Owner-only defined benefit plan

Working for yourself brings a lot of flexibility – and a lot of work. At Edward Jones, we understand the importance of running a business and saving for retirement. 

The Edward Jones Owner DB^® is designed for business owners like you – with no employees other than your spouse – who want to increase or even maximize their retirement contributions, since annual contributions can significantly exceed the $70,000 maximum that's typical of other types of retirement plans.

Owner-only defined benefit plan considerations

Consider an Edward Jones Owner DB^® if you:

• Want to contribute more than $70,000 or 25% of your total compensation 
• Are at least 40 years old 
• Have relatively high and stable income

Owner-only defined benefit plan contribution features

The amount your business is required to contribute each year is calculated based on the amount needed to pay benefits under the plan. It will vary based on several factors, such as the plan's current assets, assumed rate of return, current and expected retirement ages of participants, and expected benefit amounts.

Since the contribution amount is calculated (and it must be calculated by a qualified actuary), there isn't a dollar limit on the amount that can be contributed. As a result, your business may be able to contribute more toward your retirement than the $70,000 or 25% of total compensation limit that's typical of other retirement plans.  

However, keep in mind that contributions are generally required. If the business contributes less than the calculated amount, the IRS could assess penalties and even disqualify the plan. 

Additionally, while there isn't a limit on the amount that can be contributed, there is a limit on the maximum annual benefit you can receive in retirement, which can affect the contribution amount. The maximum annual benefit you can receive is the lesser of 100% of your average compensation for the three highest consecutive years and the applicable limit below:

Contributions are tax-deductible, and earnings are tax-deferred until you withdraw money. 

If you want to save even more for retirement, you can pair an owner-only defined benefit plan with an owner-only 401(k) plan. Doing so will allow you (and your spouse) to make additional salary deferrals.

Owner-only defined benefit plan tax deadlines

You must establish your plan by the end of your business year (Dec. 31 if a calendar year) in the year you will make contributions.

How we can help

An Edward Jones financial advisor can help you choose a retirement plan that fits your small business needs. Contact us to request a complimentary, no-obligation consultation.