Defined Benefit & Cash Balance Plan Calculator
Calculate annual tax-deductible contribution limits for Defined Benefit and Cash Balance pension plans. Model age-weighted IRS actuarial maximums and combo 401(k) deductions.
Cash Balance & Defined Benefit Parameters
Calculate annual write-offs for physicians, partners, consultants, and business owners
$254,500
100% Pre-tax write-off$106,890
Federal + State cash savings$2,545,000
Over 10 years$1,068,900
Cumulative cash retainedCash Balance Plan Proposal Ready
Share with your pension actuary or TPA to draft plan documents
Substantial Tax Deductions with Defined Benefit and Cash Balance Plans
For high-earning self-employed professionals, medical specialists, corporate partners, and small business owners, standard 401(k) plans provide insufficient annual contribution limits. A Cash Balance or Defined Benefit pension plan allows high earners—especially those aged 45 to 65+—to deduct $100,000 to over $350,000 in pre-tax income each year under IRC Section 415(b), dramatically slashing federal and state income tax burdens while accelerating retirement security.
Key Wealth & Tax Features
Actuarial Age-Weighted Sizing
Models IRS actuarial formulas allowing older professionals (ages 50–65+) to make exponentially larger pre-tax contributions.
Solo 401(k) Combination Sizing
Calculates additional 6% employer profit-sharing plus elective deferral deductions allowed when pairing a 401(k) with a DB plan.
IRC Section 401(a)(17) Compensation Caps
Incorporates modern IRS annual compensation limits ($345,000–$350,000) for exact compliance modeling.
Federal & State Cash Tax Savings
Applies combined top-bracket marginal rates to quantify immediate annual cash tax reductions.
Cumulative Multi-Year Tax Shelter
Projects multi-year wealth accumulation sheltered from ordinary income tax rates before rolling into an IRA at retirement.
Actuary-Ready Proposal Summary
Outputs structured contribution benchmarks ready to present to third-party pension administrators (TPAs) and enrolled actuaries.
Practical Financial Applications
- ✓Physicians, Dentists & Surgeons
Shelter high surgical and clinical practice earnings from top federal (37%) and state marginal tax rates.
- ✓Law Firm & Accounting Partners
Offset large pass-through K-1 partnership distributions through customized firm tier contributions.
- ✓Independent Consultants & 1099 Tech Contractors
Deduct hundreds of thousands of dollars annually without hiring employees.
- ✓Family Business Owners Nearing Retirement
Rapidly catch up on decades of retirement savings within an accelerated 5 to 10-year window.
Frequently Asked Questions
What is a Cash Balance Defined Benefit Plan?
A Cash Balance plan is a type of defined benefit pension plan that defines the benefit in terms of a stated account balance rather than a monthly lifetime pension check. It allows business owners to make massive tax-deductible contributions that far exceed 401(k) limits.
How much can I contribute to a Defined Benefit plan each year?
Contribution limits depend on age and earned income. A 50-year-old can typically contribute around $175,000 to $200,000 annually, while a 60-year-old can often contribute upwards of $280,000 to $350,000+ per year under IRC Section 415(b).
Can I have both a 401(k) and a Defined Benefit plan?
Yes. Sponsoring a 'combo plan' (Defined Benefit Plan + 401(k) Profit Sharing) is the industry standard. Under IRS rules, you can make the maximum DB contribution, the full employee 401(k) elective deferral, plus an additional 6% employer profit-sharing contribution.
What happens to the Cash Balance plan when I retire?
When you retire or close your business, the entire accumulated Cash Balance plan can be rolled over 100% tax-free into a Traditional IRA, preserving all tax-deferred growth without triggering immediate tax liability.
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