Setting Up a Defined Benefit Plan
What’s Involved and How Long It Takes
So you’ve crunched the numbers, weighed the tax advantages, and decided it’s time to take control of your retirement strategy with a defined benefit (DB) plan. The question now is: what’s next?
Contrary to what you may have heard, setting up a defined benefit plan doesn’t have to be difficult or time-consuming—if you’re working with the right team. While these plans do involve more structure than a SEP IRA or Solo 401(k), the added complexity unlocks significantly greater benefits: six-figure tax deductions, guaranteed retirement income, and a professionally managed, legally compliant system that works in your favor year after year.
In this chapter, we’ll outline the entire process—from initial consultation to plan funding—and explain what happens behind the scenes during each step. We’ll also answer one of the most common questions we get: how long does it take to get this plan live and ready for contributions?
Spoiler alert: You can have a fully functioning defined benefit plan set up in as little as 2–4 weeks.
Let’s walk through the process.
Step 1: Initial Consultation and Data Collection (1–3 Days)
Our setup process begins with a complimentary consultation. This is a 20–30 minute conversation where we:
Learn about your business structure
Review your compensation and income history
Ask about your retirement goals and timeline
Identify whether you currently have a 401(k) or profit-sharing plan
Discuss whether there are employees who need to be included in the plan
We also collect a few basic documents:
Two years of tax returns or P&Ls
W-2 or 1099 statements
Census of eligible employees (if applicable)
Payroll data and any existing retirement plan documents
This gives us everything we need to move on to step two: designing your custom plan.
Step 2: Actuarial Plan Design (3–5 Days)
Next, our actuaries run a series of projections based on your income, age, and years to retirement. The goal is to determine:
The maximum allowable contribution based on IRS rules
A reasonable and sustainable benefit target (e.g., $150,000/year starting at age 62)
The annual contribution needed to fund that benefit
The required minimum contributions for any eligible employees
How to layer a 401(k) or profit-sharing plan on top (if applicable)
You’ll receive a custom plan illustration showing:
Your contribution range (min–max)
Tax savings based on current marginal rates
Employee cost estimates (if applicable)
Long-term projected plan value at retirement
We walk through all of this with you, answering any questions and modeling alternatives. You’ll be able to see, in plain language and real numbers, what a DB plan can do for your financial future.
Once you’re comfortable with the design, we move to documentation.
Step 3: Drafting Plan Documents (2–4 Days)
With your design finalized, we prepare all the legal and compliance documents required by the IRS and Department of Labor. These include:
The Plan Adoption Agreement
The Trust Agreement
The Summary Plan Description (SPD) for participants
IRS-required elections and disclosures
Participant onboarding forms (if you have employees)
We also generate the official plan name, employer identification number (if necessary), and trust account structure.
All documents are delivered to you in a digital vault for review and signature. We explain every step and make sure nothing falls through the cracks.
Step 4: Establishing the Plan and Trust Account (1–5 Days)
Once the plan is signed, it must be formally established. That means two key actions must occur:
The plan documents are executed (signed and dated)
A trust account is opened to hold contributions and manage plan assets
We help you open this account through a custodian or financial institution of your choice—or we handle it for you through one of our preferred partners. The trust account must be:
Dedicated solely to the DB plan
Titled under the plan’s official name
Managed in accordance with ERISA fiduciary standards
Once the trust account is active, the plan is live—and contributions can begin.
Step 5: Funding Strategy and Initial Contribution (1–3 Days)
With the plan in place and the trust account open, you’re ready to make your initial contribution. Our actuaries provide you with an official funding letter detailing:
The minimum and maximum contribution for the plan year
The contribution due date
Wire or check instructions for the plan’s trust account
Many clients contribute the full amount right away to lock in their tax deduction. Others may contribute in installments—especially if cash flow varies throughout the year.
Note: If you’re setting up the plan in Q4 or by the extended tax deadline in the following year, we’ll help you backdate the plan appropriately so that the contribution counts for the prior tax year.
Step 6: Investment Strategy and Asset Allocation (3–7 Days)
Now that funds are in the plan, it’s time to put them to work. Unlike a 401(k), where participants choose investments from a menu, a DB plan is managed holistically, with a focus on:
Liability matching (ensuring assets will meet future obligations)
Preserving capital while still earning reasonable returns
Minimizing volatility
Our investment team works with the actuary to develop a custom portfolio based on:
Your plan’s funding target
Your time horizon
Your risk tolerance
Market conditions and expected returns
We handle all account setup, fund selection, and performance monitoring—so you never have to guess how the plan is invested.
Step 7: Annual Compliance and Ongoing Support (Ongoing)
Once your plan is established, funded, and invested, we shift into ongoing compliance mode. Every year, we handle:
Actuarial valuation to determine current funding status
IRS Form 5500 and Schedule SB filing
Employee communications and benefit statements
PBGC filings and premiums (if applicable)
Nondiscrimination and top-heavy testing
Coordination with your CPA for deduction reporting
We also schedule an annual plan review where we:
Recalculate your contribution range based on updated income and investment performance
Review employee census changes
Adjust funding if needed
Discuss plan amendments if your business or goals have changed
This ongoing oversight ensures that your plan stays compliant, cost-effective, and optimized year after year.
How Long Does It All Take?
Here’s a typical timeline from first call to funded plan:
Step Estimated Timeframe Initial Consultation 1–2 days Actuarial Design & Illustration 3–5 days Plan Document Drafting 2–4 days Trust Account Setup 1–5 days First Contribution 1–3 days after setup Investment Allocation 3–7 days
Total Setup Time: 2 to 4 weeks
In some cases—especially toward year-end when tax deadlines loom—we can expedite setup in as little as 7–10 business days.
We recommend starting no later than November for calendar-year plans. But if you’re reading this in Q1 or Q2, it’s the perfect time to begin planning for this year’s contribution.
What If You Already Have a 401(k) or SEP?
Great news—you don’t have to abandon your current plan. In fact, most of our clients combine their DB plan with an existing 401(k) and profit-sharing plan to maximize total contributions.
We’ll review your current plan design and:
Coordinate the testing requirements
Ensure contribution limits are observed
Modify or restate documents if needed
This "combo plan" approach can increase total contributions to $300,000+ per year, especially for professionals over age 50.
Summary: What’s Involved and Why It’s Worth It
While defined benefit plans require a little more planning than other retirement accounts, the payoff is tremendous:
Six-figure annual contributions
Massive tax savings
Guaranteed income at retirement
Asset protection
Peace of mind
Our firm’s turnkey process makes it easy. We handle everything—design, compliance, investments, and communication—under one roof.
All you need to do is:
Show up for a consultation
Review your plan illustration
Sign your documents
Make your contribution
We take care of the rest.