Contributions and payments both land at the beginning of the year; the return is credited at year end, after that year's flows.
Everything turns on how long the income has to last. The same annual income costs very different amounts to fund:
Both Contribution and Return % take an entry on any year and fill every year below it, until a later year sets a new one. Outlined cells are the ones you pinned. While Keep it funded automatically is on, changing a return — or any assumption above — re-solves the contributions on the spot, holding whatever shape you typed. Editing a contribution never triggers that, so the column stays yours. Switch it off to enter real contributions and read the surplus or shortfall instead. Level replaces the column with the equal annual amount that funds the benefit; Scale keeps your shape and multiplies it.
| Year | Age | Contribution | Return % | Income drawn | Return earned | End balance |
|---|
Before acting on this: a qualified defined benefit plan is not funded by contributions of your choosing. An enrolled actuary sets the amount each year from the plan's benefit formula, your compensation history and the plan's own assumed rate — the figures above are what the promise is worth at the returns you entered, which is the starting point for that work, not a substitute for it. Two statutory limits also bind: the annual benefit is capped by IRC 415(b) (indexed each year, recently around the $280,000 mark) and by your high-three-year average compensation. Deductibility has its own limits, and the deduction is a deferral rather than forgiveness — every dollar of income drawn later is taxed as ordinary income then. A single average return also hides sequence risk: the same average delivered in a different order, with poor years early in the payout, empties a plan sooner.