Halfway through 2026, re-forecast profit before the contribution hardens

July 5 is the middle of the year only on a calendar. For a cash balance plan it is later than that. Half the payroll has been run. The spring hires are either on the census or about to enter. The 2025 Form 5500 is due on July 31, 2026 unless Form 5558 moves it to October 15, 2026. The minimum contribution for the 2025 plan year is generally due September 15, 2026. And the 2026 accrual, the one that will become this year's deduction, is no longer a theoretical range you can ignore until the CPA asks for a number. Re-forecast profit now, and send the forecast to the administrator before the contribution hardens around a stale illustration.

Sterling Pension Group LLC in West Hartford is the third-party administrator. We are not an actuarial firm. An independent Enrolled Actuary certifies the valuation. Your CPA decides which tax year a deposit lands in. This briefing is not tax, legal, or actuarial advice. It is a mid-year instruction to replace a hope with a range.

What "hardens" means, and what it does not

A cash balance pay credit is whatever the document says it is. Some formulas are a fixed dollar or a fixed percent of pay. Those are already hard. You fund them, subject to the funding rules and to any limit that says the credit cannot exceed what the law permits. You do not discover in July that you would prefer a smaller one and simply pay less. Reducing a formula is an amendment. Benefits already accrued are protected by anti-cutback rules. A significant reduction in the future rate of accrual requires advance notice. July can still be early enough for a careful amendment if no one has accrued the full year yet and the document's language allows the change. It is not early enough for a casual decision announced in a text message.

Other formulas set a range, or set credits by class, and allow the employer to choose the point in the range before the deadline the document states. That flexibility is real and it is the reason many owners adopt a cash balance plan instead of a traditional pension with one immovable benefit. The flexibility is not infinite. The chosen credit still has to pass coverage and nondiscrimination. It still has to satisfy minimum participation. It still has to be supported by compensation the plan can see. And the choice has to be made the way the document says, often by a resolution, before the year closes. Waiting until the return is prepared in 2027 is waiting past the point where 2026 is still a design year.

Profit is the input to that choice. It is not the input to a fantasy. If collections are 15 percent under the January budget, the illustration that used the January budget is not a conservative version of the truth. It is a different year. Ask for a revised illustrative range on the profit you now believe, and on a lower case you could survive. Both are illustrations. There is no flat IRS cash-balance contribution cap that either one is trying to hit. The enrolled actuary's later certification replaces them.

The 2025 clocks that are not the 2026 design

Do not mix the years in the July meeting. The 2025 minimum funding contribution is a debt of the plan year that already ended. Paying it is not optional because 2026 is soft. The general due date is September 15, 2026. If quarterlies were required, some of that obligation was due even earlier. An unpaid minimum generally draws an excise tax of 10 percent under section 4971 until corrected. The deduction for the 2025 deposit often follows the 2025 tax return, including extensions. For many S corporations and partnerships the extended date is also in September. For a sole proprietor it may run to October if the individual return was extended. Those clocks are different even when the calendar makes them look like one appointment. Your CPA has to say which deposit belongs to which year. The actuary has to say how much the 2025 minimum is. The deadline calendar is the place those dates should already be written.

The Form 5500 is the other July fact. If the draft is not ready, file the extension. Signing a half-read return on July 30 is not a mid-year planning technique. The reading list is the briefing on signing the 2025 Form 5500, and the actuarial page is Schedule SB in plain English. This briefing assumes you will deal with that filing as its own task. It should not consume the entire conversation about 2026 profit.

What to re-forecast, in numbers the plan can use

Start with compensation the plan can see. For an S corporation that is wages, not the draw and not the K-1 distribution. For a partner it is earned income as the CPA computes it. For 2026 the plan cannot count compensation above $360,000. A forecast that says "we will each take home $700,000" has not answered the question. A forecast that says "W-2 wages will be $360,000 if the fourth quarter holds, and $280,000 if it does not" has answered it. The limits were published in IR-2025-111 on November 13, 2025, in Notice 2025-67, and they are collected on the IRS cost-of-living page.

Then forecast who is in the plan. A hire you made in the spring may enter this year or next, depending on the document. A departure may change the test or raise a partial-termination question if enough people left. The hiring briefing is the longer version. July is when "we might add someone" either becomes a name and a salary or gets deleted from the illustration. An illustration that still says "owner only" while two associates are on payroll is not a plan. It is a January document that has been allowed to go stale.

Then forecast cash, which is not the same as profit. A defined benefit contribution is a cash obligation of the employer. A profitable year with the cash trapped in receivables, inventory, or a planned equipment purchase can still be a bad year to maximize a credit. The minimum funding rules will not accept receivables as a deposit. If the lower case you wrote down cannot fund the credit in the higher case, the higher case is not available to you, however deductible it would have been. The note on when a plan is not a fit is worth rereading if the lower case is the real case and the plan was sold to you on the higher one.

The defined benefit limit remains an annual benefit of $290,000, not a deposit, as the IRS describes on its benefit limits page. The 401(k) deferral remains $24,500, with catch-up of $8,000 or $11,250 at ages 60 through 63. Annual additions in the defined contribution plan remain $72,000. If you have not deferred for 2026 and you intended to, the remaining paychecks are the only paychecks left. You cannot retroactively defer wages already paid. Roth catch-up is operational this year if 2025 FICA wages exceeded $150,000. It applies to the 401(k) catch-up, not to the cash balance credit. Ask the recordkeeper now, while payroll for the second half can still be set up. Final regulations are stricter in 2027. Good-faith compliance is the 2026 standard. Do not spend the July meeting litigating it. Spend it confirming the election.

How a range should come back

Ask the administrator and the actuary for an illustrative contribution at three points, and refuse a single number. The three points are the profit and payroll you expect, a lower case, and the maximum the formula and a preliminary test could support if the year finishes strong. Label all three illustrative. None of them is an IRS table. The maximum is often not the right choice in July, because choosing it now, when the document locks the credit, leaves no room if autumn is worse than July. A credit inside the range, with room to fund it from cash you have already identified, is the adult version of a maximum.

If the plan's formula has no range, ask a different question. What is the required contribution on the current formula, and is an amendment to reduce future accruals still available for 2026 without violating anti-cutback rules. If the answer is that the accrual has already been earned for the year, believe that answer. Funding it is the remaining task. Redesigning history is not.

Publication 560 is the IRS booklet to hand a bookkeeper who is about to enter "pension" as a round number from a January email. The calculator on this site is a conversation starter in the same spirit. It is not the valuation. A calculator that does not know your census will not know your July.

Investment results for the first half of the year belong in the same packet. A trust that is well ahead of the interest credit is not a reason to skip a formula you already adopted, but it may change the minimum and the illustrative deposit. A trust that is behind the credit is a reason to expect a larger cash call, not a reason to chase the loss with a riskier portfolio in the second half. The investing briefing explains that fight. July is a common month for it, because the statement arrives and the owner reacts.

What to do in the next two weeks

Write a one-page forecast. Compensation the plan can see, by person. Employees who entered or will enter in 2026. A profit number and a lower profit number. Cash available for a deposit without borrowing from the tax reserve. Year-to-date trust return if you have it.

Send that page to the CPA and the administrator together. Ask which of the 2025 deposits, if any, is still unpaid toward the September 15, 2026 minimum, and which tax year the CPA intends to use. Ask for the three-point illustrative range for 2026. Put the Form 5500 extension on the same list if the draft is not in your hands.

Then send us the forecast rather than the adjective. "The year is fine" is not a census. A wage, a headcount, and a range are. The contribution should harden around those, not around the illustration from January.