Under certain limited circumstances, yes. However, the amount of benefits (and therefore tax deductions) under two or more defined benefit plans of the same employer are limited to the maximum allowed under a single plan. (You can’t “beat the system”.) This is true whether the plans are maintained simultaneously or not. This is true whether the plans are traditional defined benefit, cash balance, or 412(e). Therefore, if the first plan has generated maximum accrued benefits, there is no reason for the employer to start a new one. This also is why we ask during our proposal process if the employer has maintained any retirement plans in the past. However, it may be advantageous to start a defined contribution type plan upon the termination of a defined benefit type plan.
Posted in: Plan Design, Implementation & Termination
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