Self-employed cash balance plans
A more intentional way to turn business income into retirement wealth.
For self-employed owners and professional practices, a Cash Balance Plan can create meaningful additional retirement capacity when a 401(k) or SEP no longer goes far enough.
Why owners look at this
When your income is strong, your retirement plan should have room to grow with it.
Good fit signals: steady earnings, a meaningful retirement target, and the capacity to make planned contributions over multiple years.
A SEP IRA and a solo 401(k) stop at the defined-contribution annual-additions limit, $72,000 in 2026 before catch-up deferrals, and compensation above $360,000 drops out of the formula. Past that lane, the next qualified plan is a defined benefit design. The comparison is on SEP, solo 401(k), and cash balance.
The account-based experience
A Cash Balance Plan expresses a future benefit through a hypothetical account balance. That makes the strategy easier to visualize while preserving the defined benefit framework underneath.
The account is hypothetical. Assets are generally pooled. Pay credits and an interest crediting rate build the record each year. An independent Enrolled Actuary, not a website calculator, turns that design into a deposit. Illustrations on this site are teaching numbers. The illustrations page says so in more detail, and the statutory ceilings are on limits.
What Sterling helps coordinate
- A fact-based conversation about business income and retirement objectives
- A plan design process that considers employee eligibility and contribution expectations
- Administration, reporting, and annual workflow support
- Coordination with an independent Enrolled Actuary when formal certification is required
Could this structure support your business without creating an unrealistic annual obligation? That is the question we help you work through before any implementation decision.
Self-employed does not mean owner-only
A spouse on payroll, an associate, or a long-time assistant can be a participant if they meet the plan’s age and service rules. “I work for myself” is not a census. Write down the entity, the tax classification, and everyone who received pay before anyone sketches a contribution. The staff test is staff cost. If the obligation is more than the practice can fund for several years, read when it is not a fit before you adopt anything.
S corporation wages and guaranteed payments are not interchangeable in the document. The plan sees compensation the document defines. Bring the payroll definition to the first meeting, not a colleague’s deposit from a different entity.
Start with the income you can describe.
Bring two or three years of compensation and the people on payroll. We will not certify a number on this page.