Cash Balance Plan Tax Savings 2027 Calculator
Estimate the 2027 Cash Balance Plan contribution and tax savings for self-employed high earners stacking on top of a 401(k).
What Is a Cash Balance Plan?
A Cash Balance Plan is a HYBRID retirement plan — legally a defined benefit plan but described in account-style terms ('your balance grew by X% interest credit this year'). It allows MUCH higher contributions than a Solo 401(k) for ages 45+ while feeling like a 401(k) from the participant's view. Combined with a Solo 401(k), self-employed professionals can shelter $200K-$400K/year of pre-tax income. Source: IRC §401(a)(35), §415. Last updated: May 2026.
Age-Weighted Contribution Mechanics
Each year you receive a 'pay credit' (typically 5-25% of compensation) plus an 'interest credit' (typically 4-5% guaranteed). The IRS allows contributions sized to fund a target lump sum at age 62 — about $3.0M (2027 estimate). Older participants need higher pay credits because they have fewer years to accumulate. A 55-year-old at $400K income can contribute $150K-$200K to CB; a 60-year-old can hit $250K-$300K.
Stacking with Solo 401(k)
The combined 401(k) + CB structure is the gold standard for self-employed high-income earners. The Solo 401(k) provides employee deferral ($24,500) + small employer contribution (often 6%); the Cash Balance provides the big age-weighted contribution. For a 55-year-old at $400K, total shelter often exceeds $250K — saving $100K+ in federal + state tax annually.
Costs and Considerations
Annual fees: $3,000-$8,000 (actuary + administration). Form 5500 required. Generally must commit to 5+ years. Solo plans only — adding employees triggers participation requirements and PBGC premiums. The math: $200K contribution at 42% combined = $84,000/year tax savings; over 10 years that's $840K vs $30-80K in admin costs. ROI is enormous.