Chartered Retirement Planning Counselor (CRPC) Practice Exam 2025 - Free CRPC Practice Questions and Study Guide

A defined benefit plan is particularly advantageous for older, highly compensated employees seeking to maximize tax-deferred retirement savings. This type of plan provides a predetermined payout at retirement, which is based on factors such as salary and years of service. Because the benefits are calculated using a formula that often considers the highest earning years of employment, it allows older, high-income earners to accumulate a substantial amount in their retirement accounts.

Additionally, defined benefit plans can significantly contribute to a client's overall retirement financial security as they are funded primarily by the employer, reducing the financial burden on employees themselves. Furthermore, contributions to these plans are tax-deductible for the employer, providing an incentive to establish such a plan, while employees benefit from tax-deferred growth on their retirement savings.

In contrast, while other plans like defined contribution plans also offer tax-deferred savings, they usually have contribution limits that might not meet the maximum savings goals for high earners. Unit benefit dollar plans and top hat plans have their own specific advantages, but they do not typically provide the robust, guaranteed retirement income security that older employees might be looking for.

Therefore, for meeting the goals of maximizing tax-deferred retirement savings specifically for highly compensated employees, a defined benefit plan stands out as the most