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High-income professional firms with small staffs are ideal for a custom plan. Owners can often deduct $100,000 to $300,000+ a year while keeping staff costs low.
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For most professional service firms, the strongest design is a 401(k) with new comparability profit sharing, plus a cash balance plan. Owners in these firms tend to earn high incomes and be older than their staff, which is exactly the profile where these plans direct the most to owners.
The plan can also help with taxes beyond the deduction itself. Service firms like accounting and consulting practices lose the 20% qualified business income (QBI) deduction at higher incomes, and retirement contributions lower taxable income, which can bring an owner closer to keeping it.
| Layer | 2026 amount per owner | Why it fits professional firms |
|---|---|---|
| 401(k) | $24,500, plus catch-up at 50+ | Owners and staff both save |
| New comparability profit sharing | Up to $72,000 combined with the 401(k) | Owners receive higher rates than staff |
| Cash balance plan | Often $100,000 to $300,000+ | Age-based, so senior owners can deduct the most |
See new comparability profit sharing and adding a cash balance plan.
Accounting, consulting, financial, and other professional service firms are “specified service” businesses. Above an income threshold, owners of these firms lose the 20% QBI deduction.
Retirement plan contributions reduce taxable income. For owners near the threshold, a large enough contribution can restore some or all of the QBI deduction, so the plan saves tax twice. Your CPA can model exactly where your income lands.
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.
Two partners, ages 56 and 49, each earn over $360,000. They have four staff with an average age of 31.
| 401(k) and profit sharing | Cash balance plan | Total | |
|---|---|---|---|
| Partner, age 56 | About $54,100 | About $290,000 | About $344,100 |
| Partner, age 49 | About $46,100 | About $180,000 | About $226,100 |
| Four staff combined | About $10,000 | About $5,000 | About $15,000 |
Hypothetical example for illustration only. Actual contributions are set by the plan’s actuary and depend on age, compensation, employees, and plan design. The 56-year-old’s total includes an $8,000 catch-up, and profit sharing is 6% of pay because the firm also has a cash balance plan.
We work alongside CPA firms to design and run plans for their high-income clients. You keep the tax relationship, and we handle plan design, actuarial work, administration, and filings. Many CPAs bring us in once a client’s income makes a 401(k) alone too small.
See Tax Strategies for Business Owners for how retirement plans fit into a client’s overall tax plan.
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: Tax Strategies for Business Owners | The Retirement Plan Stack | New Comparability | S Corp Owners | About Us
For most firm owners, a 401(k) with new comparability profit sharing plus a cash balance plan. It lets older, higher-paid owners deduct the most while keeping staff costs reasonable.
Sometimes. Contributions lower taxable income, and for owners of service businesses near the QBI income threshold, that can restore some or all of the 20% deduction. Your CPA should run the numbers.
With a 401(k) and profit sharing plan, up to $72,000, plus catch-up contributions at 50 and older. Adding a cash balance plan often allows $100,000 to $300,000+ more, depending on age.
A solo consultant with no employees can use a solo 401(k), and can add a cash balance plan for larger deductions. Once you hire, the plan has to cover eligible staff.
For partners, plan compensation is based on net self-employment earnings, adjusted for half of self-employment tax and the partner’s own contributions. We calculate it with your CPA each year.
Yes. We design and administer plans for CPA firms’ business-owner clients and coordinate with the CPA on timing, deductions, and tax filings.
A profit sharing plan or cash balance plan can generally be adopted up to your business tax return due date, including extensions, and count for the prior year. 401(k) deferrals must be set up in advance.
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.