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Potentially larger tax-deductible contributions than a standalone 401(k), when age, pay, and the census support the formula.
Defined Benefit Plans
Create more retirement value from the business you’ve built.
Defined Benefit Plans can give eligible business owners a more intentional way to fund retirement—often with significantly higher annual contributions than a standard defined contribution plan.
For owners prioritizing retirement income
A plan is only useful if it fits your real life.
We start with the business you have—not a generic profile. Then we help you see the trade-offs in plain language, with the right professional partners involved at the right time.
Important distinction: Sterling Pension Group is a retirement plan consulting and third-party administration firm. We are not actuaries. When an independent Enrolled Actuary’s formal certification or valuation is required, we coordinate that work with the appropriate professional.
What the plan is
A Defined Benefit Plan is a retirement arrangement designed around a target benefit at retirement. Instead of beginning with a fixed employee contribution limit, the plan starts with the retirement outcome you want to work toward, then builds a contribution strategy around it.
That is the practical difference from a SEP or a 401(k). Those plans start with a deposit ceiling. A defined benefit plan starts with a promised benefit, and an actuary works backward to the deposit. The IRS states the 2026 ceiling as an annual retirement annuity of $290,000, not as a contribution. Read the IRS benefit-limit page and our 2024–2026 limits note before anyone treats a marketing number as your deduction.
Who tends to consider one
These plans are commonly explored by established business owners and high-earning professionals who have consistent cash flow, a meaningful retirement funding goal, and the capacity to contribute regularly over time. Physicians, dentists, attorneys, and consultants show up often. So do closely held companies with one or a few owners and a payroll that can be described accurately.
The plan is a poor fit if pay is unstable, a sale is already on the calendar, or you want deposits to feel optional the way a SEP does. That test is on when it is not a fit.
Why professional coordination matters
The plan touches business cash flow, employee eligibility, tax strategy, administration, and compliance. Sterling brings the moving parts into one coordinated process and works with your tax, legal, and actuarial professionals when their expertise is required.
Your CPA decides what is deductible on the return. An independent Enrolled Actuary certifies the valuation and signs Schedule SB when the filing requires it. Sterling, as the administrator, keeps the census, the document, and the annual work lined up with those signatures. Who bills for which piece is on fees and who does what.
What to evaluate
The opportunity is personal to your numbers.
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A structured way to close a retirement savings gap, funded over several years rather than as a one-December idea.
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Can be coordinated with an existing 401(k) strategy. The combination is described on 401(k) and cash balance.
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Plan design built around age, compensation, and goals. Staff who meet the age and service rules are in the test. See staff cost.
What happens after the plan exists
Adoption is the start of a calendar, not the end of a project. Minimum funding, the deduction deadline, and Form 5500 are three different dates. A calendar-year plan generally funds by September 15, deducts by the return due date including extensions, and files Form 5500 by July 31, extendable to October 15. The map is the deadline calendar. The year-after-year work is after the plan exists.
A cash balance plan is still this plan
Most owners who say “defined benefit” and then ask to see an account balance are describing a cash balance plan. It is a defined benefit plan with a hypothetical account, pay credits, and an interest credit. The traditional formula and the cash balance formula are design choices inside the same legal frame. If you want the account statement, start on the cash balance page. If you want the target-benefit version, stay here.
Ready to explore the fit?
Let’s put your business in context.
Bring compensation, entity type, and a census. Leave the uncertified contribution target at home.