In a Fully Insured Defined Benefit Pension Plan, businesses make tax-deductible contributions and the plan purchases fixed annuities or a combination of fixed annuities and whole life insurance policies. These pay out retirement distributions or rolls benefits to another qualified plan. The benefits are guaranteed with no market risk. The benefits include having a large current tax deduction for employers and guaranteed retirement benefits for employees.
(Note: Guarantees are based upon the claims-paying ability of the insurance company.)
Fully Insured Defined Benefit Pension Plan Key Points:
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