Defined Benefit & Cash Balance Plans for the Self-Employed
The IRS-approved retirement plan that lets high-earning real estate professionals, investors, and business owners deduct $100,000-$300,000+ per year — while building a guaranteed, creditor-protected retirement benefit.
The tax problem of a great year
Big commission years, profitable flips, and management income all share the same problem: ordinary income tax rates on every dollar, with almost nothing left to deduct after depreciation runs out. A SEP IRA helps a little. A solo 401(k) helps a little more.
A defined benefit planis a different category. Instead of capping what you can put in, the IRS defines the retirement benefit you're allowed to fund — and lets you deduct whatever it actuarially takes to get there. For a 50-year-old broker earning $400K, that can mean a deductible contribution larger than most people's income.
It stacks with the rest of your plan: contributions reduce today's taxes, the assets grow tax-deferred, and the eventual rollover can fund tax-free retirement strategies, infinite banking, or estate planning moves later.
Why high earners use defined benefit plans
Massive Tax Deductions
Contributions are fully deductible business expenses. High earners routinely deduct $100K-$300K+ per year — often cutting six figures off a tax bill in a strong commission or flip year.
3-5x the Limits of a 401(k)
SEP IRAs and solo 401(k)s cap out quickly. A defined benefit plan funds a target retirement benefit, so allowable contributions scale with your age and income instead of a flat limit.
Pairs With Life Insurance
Plans can hold whole life insurance, and fully-insured 412(e)(3) designs are built entirely on guaranteed insurance contracts — connecting your retirement plan to your infinite banking and estate strategy.
Creditor-Protected, ERISA-Qualified
Qualified plan assets carry strong creditor protection — meaningful for anyone signing personal guarantees on real estate debt.
Who this works best for
The ideal candidate is age 40+, self-employed or owner of a small business with few or no employees, earning $200K+ in active income, and expecting to sustain contributions for at least 3-5 years. In real estate that means agents and brokers on commission, flippers and wholesalers, property managers, syndicators earning fees, and investors with an active business alongside their rentals.
Purely passive rental income generally doesn't count as plan compensation — part of the design work is structuring the active side of your operation so it can support the plan. That's a conversation involving your CPA, and we run it together.
Most clients pair the plan with a solo 401(k) for flexibility: the defined benefit plan takes the large, steady deduction while the 401(k) layer flexes with good and bad years.
Frequently asked questions
How much can I actually contribute to a defined benefit plan?
It depends on your age and income, but contributions of $100,000-$300,000+ per year are common for high earners in their 40s, 50s, and 60s — typically 3-5x what a SEP IRA or solo 401(k) allows. The older you are and the higher your income, the larger the allowable contribution, because the plan is funding a defined retirement benefit over fewer years.
I'm a real estate agent/broker on 1099 income. Do I qualify?
Yes — 1099 real estate agents, brokers, and self-employed investors with active income (commissions, flipping profits, management fees, wholesale fees) are ideal candidates. Note that purely passive rental income generally doesn't count as compensation for plan purposes, which is why we structure plans around the active side of your real estate business.
Can a defined benefit plan include life insurance?
Yes. Plans can hold whole life insurance within IRS incidental-benefit limits, and fully-insured 412(e)(3) plans are funded entirely with insurance and annuity contracts — offering guaranteed accumulation and often the largest deductible contributions available. This is where the strategy pairs naturally with infinite banking and estate planning.
What if my income varies year to year?
Defined benefit plans do require relatively consistent funding, but there is flexibility: plans can be designed with a funding range, amended as your business changes, or paired with a solo 401(k) so the required portion stays conservative and the flexible portion rides on top. For very lumpy income, a cash balance design is usually the better fit.
What happens to the money when I retire or close the plan?
Plan assets roll over to an IRA tax-free when the plan terminates, where they continue growing tax-deferred. Many clients then use the IRA for Roth conversion strategies or to fund life-insurance-based estate planning. The deduction today, decades of tax-deferred growth, and a controlled exit make it one of the most powerful tax moves available to high-earning self-employed professionals.
Find out your maximum deductible contribution
Bring last year's income numbers. We'll run an actuarial estimate of what you could contribute and deduct this year — before year-end deadlines close the window.