Retirement
advanced · $500K+
If you're self-employed with consistent high income ($200K+) and approaching retirement, a cash balance or defined benefit plan allows contributions FAR exceeding 401(k) limits - $200K-$300K+ annually deductible.
Annual Limit
Based on age and income - can exceed $300,000
Key takeaways
- A cash balance or defined benefit plan lets high-earning self-employed people contribute far more than a 401(k), often $200,000-$300,000+ per year.
- Contributions are set by an actuary each year based on your age, income, and target benefit.
- It works best with consistent high income and a 5-10 year commitment, since required contributions are mandatory.
- It can be stacked with a Solo 401(k) for even larger deductions.
Requirements
- Consistent self-employment income $200K+
- Age 50+ (higher contributions allowed)
- 5-10 year commitment typically needed
- Actuarial administration required
How to Implement
- 1Consult pension actuary and TPA
- 2Design plan based on age and income
- 3Establish plan by fiscal year-end
- 4Make required annual contributions
- 5Pay annual administration fees ($2K-$5K)
The bottom line
A defined benefit plan allows some of the largest deductions available to the self-employed, in exchange for mandatory annual funding and administration costs. Income stability is the main prerequisite.
Frequently Asked Questions
Related retirement strategies
Sources
- Internal Revenue Service, Rev. Proc. 2025-32
2026 inflation-adjusted amounts (tax brackets, standard deduction, estate & gift, FSA, credits)
- Internal Revenue Service, Notice 2025-67
2026 retirement plan limits (401(k), IRA, SIMPLE, catch-up)
- Internal Revenue Service, Rev. Proc. 2025-19
2026 HSA and HDHP inflation-adjusted limits
Educational information only. Not financial, tax, or legal advice or a recommendation. Figures are drawn from the primary sources cited above; verify current amounts with the source before acting.