Most small business owners assume they’re already doing the maximum when they max out their 401(k). After all, the IRS limits employee deferrals and employer contributions, so how much more could really be possible?
As it turns out, quite a bit.
There’s a little-known strategy designed specifically for high-earning small-business owners:
Pairing a Cash Balance Plan with your 401(k)
This combination can allow certain owners to contribute $150,000–$300,000+ per year into tax-advantaged retirement accounts — far more than a traditional 401(k) alone.
Wait… what’s a Cash Balance Plan?
A Cash Balance Plan is a type of Defined Benefit plan. Instead of limiting how much you put in each year (like a 401(k) does), the IRS structures these plans around how much you’re allowed to accumulate at retirement.
That creates room for much larger annual contributions — especially for business owners in their 40s, 50s, and 60s.
Think of it like this:
A 401(k) says “You can save a set amount per year.”
A Cash Balance Plan says “You can save enough to reach a promised benefit.”
If you are closer to retirement, the funding needed to hit that benefit can be substantial… which is exactly why contributions often reach six figures per year.
An YouExample
Let’s say you’re a 55–60 year-old business owner earning $400,000+ annually with strong, predictable cash flow.
Here’s what may be possible:
| Strategy | Approximate Annual Contribution |
|---|---|
| 401(k): Employee deferral + Employer match/profit sharing | ~$70,000–$77,500 |
| Cash Balance Plan | ~$150,000–$225,000+ |
| Total | ~$220,000–$300,000+ |
That’s not a theoretical number — it’s something many owners are doing today.
Why Business Owners Love This Strategy
- Large tax deduction — contributions reduce taxable business income
- Accelerates retirement readiness, especially late-career
- Pairs with an existing 401(k) — you keep the plan you already have
- Great for succession planning or exit planning
- Often benefits the owner most, while still supporting employees
For owners who feel “behind” on retirement savings, a Cash Balance Plan can help them catch up quickly.
When It Makes Sense
A Cash Balance Plan is worth exploring if:
You’re already maxing out your 401(k)
Your business generates consistent profits
You are 50+ (older works to your benefit)
You could use a larger tax deduction
You want to retire or sell the business in the next 5–10 years
When It Might Not Fit
Cash flow is unpredictable
You don’t want mandatory annual contributions
You have many employees and prefer a simpler plan
- You are on the younger side, and your employees are older
These are design questions, not deal-breakers — but they matter.
Why Most Owners Have Never Heard of This
Three reasons:
Status-quo bias — once a 401(k) is in place, most owners assume they’ve “checked the box.”
It sounds complicated, so it’s rarely mentioned unless an owner asks the right questions.
It requires coordination between the advisor, CPA, TPA, and actuary — not every advisor specializes in it.
This is one of those areas where what you don’t know can cost you.
If You’re Curious, the First Step Is Simple
A feasibility analysis takes only a handful of data points:
Age(s)
Income
Current plan design
Number of employees
From there, we can calculate how much you could legally contribute — and whether the tax benefits make sense for your business.
Some owners find they can add an extra $150,000–$300,000+ a year to retirement
Others find a Cash Balance Plan isn’t needed yet — but may be in a few years
Either result is valuable.
Next Steps
→ Schedule a short discovery call to explore what might be possible.
If you’re already doing the right things — maxing out your 401(k), building a strong business, and thinking about retirement — this may be the opportunity that ties everything together.
The content is developed from sources believed to be providing accurate information. The information in this material is for educational purposes only and is not intended as tax, investment, or legal advice. It may not be used to avoid any federal tax penalties. Please consult legal, investment, or tax professionals for specific information regarding your situation. Mayfair Financial and FMG Suite developed and produced this material to provide information on a topic of interest. FMG is not affiliated with the named state-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.