The Cash Balance Plan a 58-Year-Old Solo Consultant Is Using to Shelter $312,000 a Year From Federal Tax

A 58-year-old solo strategy consultant with $480,000 net Schedule C income has already maxed a Solo 401(k) with a $24,500 employee deferral plus an $8,000 catch-up and $47,500 employer profit-sharing, totaling $80,000 of pre-tax sheltering. With about 7 years until retirement at 65, additional marginal income above the 2026 single-filer threshold of $256,225 is taxed at 35% and above $640,600 at 37%, plus state income tax and self-employment tax, making the marginal unsheltered cost near 40 cents per dollar. A Cash Balance Plan is an IRS-qualified defined-benefit plan whose contribution limit is determined by an actuary using age, compensation, and a target retirement benefit, allowing higher contributions for older participants. For a solo practitioner at 58, typical annual contribution capacity is $190,000 to $240,000, which stacked on the Solo 401(k) raises total pre-tax sheltering to roughly $305,000 to $355,000 per year.

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