Any company with highly compensated owners and management looking to increase tax-deductible contributions in excess of defined contribution plan limits. DR-VIP was designed to help high-income earners at professional service firms (e.g., private equity, venture capital, investment banking, hedge fund, accounting and law firms).

It means that a participant’s retirement benefit is credited with the actual investment performance of the plan.

A DR-VIP arrangement consists of three fully integrated elements including 401(k), profit-sharing and DR-VIP defined benefit contributions.

Yes, every plan is submitted to IRS for a favorable determination of the plan’s tax qualification.

401(k) and profit-sharing plan assets are generally participant directed and DR-VIP plan assets are invested pursuant to the plan sponsor’s objectives and directions.

Yes. A DR-VIP gets the same tax treatment as any other defined contribution or defined benefit plan including 401(k), profit-sharing and cash balance plans.

Yes.

Yes.

Yes.

Yes.

Yes, the same limit that applies to cash balance and traditional defined benefit plans.

Yes, the same limit (IRC Section 415) that applies to a cash balance plan.

Contributions can be set to automatically decrease when profits are reduced. Optional contributions can also be made when profits go up.

No.

Since the value of benefits accrued in DR-VIPs is directly tied to asset performance the exposure to underfunding or overfunding is mitigated.

No, like cash balance plans, DR-VIP assets are invested on a pooled basis. The 401(k) and profit-sharing assets in the DR-VIP arrangement are participant directed.

No. DR-VIP participant benefits are credited with the actual investment performance of the associated plan assets.

No. However, the maximum benefit allowed by IRC Section 415 still applies.

Yes. DR-VIPs can be used by partnerships, S-Corporations, LLCs and C-Corporations.