One of the things I dislike the most is owner-only defined benefit plans where the minimum contribution is tied fully to the funding of a whole life insurance policy.
Why do I hate it? It’s because when times are bad and these owners have to cease accruals in their plan because they can’t afford it, they end up taking a massive financial haircut by surrendering their policy. It’s one of the great abuses in the sales practices of the retirement plan industry. No employer contribution should ever be tied dollar for dollar with an insurance product of any kind. All it does is limit a defined benefit plan sponsor when times are tough and the insurance agent gets the commission.
