A 401(k) is where most advisors stop. For high-income owners, it shelters less than a third of what's available. This is what the rest looks like.
The number above captures annual tax savings on contribution. It doesn't capture the Roth conversion window after a business sale — the 3–7 year gap between peak income and Social Security, when a well-funded plan can convert at rates you'll never see again.
It doesn't coordinate with a QSBS §1202 exit or an installment sale, where a properly timed DB contribution absorbs spiking income in the year it actually matters.
It assumes a single-layer structure — not the Solo 401(k) → profit-sharing → Cash Balance → NQDC stack that a properly designed plan uses once income clears the §401(a)(17) compensation cap.
And the dollar number above doesn't price what a DB/CB plan gives you that no taxable account can: ERISA creditor protection. Assets inside a qualified plan are shielded from judgments, malpractice awards, and — in most cases — bankruptcy. For physicians, dentists, surgeons, and partners in litigation-exposed practices, that protection can be worth more than the deduction itself.
The real leverage is typically 30–60% beyond the number shown — before you even price the asset protection. That work is what a fiduciary engagement is actually for.
| Metric | 401(k) Only | With DB/CB Plan | Your Additional Benefit |
|---|---|---|---|
| Annual Contribution | $70k | $270k | $200k |
| Annual Tax Savings | $25.9k | $99.9k | $74k |
| Est. Value at Retirement | $1.8M | $7.5M | $5.7M |
Adding a DB/Cash Balance Plan could shelter an additional $200,000 per year — saving $74,000 in taxes annually and building $5.7M more toward retirement.
A Cash Balance Plan is an IRS-approved retirement vehicle that combines the best features of defined benefit and 401(k) plans. The employer (you) makes an annual contribution that's credited to each participant's account and guaranteed to grow at a minimum rate (typically 5% annually).
Why it matters for you: Unlike a 401(k), there's no annual contribution cap based on salary percentage. You can contribute up to what an enrolled actuary determines is needed to fund your retirement. For high-income business owners, this typically means sheltering $100,000–$300,000+ annually.
Important considerations: You'll need an enrolled actuary to calculate contributions ($2,000–$5,000/year). Plans work best for business owners with consistent income, 5+ year horizons, and a desire for maximum sheltering. Contributions can vary year to year based on business income — built-in flexibility.
Not ready for a consultation yet? Take the 2-minute Wealth Gap Assessment to see which of the four quarterly disciplines needs your attention first.