A 412(i) defined benefit pension plan, also known as an “insurance contract plan,” is the only defined benefit plan that is exempt from the minimum funding requirements. A 412(i) plan is ideal for owners of a small business with few or no employees. When you compare a 412(i) to a traditional defined benefit plan, the 412(i) has some key advantages: Larger initial deductions Greater contribution level stability Retirement benefits are guaranteed by an insurance company as opposed to the employer providing the plan Contract guarantees are used as funding assumptions and helps guard them from IRS attack as unreasonable funding assumptions The key requirements for a 412(i) plan include: The plan must be funded exclusively with annuity products, or a combination of life insurance and annuity products, issued by an insurance company. The benefits provided each individual must be equal to the values provided in the contracts and guaranteed by the insurance carrier. Life insurance dividends and excess annuity must be used to reduce the following year's plan contribution. No policy loans are allowed under the contracts. To learn more contact AWT Group at 800-598-9406 or 303-673-9300. Or, email us at bwolf@AWTGroup.com