Defined Benefit Plan Calculator & Cash Balance Plan Calculator

Estimate Your Maximum Defined Benefit Contribution

Curious how much you can contribute to a Defined Benefit Plan or a Cash Balance Plan? This calculator estimates the maximum first-year contribution you could make to a traditional Defined Benefit Pension Plan.

Since a Cash Balance Plan is a type of Defined Benefit Plan with the same contribution limits, the calculator also shows the estimated first-year contribution for a Cash Balance Plan. Both Defined Benefit Plans and Cash Balance Plans allow significantly higher tax-deductible contributions than 401(k) plans or SEP IRAs — often reaching six figures.

To use the calculator, adjust the sliders to indicate your age, income, and how long you have been in business. If your spouse is employed by the business, enter their information as well. Including your spouse as an employee is a common strategy to increase your potential Defined Benefit Plan or Cash Balance Plan contribution.

The Defined Benefit Plan and Cash Balance Plan Calculator updates in real time as you move the sliders, letting you see instantly how each input affects your maximum contribution. You can quickly explore multiple scenarios to understand how much you can contribute to a Defined Benefit Plan or Cash Balance Plan under different ages, incomes, and business situations — all without needing to submit your information each time.

How Inputs Impact Your Defined Benefit Pension Calculation

The Defined Benefit Plan Calculator estimates your possible deductible contribution. Here's how your inputs affect your Defined Benefit Plan calculation:

1. Age: Generally, the closer you are to retirement, the higher your allowable contribution. Shorter time horizons require larger contributions to reach the same Defined Benefit.

2. Income: Contribution maximums are adjusted for income. In 2025, a 3-year average income of $280,000 allows the full maximum benefit. Lower average incomes may reduce your maximum Defined Benefit contribution, depending on business income and years of service in the business.  

3. Years with Business: The number of years you’ve recevied business income can affect your maximum Defined Benefit or Cash Balance Plan contribution limit, especially if your average compensation is below $280,000 in 2025.

4. Spouse as an Employee: If your spouse works for your business, you may be able to significantly increase your total deductible contribution. The impact depends on your spouse’s age, income, and years with the business.

Increasing Your Defined Benefit Plan Contribution

Now that you understand how the inputs affect your Defined Benefit Plan calculation, here are some strategies to increase your maximum deductible contribution:

1. Increase Your Income: Higher income generally allows for a higher contribution limit. Increasing income is often easiest if your business is taxed as a corporation, since increasing W-2 wages directly impacts your Defined Benefit Plan contribution limit. Keep in mind, however, that higher wages may also increase payroll taxes, which should be considered alongside the potential tax deduction.

2. Employ Your Spouse: Having your spouse as an employee can potentially double your deductible contribution. Even if your spouse earns a lower wage than you, as the primary owner, depending on their age and income, this strategy can significantly increase your maximum Defined Benefit contribution.

3. Add a 401(k) Plan: Implementing a 401(k) Plan allows for additional tax-deferred contributions. Individuals age 50 or older can defer and deduct up to $31,000 per person. Profit sharing allocations are also permitted, providing another way to boost overall contributions.

What If You Have Employees?

In general, employees must be be covered in the Defined Benefit Plan, although usually at a lower benefit level than the owner. The Defined Benefit Plan contribution calculator estimates your potential contributions but does not calculate the cost of employee benefits. Depending on the ages and income levels of your employees, the cost of providing benefits may still make financial sense when weighed against potential tax savings.

We can help you determine your maximum deductible contribution and calculate the cost of employee benefits. Contact us at (480) 795-8256 or info@saberpension.com for a personalized consultation.

Defined Benefit Calculator

Other Defined Benefit Plan Questions

What Is a Defined Benefit Plan? 
A Defined Benefit Plan is an employer-sponsored retirement plan, like a 401(k) Plan or SEP-IRA. However, a Defined Benefit Plan allows you to make significantly higher tax-deductible contributions, often ranging from $100,000 to $250,000 (or more) per year, depending on your age, income, and years of business income.

What Is a Cash Balance Plan?
A Cash Balance Plan is a type of Defined Benefit Plan that functions like a retirement account with an annual contribution and interest credit. While structured differently than a traditional Defined Benefit Plan, a Cash Balance Plan also allows high tax-deductible contributions, often reaching $100,000 to $250,000 (or more) per year, depending on your age, income, and years of business income. Using this Cash Balance Plan calculator can help you estimate how much you can contribute and plan for your retirement goals.

How is the Defined Benefit Plan contribution calculated?
Defined Benefit Plans and Cash Balance Plans have a contribution range, including a minimum required contribution and a maximum deductible contribution. An actuary calculates both the minimum amount needed to fund the plan and the maximum annual contribution you can deduct, helping business owners plan effectively for retirement while maximizing tax savings.

How is the minimum required contribution calculated?
The minimum contribution for a Defined Benefit and Cash Balance Plan equals the value of benefit increases in the coming year plus a 15-year amortization of unfunded benefits already accrued. If the Defined Benefit Plan is overfunded, there is no unfunded benefits, so the value of benefit increases is reduced by the amount of funding surplus. In fact, if the plan is very well funded, there may not be a required contribution. Because most small employers want to overfund their Defined Benefit Plan, the calculator on this page does not show the minimum required contribution.

How is the maximum deductible contribution calculated?
The maximum contribuiton for a Defined Benefit Plan or a Cash Balance Plan is calculated as 150% of the value of benefits already accrued plus the full value of benefit increases in the coming year, reduced by the value of existing plan assets. For this calculator, which estimates just the first-year allowable contribution, the plan assets are zero. If you overfund the plan, future contributions are likely to decrease, so you must plan how much to contribute each year to maximize tax-deductible benefits.

Is there a way to increase your Defined Benefit deduction?
You may increase your deduction by amending the Plan to provide a higher benefit and/or increasing plan compensation, such as W-2 wages for corporations. Including your spouse as an employee and providing them a benefit can also significantly boost your deduction, sometimes nearly doubling your allowable contribution.

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Cash Balance Plan Calculator

You also can use this tool as a Cash Balance Plan calculator. Because contribution limits for Cash Balance Plans and Traditional Defined Benefit Plans are the same, the results above also provide an estimate of your maximum Cash Balance Plan contribution. Cash Balance Plans are structured differently from traditional Defined Benefit Plans. Even so, this Calculator can help you see how much you can contribute to a Cash Balance Plan.

In Summary

The Defined Benefit Plan and Cash Balance Plan Calculator is a powerful tool for estimating maximum deductible pension contributions and planning for retirement. By entering a few inputs, you can quickly see your maximum contribution.

Defined Benefit Plans and Cash Balance Plans allow significantly higher tax-deductible contributions than traditional retirement plans like 401(k) plans or SEP-IRAs, often reaching six figures, depending on your circumstances.

You can use this calculator to explore business strategies such as employing a spouse, or adjusting plan compensaton to maximize your Defined Benefit Plan deduction. With a Defined Benefit Plan, you also can employ contribution strategies such as front-loading, backfilling, and contribution rotation to maximize retirement savings and tax benefits.

To get precise calculations and fully understand your contribution limits, contact us. We can help you determine your maximum Defined Benefit or Cash Balance Plan contribution and design a plan tailored to your business and retirement goals.

Notes Regarding the Calculator

Income Instructions: For corporations and LLCs taxed as corporations, enter your W-2 wages. For partnerships and sole proprietors, use your earned income reported on your K-1 or Schedule C, respectively.

The Defined Benefit Pension Calculator provides two key figures:

1. Deductible Contribution: Your estimated first-year Defined Benefit contribution without maximum front-loading.

2. Front-Loaded Contribution: Your estimated maximum Defined Benefit Plan contribution for the first year. Front-loading allows you to contribute more upfront, though it reduces contributions in future years. This strategy may be helpful if you want a larger first-year deduction.

Questions about how much you can contribute or which option is right for you? Contact us at (480) 795-8256 or info@saberpension.com.

Disclaimer: Figures provided in the calculator are first-year contribution estimates and for informational purposes only. Maximum Defined Benefit Plan contributions in subsequent years will vary depending on investment returns, future salaries, interest rates, mortality rates, and any legislation changes. The calculator is not a substitute for professional advice. Actual deductible amounts may vary based on your situation.