A cash-balance defined-benefit plan expresses each participant’s benefit as an account balance, like a 401(k), but it is funded actuarially like a traditional pension. For high-income business owners (roughly $400,000-plus net income) aged 45 and older, a cash-balance plan can allow contributions of $100,000 to $300,000 or more annually — far above 401(k) or SEP limits. Combined with a solo 401(k), total contributions can exceed $300,000 per year. The trade-off is that the plan requires an annual actuarial valuation and ongoing funding commitment.
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