This is the traditional "pension
plan". It is designed to provide a monthly benefit at a set retirement
age. The actuarial calculations determine the amount of contribution
required each year to fund that benefit. For a small company or a
sole proprietor, that monthly benefit is often converted to a lump
sum at retirement and rolled over to an IRA. This takes away all of
the complexity of the calculation used to accumulate the lump sum
and leaves the use or spending of that amount, with some restrictions,
to the individual.
