Defined Benefit Plan Self-Employed 2027 Contribution Calculator
Estimate the 2027 maximum tax-deductible Defined Benefit Plan contribution for a self-employed professional age 45+.
Why a Defined Benefit Plan in 2027?
Defined Benefit (DB) plans let high-income self-employed workers contribute MUCH more than a Solo 401(k) — often $100K-$300K/year for ages 50+. The 2027 IRC §415(b) annual benefit limit is projected at $290,000/year of retirement income. To fund that benefit, an actuary calculates the contribution needed each year based on your age, target retirement, expected return, and mortality. Source: IRC §415(b), Rev. Proc. 2024-40. Last updated: May 2026.
How DB Contributions Are Calculated
An actuary computes the present value of your target retirement benefit at your retirement age, then subtracts existing plan assets and earnings, divides by years to retirement, and amortizes funding. Older participants close to retirement need larger annual contributions because there's less time for compounding. A 55-year-old can often contribute $150K-$250K, vs $50K-$100K for a 45-year-old.
Best Candidates for DB Plans
(1) Self-employed professionals age 45-65 with consistent $200K+ income. (2) Doctors, dentists, lawyers, consultants in late-career catch-up mode. (3) Side-business income on top of a W-2 (DB on the side). (4) Empty-nesters with cash flow now that kids are out. The plan favors stable income — large income drops can require contribution rollbacks.
Costs and Administration
DB plans cost $1,500-$5,000/year in actuarial fees plus annual Form 5500 filing. PBGC premiums may apply for plans with non-owner employees. Required for life of the plan — generally minimum 5 years to avoid IRS scrutiny. The tax savings on a $200K contribution at 37% federal + 5% state easily covers these fees 50-100x over.
Frequently Asked Questions
What's the 2027 Defined Benefit Plan annual benefit cap?
Approximately $290,000/year of retirement income (projected, IRS Rev. Proc. 2024-40 inflation adjustment from 2024's $275,000). This is the MAXIMUM target retirement benefit your DB plan can promise \u2014 actual contribution to fund that depends on your age, years to retirement, assumed return, and mortality.
How much can a 55-year-old contribute to a DB plan in 2027?
Typically $150,000-$250,000 depending on income consistency, assumed return (usually 5%), and target retirement age (usually 65). The older you are, the higher the contribution because there are fewer years for compounding to build the target benefit. An actuary calculates the precise amount.
Can I have both a Solo 401(k) and a DB plan?
Yes \u2014 you can stack a Solo 401(k) on top of a DB plan. The DB plan handles employer contributions; the Solo 401(k) provides the $24,500 employee deferral ($32,000 with catch-up). Combined contributions for a 55-year-old can exceed $250K-$300K annually.
What if my income drops mid-plan?
DB plans require minimum funding annually \u2014 the actuarial promise must be met. Income drops can trigger amendments (lowering the target benefit, reducing contributions) but require IRS notification. Sustained inability to fund the plan can lead to termination \u2014 distributions can be rolled to an IRA tax-free.
How long must I keep a DB plan open?
Generally a minimum of 5 years to avoid IRS challenge. The IRS may disallow deductions if a plan is created, fully funded with maximum contributions, then terminated quickly. Genuine retirement planning intent requires multi-year funding. Many plans run 10-15 years before termination.
Are DB contributions tax-deductible?
Yes \u2014 fully deductible on Schedule 1, line 16 (self-employed retirement plan contribution). $200K of DB contribution at 37% federal + 5% state = $84,000 tax savings annually. Plus the assets grow tax-deferred until withdrawal. The combined value vastly exceeds the plan setup costs.