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Maxing out your 401(k) and still writing a big check to the IRS? A cash balance or defined benefit plan can add $100,000 to $300,000+ a year in deductible contributions.
Keep your 401(k). Add the layer that does the heavy lifting.
A free illustration of your 401(k) plus defined benefit plan
Yes. A business can sponsor both, and many high-income owners do. You keep your 401(k) salary deferrals, and the business adds a defined benefit plan, usually a cash balance plan, with much higher contribution limits that rise with age.
The two plans are designed and tested together. In most designs, owners keep their full 401(k) deferral, receive a profit sharing contribution of up to 6% of pay, and let the cash balance plan do the heavy lifting.
Everything is tested together for nondiscrimination, which is how a well-designed plan directs most of the contributions to owners while giving staff a fair benefit.
| 401(k) and profit sharing only | Adding a cash balance plan | |
|---|---|---|
| 401(k) deferral with catch-up | $32,500 | $32,500 |
| Profit sharing | $47,500 | $21,600 (6% of pay) |
| Cash balance plan | None | About $197,000 |
| Total | $80,000 | About $251,100 |
Profit sharing drops to 6% of pay so the plans stay within the combined deduction rules, but the cash balance plan more than triples the total.
Hypothetical example for illustration only. Actual contributions are set by the plan’s actuary and depend on age, compensation, employees, and plan design. Assumes compensation of at least $360,000.
From first call to first contribution, we handle the design, the math, and the compliance.
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We look at your income, age, staff census, and current plan to see what’s possible.
We layer your 401(k), profit sharing, and cash balance plan around your tax goals.
You get a clear illustration of your deduction, your savings, and your staff cost before you commit.
Plan documents, annual actuarial work, testing, and filings, handled every year.
Not sure which type to use? See cash balance vs. defined benefit plans.
Michael, a successful business owner with no employees, wanted to maximize his retirement savings while minimizing taxes.
Through a custom-designed retirement plan stack, he and his wife were able to contribute over $575,000 across multiple plans in a single year.
This strategy not only helped secure their financial future but also generated over $222,000 in immediate tax savings, significantly increasing their cash flow and long-term wealth-building potential!
James runs a construction company with high employee turnover and wanted a way to protect cash flow while maximizing retirement contributions.
Through a custom 401(k) and profit-sharing plan design, we used strategic eligibility and vesting schedules to limit costs from short-term employees while allowing ownership to maximize contributions.
This strategy protected company assets, controlled expenses, and helped James build significant retirement wealth.
Eileen, a small business owner, needed a low-cost retirement plan that would meet state mandate requirements while helping her recruit and retain high-quality employees.
Eileen used a customized 401(k) solution focused on minimizing expenses, giving Eileen a competitive edge in hiring without pulling resources away from reinvesting in her growing business.
By using tax credits, her design allowed her to stay compliant, attract top talent, and keep her financial priorities aligned.
*These are hypothetical clients with hypothetical situations and plan designs.
Learn more: Cash Balance vs. Defined Benefit | Employee Costs | 2026 Savings by Age | The Retirement Plan Stack | About Us
Yes. A business can sponsor both. Owners typically keep their full 401(k) deferral, receive profit sharing of up to 6% of pay, and receive large age-based contributions in the defined benefit plan.
It depends mostly on your age and income. Owners in their 40s often add around $100,000 or more a year, and owners in their late 50s and 60s can often add $250,000 to $350,000+.
Yes, within a range. The actuary sets a minimum and maximum each year, which gives you some flexibility, but the plan must be funded.
The IRS expects plans to be permanent, so most owners plan for at least several years. A plan can be amended, frozen, or terminated if business circumstances genuinely change.
Yes, eligible employees must be covered, but the plan can be designed so most contributions go to owners. Eligibility rules, vesting, and new comparability profit sharing all help.
Yes. A cash balance plan is a type of defined benefit plan that expresses each person’s benefit as an account balance, which makes it easier to understand and more flexible to design.
Yes. A new cash balance or defined benefit plan can generally be adopted as late as your business tax return due date, including extensions, and still count for the prior year.
Life, Inc. Retirement Services does not offer tax advice. Please always consult your tax professional about your eligibility for tax credits.
Life, Inc. Retirement Services is a Registered Investment Advisory Firm of the state of Ohio and licensed in Florida and Maryland. All emails and communication are meant to be informative and educational and should not be considered a sale of security until proper notification and disclosures are given.