A 412(i) plan, also known as a fully insured defined benefit plan, is a type of retirement plan governed by section 412(i) of the Internal Revenue Code (IRC). It is designed to provide a guaranteed level of retirement income for participants. Here are key features of a 412(i) plan:

### 1. **Defined Benefit Plan:**

– **Nature of the Plan:**
– A 412(i) plan is a type of defined benefit plan, which means that it specifies the amount of retirement income that participants will receive, typically based on a formula considering factors such as salary and years of service.

### 2. **Guaranteed Annuity:**

– **Insurance Contract:**
– The hallmark of a 412(i) plan is that it primarily uses insurance products, such as annuities or life insurance contracts, to fund the promised retirement benefits.

– **Guaranteed Benefits:**
– The contributions made to the plan are used to purchase insurance products that provide guaranteed benefits, ensuring that the participant will receive a specified amount of income in retirement.

### 3. **Contributions and Funding:**

– **Actuarial Calculations:**
– Contributions to a 412(i) plan are determined through actuarial calculations, considering factors such as the participant’s age, salary, and the promised benefit level.

– **Consistent Contributions:**
– Contributions are typically consistent and stable, providing a predictable funding structure for both employers and employees.

### 4. **Tax Advantages:**

– **Tax Deductibility:**
– Contributions made by employers to a 412(i) plan are tax-deductible, providing potential tax advantages for businesses.

– **Tax-Deferred Growth:**
– Investment growth within the insurance products is tax-deferred until withdrawals are made in retirement.

### 5. **Employee Participation:**

– **Primarily for Employers:**
– 412(i) plans are often structured as employer-sponsored plans, and the primary participants are employees.

– **Limited Employee Contributions:**
– Employees may have limited or no ability to make contributions to the plan, unlike certain other retirement plans that allow employee deferrals.

### 6. **Compliance and Regulations:**

– **IRC Section 412(i):**
– The plan must comply with the requirements outlined in section 412(i) of the Internal Revenue Code.

– **IRS Approval:**
– To establish a 412(i) plan, employers typically work with insurance professionals and actuaries to ensure compliance. The plan may require approval from the Internal Revenue Service (IRS).

### 7. **Limitations and Considerations:**

– **Limited Investment Flexibility:**
– 412(i) plans may have more limited investment flexibility compared to some other retirement plans, as they are primarily focused on using insurance products.

– **Ongoing Commitments:**
– Employers that establish 412(i) plans should be aware of the ongoing commitments and obligations associated with funding guaranteed benefits.

It’s important to note that while 412(i) plans offer guaranteed benefits and tax advantages, they are subject to specific regulations, and employers should seek professional advice to ensure compliance with the Internal Revenue Code. Regulatory changes and updates may also impact the features and viability of these plans.