How much can I contribute?

Contribution amounts depend on your age, income, and desired benefit. Older, higher-earning individuals can contribute $200,000-$300,000+ annually - far exceeding 401(k) limits. An actuary calculates your specific amount each year.

Can I have a defined benefit plan AND a 401(k)?

Yes - you can stack both. Contribute $24,500 to your Solo 401(k) plus $200,000+ to your defined benefit plan. Combined, a self-employed individual over 50 could shelter $250,000+ per year from taxes.

What if my income fluctuates?

This is the main risk. Once established, you're required to make annual contributions based on actuarial calculations. If income drops dramatically, funding the plan can become a burden. Plans can be frozen or terminated, but there are costs.

How long should I maintain the plan?

Ideally 5-10+ years for the economics to work well. Setup costs ($2,000-$5,000), annual administration ($2,000-$5,000/year), and actuarial fees need time to be offset by the massive tax deductions.

What happens to the money at retirement?

You receive a pension payout (lump sum or annuity) that's taxed as ordinary income. Many people choose to roll the lump sum into an IRA for continued tax-deferred growth and more control over withdrawals.

Retirement

Defined Benefit Pension Plan

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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

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Tax Benefit

Deduct $200,000-$300,000+ annually in retirement contributions

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)

Frequently Asked Questions

Annual Limit

Based on age and income - can exceed $300,000

Educational Only: This information is for educational purposes. Consult a qualified financial advisor or tax professional before implementing.

Last reviewed: April 2026

Related retirement strategies

Roth IRATax-free growth and withdrawals in retirement. The younger you start, the more powerful.Employer 401(k) MatchAn employer match adds employer money on top of your own contributions, up to a set limit.Backdoor Roth IRALegal workaround to contribute to Roth IRA when your income is too high.

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.

Defined Benefit Pension Plan

Interactive Calculator

Tax Benefit

Requirements

How to Implement

Frequently Asked Questions

How much can I contribute?

Can I have a defined benefit plan AND a 401(k)?

What if my income fluctuates?

How long should I maintain the plan?

What happens to the money at retirement?

Annual Limit

Related retirement strategies

Sources