The Retirement Account Your CPA Never Mentioned
You maxed out your 401k. Maybe you even added a SEP-IRA or a backdoor Roth. You feel like you've done everything right.
Here's the uncomfortable truth: if you're earning $300K or more, you've barely scratched the surface of what's available to you. The most powerful retirement vehicle in the tax code — one that lets qualifying high earners shelter $100,000 to $300,000+ per year in pre-tax contributions — goes unmentioned in most CPA conversations.
It's called a defined benefit plan. And if you're a doctor, surgeon, business owner, executive, or high-earning self-employed professional, it might be the single biggest tax move you're not making.
What Is a Defined Benefit Plan — and Why Haven't You Heard of It?
A defined benefit plan is a qualified retirement plan that works differently from a 401k. Instead of capping your contribution at a fixed dollar amount, it calculates contributions based on the benefit you want at retirement, your current income, and your age.
That math — run by an actuary each year — is what unlocks the massive contribution limits.
Your standard 401k lets you contribute up to $23,000 in 2025 (or $30,500 if you're 50+). A defined benefit plan can allow contributions of $150,000 to $275,000 per year, and in some structures, even more. Every dollar goes in pre-tax, reducing your taxable income dollar-for-dollar.
These plans have been used by law firms, medical practices, and closely-held businesses for decades. The reason most CPAs don't mention them? They're complex to set up, require an actuary, and demand a multi-year commitment. For a CPA who's focused on filing your return once a year, it's easier to check the "maxed out 401k" box and move on.
The problem is, that approach is costing you six figures in unnecessary taxes every year.
The Numbers: What You Can Actually Contribute
Let's be specific, because numbers are what matter here.
The IRS limits the annual benefit you can receive from a defined benefit plan at retirement to $275,000 per year (2025 limit, indexed for inflation). Your annual contribution is calculated backwards from that target — which is why older participants can often contribute significantly more than younger ones.
Here's how the math plays out across different profiles:
- Age 45, $500K income: Contribution of approximately $120,000–$160,000/year
- Age 52, $600K income: Contribution of approximately $175,000–$220,000/year
- Age 58, $800K income: Contribution of approximately $225,000–$270,000/year
Now layer that against a 37% federal tax rate — the bracket most of this audience lives in — and a state income tax rate of 9–13% for residents in California or other high-tax states.
A $200,000 contribution at a combined 45% marginal rate represents $90,000 in immediate tax savings. Not deferred. Not "someday." This year.
Stack that on top of a 401k and profit-sharing contributions, and a well-structured high earner can shelter $250,000–$350,000+ in a single tax year.
Who This Works Best For
Defined benefit plans aren't for everyone. They work best for a specific profile:
Self-employed professionals and business owners with consistent, high income. Surgeons with their own practice, attorneys at small firms, consultants, franchise owners, real estate investors with active income — anyone earning $300K+ from their own entity or as a sole proprietor.
W-2 earners with a side business. If you have a consulting practice, rental income treated as active, or any business income on the side, you may be able to establish a defined benefit plan on that income — even if the bulk of your earnings come from a W-2.
High earners who are older and behind on retirement savings. The plan's contribution formula rewards age. If you're in your 50s and worried you haven't saved enough, this is one of the few legal tools that lets you compress decades of savings into a handful of years.
The profile that does NOT fit: variable-income earners with employees. Defined benefit plans require contributions for eligible employees, which can increase costs significantly. This is a conversation worth having — but the math changes.
A Real-World Scenario: $94,000 in Tax Savings in One Year
Here's how this played out for one of our clients — a general surgeon in private practice, age 54, with a net business income of approximately $620,000.
Before the strategy review:
- Maxed out a Solo 401k: $30,500 contribution
- Total retirement contributions: $30,500
- Federal tax paid: approximately $198,000
- State tax paid (California): approximately $66,000
- Combined tax bill: ~$264,000
After implementing a defined benefit plan alongside the 401k:
- 401k contribution: $30,500
- Defined benefit plan contribution: $204,000
- Total retirement contributions: $234,500
- Combined federal + state tax reduction: ~$94,000
- Retirement assets growing tax-deferred: $234,500 per year going forward
That $94,000 didn't disappear. It moved — from the IRS into a tax-deferred account growing for retirement. Over 10 years, at reasonable investment returns, the compounding effect of that annual shift is worth millions at retirement.
His CPA had filed his return for seven years without once mentioning a defined benefit plan.
What You Need to Know Before You Start
This is not a DIY tax project. A few things to understand upfront:
You need an actuary. Defined benefit plans require annual actuarial calculations to determine the correct contribution amount. This is required by the IRS — not optional.
You're making a multi-year commitment. These plans require consistent contributions. If your income is highly variable year to year, the structure needs to be built carefully to avoid underfunding issues.
The plan needs to be established in the right entity. Depending on whether you operate as a sole proprietor, S-Corp, partnership, or professional corporation, the setup is different. Getting the entity structure right before you establish the plan matters — and is often the bigger conversation.
Timing matters. For most plan types, the business entity must establish the plan by the end of the tax year. Some plans (like SEP-IRAs) can be opened after year-end, but defined benefit plans generally cannot. If you're reading this in October or November, you may still have time for this tax year.
These aren't reasons not to do it. They're reasons to work with an advisor who does this proactively — not one who shows up after December 31st.
The Real Question Is: What Is Your CPA Waiting For?
A defined benefit plan isn't a loophole. It's a deliberately designed provision of the tax code built to reward business owners who commit to long-term retirement savings. It's been around for decades, used by major corporations, medical groups, and law firms.
The only reason you might not know about it is that proactive tax planning takes time — and most accounting firms aren't paid to do it. They're paid to file.
That's the difference between a CPA who files once a year and a tax strategist who's planning year-round.
If you're a high-income earner — $300K and above — and you've never had a conversation about defined benefit plans, cash balance plans, or multi-vehicle retirement stacking, you're likely leaving tens of thousands of dollars on the table every single year.
Book a free 30-minute strategy session with Roadmap Tax. We'll walk through your current setup, show you what you're likely overpaying, and give you a clear picture of what's available. No obligation — just real numbers.
📞 (619) 280-2700 | ✉️ info@RoadmapTax.com