The Cash Balance Plan Strategy: What Wealthy Business Owners Do Differently

If you’re a high-income business owner and think you’re “maxing out” your retirement contributions with a 401(k), it might be time to rethink your strategy.

In this video, we explore one of the most powerful—but often overlooked—tools in the retirement and tax planning world: the cash balance plan (a type of defined benefit plan). These IRS-approved plans are making a major comeback among successful entrepreneurs, solo practitioners, and small business owners who want to reduce their tax burden while rapidly building retirement wealth.

Here’s what makes them different:

💡 What Is a Cash Balance Plan?

A cash balance plan is a pension-style retirement plan that works on top of your 401(k). It allows for significantly higher contribution limits—often in the range of $100,000 to $300,000+ annually—depending on your age, income, and goals.

Contributions are made by the business (not the employee) and are:

• Fully tax-deductible
• Credited to the business owner
• Actuarially calculated based on your age and retirement timeline

For those over 40, this strategy can be game-changing. The older you are, the more you're allowed to contribute—making it ideal for business owners who are behind on savings but ahead on profit.

💸 Why It Works So Well for High Earners

While most retirement savers are limited to around $70K–$76K per year through traditional plans, cash balance plans can triple that amount. Best of all, they pair seamlessly with 401(k) and profit-sharing contributions.

Owners can often:

• Contribute up to $300K+ per year
• Deduct every dollar from business income
• Design the plan to heavily favor themselves while still passing IRS testing
• Build $1M+ in tax-deferred wealth over 5–10 years
• Save $50K–$100K+ annually in taxes

And yes—it’s all fully legal and IRS-approved when implemented correctly.

⚠️ Timing Matters

One critical point: cash balance plans must be adopted before year-end, even though funding can occur up to the tax filing deadline. That makes timing and proactive planning essential if you want the tax deduction this year.

👥 Who Should Consider It?

This strategy isn’t for everyone. But it’s ideal for:

• Business owners over 40
• Highly profitable businesses with steady income
• Entrepreneurs behind on retirement savings
• Professionals seeking large, legal tax deductions
• Solo practitioners or family-run businesses looking to keep staff contributions low

🧠 The Bottom Line

While most people settle for “maxing out” their 401(k), wealthy business owners know that’s just the start. They leverage defined benefit and cash balance plans to supercharge savings, slash their tax bills, and create flexible, owner-centric wealth-building strategies.

If you’ve built a profitable business and want to explore what’s possible beyond the basic retirement plan, it might be time to join them.

If you’re a high-income professional, equity-compensated executive, or business owner ready for deeper, smarter financial advice — let's talk.

Because real advice isn’t mass-produced; it’s tailored, proactive, and built around you.