The 7-Figure Retirement Game Plan You Gotta Know

If your client is a successful business owner earning over $500,000 annually, you’re likely looking for ways to minimize taxes while building meaningful retirement savings for them. And traditional plans like 401(k)s and IRAs, though valuable, often don’t provide the contribution capacity you want for your clients. That’s where Cash Balance Plans come in—a sophisticated, IRS-approved strategy designed specifically for high earners who want both tax efficiency and long-term wealth accumulation.

Where Traditional Plans Just Don’t Cut It

High-income earners always face steep tax burdens—federal and state taxes can significantly reduce take-home earnings. While 401(k)s and IRAs offer some tax advantages, their relatively low contribution limits often leave successful entrepreneurs underprepared for retirement and overexposed to taxation.

On the other hand, Cash Balance Plans address this gap by allowing dramatically higher contributions. Depending on the client’s age and income, you could set a plan to contribute $100,000 to $300,000+ annually, with those contributions being tax-deductible. The result? Lower taxable income, immediate tax relief, and accelerated retirement savings.

Why Cash Balance Plans Are the Real Deal

Cash Balance Plans are a type of defined benefit plan, but they function like a hybrid between a pension and a 401(k). Each participant has an individual account that grows through employer contributions and a guaranteed interest credit, either fixed or indexed. This setup provides the stability of a pension with the transparency and portability of a defined contribution plan.

Moreover, Cash Balance Plans can be paired with a 401(k). For instance, in 2025, someone over 50 can contribute $30,500 to a 401(k), including catch-up contributions. When combined with a Cash Balance Plan, your total retirement contributions can surge, significantly boosting both tax deductions and retirement assets.

Who Should Hop On This Bandwagon?

Cash Balance Plans are ideal for:

• Business owners with steady, high annual income (typically over $500,000)
• Professionals who have already maxed out their 401(k) contributions
• Entrepreneurs focused on minimizing current tax liabilities while growing retirement funds
• Companies with a relatively small employee base (simplifying plan administration)

The benefits extend beyond tax savings. For example, contributing $200,000 annually at a 40% tax rate could save you $80,000 in taxes each year. Over a decade, this strategy could generate more than $2 million in tax-deferred retirement savings—a powerful boost to your financial future.

Play It Smart

Cash Balance Plans come with regulatory responsibilities. They require annual actuarial certification and must comply with IRS rules. That’s where experienced professionals can showcase their craft by designing, implementing, and maintaining the plan properly, ensuring that tax benefits are optimized and legal requirements are met. 

Consider a law firm partner earning $1 million annually. By implementing a Cash Balance Plan, they contribute $250,000 each year, reducing their taxable income to $750,000. This move cuts their tax bill by about $100,000 annually and fast-tracks their ability to retire comfortably—and potentially even earlier.

Ready to Level Up?

If you have clients with high-income businesses and want to help them keep more of what they’ve earned while investing in their future, now’s the perfect time to explore these options. A Cash Balance Plan could be the key to a more efficient, tax-smart retirement strategy. As a financial advisor or retirement planning expert, you can add value to their overall portfolio, helping it fit their financial goals like a glove.