Cash‐Balance Pension Plans: Top S-Corp Retirement Plan Options Beyond a Solo 401(k)
- Evin Wick
- 3 days ago
- 3 min read
As an S-Corp owner, you know the Solo 401(k) is a cornerstone of s corp retirement plans. But if you're seeking next-level tax-deferral and want to outpace standard retirement plans for S Corp, a cash-balance pension is often the best retirement plan for S-Corp owners with high earnings.
What Is a Cash-Balance Pension?
Defined-Benefit Structure: Your S-Corp makes annual, actuarially determined contributions.
Hypothetical Account: Each participant "earns" a fixed or indexed interest credit.
Vesting & Portability: Typically vests in 3–5 years; balances roll into an IRA or Solo 401(k) at departure.
This design lets you shelter far more in s corp retirement contributions than through a Solo 401(k) or a simple s corp profit sharing plan, where limits top out at $70,000 in 2025.
Who It's Best For
High Earners ($200K+ Net S-Corp Income): Potential for $150K–$341K+ annual contributions.
Older Owners (45+): Contribution limits rise with age, making it one of the best retirement plan for s-corp owners nearing retirement.
Stable Cash Flow: You must fund the plan by your tax-filing deadline (extensions allowed).
If your income is under ~$150K or cash flow varies significantly, simpler s-corp retirement plan options like Solo 401(k) or SEP IRA may suit you better.
Quick Comparison (2025 Limits)
Plan Type | Max Contribution | Complexity | Ideal Candidate |
Solo 401(k) | Low | Early-career, <$150K income | |
SEP IRA / Profit Sharing Plan | Low | Flexible cash flow | |
Cash-Balance Pension | High | 45+, $200K+ net income |
Why Add a Cash-Balance Plan?
Turbo-Charge Deferrals: Add $100K–$270K+ on top of Solo 401(k) limits.
Massive Tax Deductions: Slash your pass-through taxable income.
Customization: Work with an actuary to set interest credits and vesting.
Lifetime Benefit Potential: Build toward the $3.5 million lifetime limit.
Important S-Corp Considerations
Remember that S-Corp owners can only make retirement plan contributions based on W-2 wages, not shareholder distributions. This makes strategic salary planning crucial for maximizing your cash-balance contributions while managing payroll taxes.
Setting Up with Sworks-io
At sworks-io, we streamline your s corp owner retirement plan options:
Design & Actuarial: Define contribution formulas and interest credits.
TPA Coordination: Handle compliance, IRS filings, and statements.
Payroll Integration: Automate funding via Gusto, Check, or your platform.
Enhanced Catch-Up Opportunities
New for 2025: Participants ages 60-63 can contribute an enhanced catch-up amount of $11,250 to their Solo 401(k), bringing total Solo 401(k) contributions to $81,250. This makes the combination even more powerful for older business owners.
Is It Right for You?
Yes, if you're 45+ with $200K+ net income and want aggressive tax-deferral.
Maybe, if you earn $150K–$200K and can commit to annual funding.
No, if income < $125K or you prefer simplicity.
Additional Resources
Bottom Line: For high-earning S-Corp owners, combining a Solo 401(k) with a cash-balance pension ranks among the s-corp retirement plan options that deliver the largest tax-advantaged savings. With 2025's enhanced catch-up provisions and higher limits, the opportunity is even greater. Ready to explore your best path? Contact Sworks-io for a free feasibility assessment.
Evin Wick JD, LLM is a Georgetown-trained tax lawyer and co-founder of S-Works, where he channels two decades of small-business tax expertise into streamlined S-Corp, bookkeeping, and payroll solutions for solo consultants.
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