Cash Balance and Defined Benefit Plans for High-Income Professionals and Business Owners
If you are a self-employed professional or business owner writing six-figure checks to the IRS every year, a cash balance or defined benefit plan may be the most powerful tool available to change that. These plans let high earners contribute far beyond what a 401(k) allows, building substantial retirement savings while generating large, current-year tax deductions for the business.
We specialize in evaluating, designing, implementing, and managing these plans, and we coordinate them with your CPA so your tax strategy and your investment strategy reinforce each other.
Why these plans are so powerful
A 401(k) caps everyone at the same dollar amount regardless of age. A cash balance plan works differently. It is a type of defined benefit plan, so instead of setting a fixed contribution, it targets a benefit at retirement and then funds toward it. Because an older participant has fewer years to reach that target, the allowable annual contribution rises steeply with age. The higher your income and the closer you are to retirement, the more you can put away, and deduct, each year.
What that can look like
Cash balance estimator
See roughly how much you could shelter
Estimated maximum in a cash balance plan, per year
Illustrative estimate only, based on 2026 IRS maximums and indexed annually. This is not a recommendation, a projection of your specific results, or a guarantee. Actual contributions are calculated and certified by an actuary and depend on your income, age, business structure, plan design, and other plan participants. Income scaling is a simplified approximation. Speak with us before making any decision.
For a high earner in a combined 45 percent federal and state bracket, a contribution at these levels can translate into well over $100,000 in tax savings in a single year, while that money grows tax-deferred for retirement.
Who these plans fit best
Physicians, dentists, and other medical professionals
Attorneys and partners in professional firms
Real estate professionals and high-earning 1099 contractors
Consultants and self-employed professionals
Owner-operated businesses with strong, consistent profits, typically owners age 40 and up
Built-in flexibility
A common worry is being locked into a contribution you cannot sustain. In practice, after the first year your plan generally has a funding range with a minimum and a maximum, so you can contribute more in strong years and less in lean ones. We design the plan with that flexibility in mind and review it with you annually.
Frequently asked questions
How much more can I contribute than with a 401(k)? Far more. Depending on your age and income, a cash balance plan alone can allow anywhere from roughly $100,000 to more than $350,000 per year, and paired with a 401(k) and profit sharing, total deferrals can exceed $400,000 in peak years. A 401(k) by itself is capped well below that.
Do I need employees to set one up? No. Solo professionals and self-employed earners are often ideal candidates. If you do have employees, the plan must include them, and we design it with that in mind. In many practices the required staff contribution is in a range the business already provides, so there is little or no added cost.
Can I have both a cash balance plan and a 401(k)? Yes, and many high earners do exactly that to maximize deferrals and deductions.
Is the contribution fixed every year? No. Because contributions are calculated to reach a target benefit, the amount can move year to year based on plan investment performance and your compensation, within the funding range we establish.
How do you work with my CPA? Closely. We coordinate plan design and funding with your tax advisor so the deduction and the long-term strategy line up.
If you are paying more in taxes than you should be, schedule a complimentary consultation by calling (765) 742-7366.