2026 Tax-Saving Benefits

  • Large deductions: Because a DBP targets a future pension (capped at $290,000 per year in 2026), the actuarial math often allows six-figure annual contributions far higher than the $72,000 Solo 401(k) cap.
  • Tax-deferred growth: Assets compound without current taxation; you pay ordinary income tax only when benefits are distributed in retirement.
  • Stackable with other plans: You can still max a Solo 401(k) or SEP IRA alongside the DBP, layering additional retirement savings and deductions.

Disclaimer: Educational account-opening steps only not personalized financial or legal advice and not a complete description of Defined Benefit Plan rules. Consult your own brokerage adviser before acting. We can connect you with our partner who many of our physician clients use if desired.

Step 1: Design & open the plan

Engage a DBP administrator/actuary to draft the plan document and run the initial calculations. We can introduce you to a partner many of our physician clients use, or you’re free to choose your own provider.

Why it matters: The actuary sets your annual funding target based on age, income, and retirement goals, prepares the plan document, and handles the plan's annual government filing (Form 5500). Some plans also request an optional IRS determination letter.

One particular type of defined benefit plan is the cash balance plan. Each participant has a hypothetical account balance that grows with annual credits, which makes it easier to understand than a traditional pension. It is the version most of our physician clients use.

Step 2: Fund the plan each year

Contribute the amount the actuary certifies often $100 k–$300 k+ annually for high income physicians. Fund the certified amount by your tax return deadline including extensions, and confirm the exact date with your actuary each year, since pension funding rules carry their own deadlines that can differ from the return deadline.

Step 3: Maintain & monitor

  • Actuary performs an annual valuation and adjusts the required contribution.
  • Ongoing valuations and filings keep the plan in compliance and on track to deliver the promised benefit.