In brief
For 2026, the combined employer and employee 401(k) limit is roughly $70,000 for workers under age 50 (including catch-up). A Cash Balance Plan can allow total employer contributions of $150,000 to $300,000 or more for eligible business owners, often stacked on top of 401(k) deferrals when both plans are maintained together.
401(k) limits in context
A 401(k) remains the foundation of most small-business retirement programs. Employee deferrals, employer match, and profit-sharing are all subject to annual IRS limits that cap total additions per participant.
For high-income owners who have maxed their 401(k), the plan alone may not provide enough tax-advantaged savings relative to their income and retirement goals.
Where Cash Balance Plans add capacity
A Cash Balance Plan adds a defined benefit layer. Actuarial formulas - based on age, compensation, and years to retirement - determine deductible contributions that can far exceed 401(k) caps.
The most common structure pairs a 401(k) profit-sharing plan with a Cash Balance Plan so owners capture both employee deferrals and large employer contributions to the defined benefit plan.
Run your own numbers
Every situation differs based on age, income, employee count, and state taxes. Use our free calculator for an illustrative comparison, then speak with an advisor and your CPA before implementing any plan.
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This article is for educational purposes only and does not constitute tax, legal, or investment advice. Individual circumstances vary. Montreux Wealth Management is a registered investment adviser. Contact f.hasan@montreuxwealth.com with questions.