2026 cash balance math

Defined Benefit Plan Calculator: The Largest Deduction Left

A free defined benefit plan calculator for self-employed people and creators. Enter your age, a retirement age, and stable annual profit to see the contribution range a one-person defined benefit plan (usually a cash balance plan) could support in 2026, and what that deduction is worth at your marginal rate.

The 2026 415(b) limits A range, not false precision The number on this page, no gate

Stable annual profit in 2026?

$20,000Net self-employment profit or owner compensation you expect to repeat$500,000+

Current age

Retirement age

Estimated annual contribution range

$185,000 to $196,000 / year

Years to retirement age: 12
Annual benefit funded (capped at your compensation): $250,000
Value at retirement the plan targets: $3,125,000
Deduction value at a 32% marginal rate: $59,200 to $62,700

A defined benefit plan likely pencils

At your age and $250,000 of stable profit, a cash balance plan could shelter far more than any 401(k). Get an actuarial illustration; the range above is the honest ballpark.

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Estimate only, from the 2026 IRC 415(b) limits, a fixed annuity factor, and a 5 to 6% funding rate. A real plan's contribution is set each year by an enrolled actuary from your census, compensation history, and the plan's interest crediting rate. Not tax or investment advice.

Before you call an

Three things the calculator assumes you know

How the limit actually works

A defined benefit plan does not have a contribution limit the way a 401(k) does. Instead, IRC 415(b) caps the annual benefit the plan may pay at retirement: $290,000 a year for 2026, or 100% of your highest three-year average compensation, whichever is smaller. The contribution is whatever it actuarially takes to fund that benefit by your retirement age, which is why the number grows so fast with age: fewer years means more per year.

Two caps shape the estimate on this page. If your average compensation is below the dollar limit, the benefit is capped at your compensation, so the calculator binds there for lower incomes. And the dollar limit phases in over 10 years of plan participation, so a plan opened a few years before retirement funds a proportionally smaller benefit.

What the range means, and what an actuary changes

The calculator levels the funding of the maximum benefit over your years to retirement at a fixed 5 to 6% rate, which is why it shows a range instead of one number. A real plan is priced by an enrolled actuary from mortality tables, segment rates, your compensation history, and the interest crediting rate the plan document picks. The illustration you get can land above or below this range, and the required contribution moves each year with investment performance.

That annual requirement is the real commitment. A defined benefit plan has minimum funding rules: in a down year you still owe the contribution the actuary certifies. That is why the plan fits stable, repeating profit, and why the honest advice below a stable $100,000 is to max the solo 401(k) first.

Running an S corp? Check the salary math first →

Stacking it with a solo 401(k)

The defined benefit plan replaces nothing; it stacks. Alongside the plan you can still make the full 401(k) employee deferral, and the employer side of the 401(k) survives at a reduced limit, generally 6% of compensation when a defined benefit plan is also active. For a creator in their fifties with strong profit, the combined deduction routinely runs two to four times the standalone 401(k) ceiling.

The order of operations matters for everyone else. Max the solo 401(k) first, because it is cheap, flexible, and pauses without penalty. Add the defined benefit plan when income is high, stable, and you can commit to funding it for several years. Close it later and the assets roll to an IRA or your 401(k); opening and closing one in two years is the pattern the IRS treats as abusive.

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Defined benefit plan questions

When does a defined benefit plan make sense?+

When three things line up: high income you expect to repeat for several years, an age somewhere past the mid-forties so the years to retirement are few and the annual funding is large, and few or no employees, because a plan generally has to cover eligible staff too. A one-person business clearing $200,000 or more at 45 plus is the classic fit. Below that, the setup and actuary fees usually eat the advantage a solo 401(k) already delivers.

Can I have a defined benefit plan and a solo 401(k) at the same time?+

Yes, and most owners who adopt one do. The defined benefit plan carries the large actuarially determined contribution, and a paired solo 401(k) adds the employee deferral plus a reduced employer contribution, generally limited to 6% of compensation when the plans are combined. The two together are how a high earner in their fifties shelters well over $200,000 in a year.

What is the deadline to set up and fund a defined benefit plan?+

Since the SECURE Act, a plan can be adopted as late as the business tax return due date, including extensions, and still count for the prior year. The contribution itself must be deposited by that same extended due date, and no later than 8.5 months after the plan year ends for minimum funding. Practically: talk to an actuary before year end, because the illustration, plan document, and funding all take time.

Who runs the plan, and what does it cost?+

A defined benefit plan is administered by a third party administrator with an enrolled actuary, who certifies the required contribution each year, files Form 5500, and keeps the plan qualified. Expect a setup fee plus annual administration, commonly a few thousand dollars a year for a one-participant plan. The plan is also a multi-year commitment: the IRS expects a permanent program, not a one-year deduction.

Estimate only, using the 2026 IRC 415(b) annual benefit limit and 401(a)(17) compensation limit from IRS Notice 2025-67, a fixed annuity purchase factor, and a 5 to 6% funding rate. A real plan's contribution is certified each year by an enrolled actuary. Employees, if any, change the math. Not tax advice.

Terms behind this calculator

Defined benefit plan/Self-employment tax/QBI deduction

Amadae members never run this calculator.

We watch the profit that makes a defined benefit plan pencil, bring the actuary when it does, and file the deduction from books that already support it.

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Defined Benefit Plan Calculator: The Largest Deduction Left