
  • Maximum Deduction
    • Money purchased: 25% of all participant's compensation.
    • Profit sharing: smaller of $40,000 or 100% of participant's compensation.



Securities and insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers LLC. Neither firm is affiliated with the financial institution where investments are offered. Advisory services are only offered by Investment Adviser Representatives. Registered address and phone number: American Savings Investment Services, 300 North Beretania Street Honolulu, HI 96817. (808) 735-1717.

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May Lose Value
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