Fidelity Defined Benefit Plan: Maximize Your Contribution


When you think of investments, the first name that often comes to mind is Fidelity. This is for good reason. They offer a variety of investments, low commissions, and excellent customer support.

If you’re in the market for a defined benefit plan, Fidelity does have a lot to offer. We’ll explore how Fidelity can help you set up and maintain this beneficial retirement plan for your company.

Why Choose Fidelity?

Fidelity offers a full-service suite of products for defined benefit plan solutions. They handle the administrative, actuarial, and investment management components for you.

They also offer consulting for your plan participants, helping everyone choose the investments they are most comfortable with maintaining. Fidelity offers all of this at competitive prices, taking them one step ahead of the competition.

Choosing Fidelity as your Custodian

Most people think to use Fidelity for their custodian that they must open the account with Fidelity. That’s not the case, though. When you open a pension trust, you need a trust agreement, tax ID/EIN, and a custodian. You are free to choose anyone to be the custodian, which in this case, many people choose Fidelity.

Using a third-party provider to create and execute the trust agreement provides you with 360-degree service that ensures you dot all of your ‘i’s and cross all of your ‘ts’. It’s not an area you want to mess around as the process is complex, including legal compliance. Combining the efforts of a third-party service with Fidelity covers all of your bases.

The Downside of Working with Fidelity

As we stated above, you don’t have to set up your cash balance plan with Fidelity. If you are a small business (less than 100 employees), you want a company that specializes in small-business cash balance plans (like us). You can then choose Fidelity as your custodian to get the ‘big-name’ backing that you desire, but with more customized and attentive support.

Here’s the problem if you choose to work directly with Fidelity – your options are limited. Fidelity is more of a one-size-fits-all firm. When you’re a small business trying to keep your head above water, a one-size-fits-all approach typically doesn’t work. You need a firm that has customized solutions and understands the pains of being a small business owner.

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You also need a firm that offers adequate plan control to you, the owner. Do you want someone else telling you what you have to do with your investments or would you like some say? Self-direction is our specialty, providing our plan owners with the autonomy they desire when choosing investment options and the direction of their plan.

Our Selection of Defined Benefit Plans

It’s our goal to provide you with a simplified and flexible retirement solution. We work closely with you, understanding your needs, and creating a comprehensive and customized plan that you help us create – it’s a team effort, not a ‘here’s your plan and that’s it style.’

With our services, you can expect:

  • A customized plan that suits your needs (not based on anyone else’s needs)
  • Plan establishment
  • An illustrated view of the plan created by our actuaries
  • Coordination with your tax and financial advisors

We aren’t the ‘money manager,’ instead we set up your plan in a way that suits your needs the most. We don’t influence your choices – we listen to your needs and your business structure and advice, but never pressure. We’ll walk you through the process and even help you open an account at Fidelity, if that’s your custodian of choice.

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We’ll help you see all investment options that you have, whether that means choosing traditional investment products from Fidelity, such as stocks, bonds, mutual funds, and CDs or diversifying into other areas, such as real estate, mortgage notes, private equity, and precious metals. Again, you are the guide – if you want to stick to the straight and narrow, that’s what we’ll help you do.

Setting up a Fidelity Defined Benefit Plan

Setting up a cash balance plan with Fidelity as the custodian is simple, just use the following steps:

  • Choose a third-party administrator

Choose a company that looks at the big picture, allows you to be a team player, and provides competitive administrative costs that are affordable

  • Create a plan that allows Fidelity to be the custodian

Make sure your administrator works with Fidelity, ensuring a seamless operation from start to finish

  • Open your account at Fidelity

You’ll open an account at Fidelity just like you would if you were going straight through Fidelity. Choose your investment allocation that allows for the risk tolerance you can handle.

  • Fund your plan

Set up a time that’s comfortable for you to fund the plan. It doesn’t have to be right away. You can partially fund it, with completion occurring by the tax filing date. Remember, this includes extensions, which gives you more time should you need it.

  • Tell your CPA

Make sure you keep your CPA or tax advisor on the same page. Your CPA will have more deep knowledge of the cash balance plan and will help you file your paperwork accordingly.

Drawn diagram of Planning Process

Should you choose Fidelity as your cash balance plan provider? Obviously, the choice is yours, but know that they may not be able to provide the level of service you need as a small business. Fidelity’s expertise is in large, institutional sized businesses, using more of a one-size-fits-all approach.

If you want a customized approach that meets the needs of your business, you need a third-party administrator that offers the level of service you need. You can still use Fidelity as your custodian, taking advantage of their great investment options, but have the expertise of a small business expert helping you throughout the complicated process.

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