What is a cash balance plan and who should use one?

A cash balance plan is a type of defined benefit (pension) plan that allows much higher annual contributions than a 401(k) — typically $150,000-$300,000+ per year depending on your age. It is ideal for established high-income professionals (physicians, attorneys, business owners) over age 40 who want to aggressively shelter income from taxes. Contributions are tax-deductible, and the plan grows tax-deferred.

How does the Backdoor Roth IRA work?

High earners who exceed Roth IRA income limits ($161K single / $246K married in 2026) can still contribute by making a non-deductible contribution to a Traditional IRA, then immediately converting it to a Roth IRA. The conversion is tax-free if you have no other pre-tax IRA balances (the pro-rata rule). This gives you tax-free growth and withdrawals in retirement.

What is tax-loss harvesting?

Tax-loss harvesting is selling investments at a loss to offset capital gains and up to $3,000 of ordinary income per year. Unused losses carry forward indefinitely. The key is the wash sale rule: you cannot buy a 'substantially identical' security within 30 days before or after the sale. You can buy a similar (but not identical) fund to maintain market exposure while capturing the tax loss.

Wealth & Retirement Strategy Hub

Wealth & Retirement Strategy

Tax-efficient investing and retirement planning for high-income professionals who want to keep more of what they earn and grow it faster. The right account structure can save you hundreds of thousands over a career.

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A guide by Taxstra Tax & Accounting — CPA-led tax strategy for business owners

Retirement Plan Design

The accounts that shelter the most income — built for owners and the self-employed

Essential

Solo 401(k)

The ultimate retirement account for self-employed individuals. Contribution limits up to $69k+.

Cash Balance Plans

Supercharge your savings with 'defined benefit' plans allowing $200k-300k+ annual contributions.

Mega Backdoor Roth

Use after-tax 401(k) contributions to stuff an extra $40k+ into your Roth bucket annually.

Roth & Investment Account Strategy

How high earners structure accounts and harvest losses to cut the tax drag on a portfolio

Backdoor Roth IRA

How high earners bypass income limits to contribute to tax-free Roth IRAs.

Tax-Loss Harvesting

Turn investment losses into tax assets. Offset gains and up to $3,000 of ordinary income annually.

Asset Location

Optimize where you hold assets (bonds in IRA, stocks in brokerage) to minimize tax drag.

Where to Start

A quick routing guide if you're not sure which page to read first

Key Insight

If you have self-employment or 1099 income, start with the Solo 401(k) — it's the foundation most other moves build on, and established high earners can layer a cash balance plan on top. If you're a high-income W-2 earner, the backdoor Roth is usually the first read. Already maxing your accounts? Asset location and tax-loss harvesting work on the taxable side of your portfolio.

Frequently Asked Questions

The questions we hear most about retirement and wealth strategy

For 2026, you can contribute up to $24,500 as an employee deferral, plus 25% of your net self-employment income as an employer contribution, for a combined maximum of $72,000. If you are 50 or older, catch-up contributions add another $8,000, bringing the total to $80,000. A Solo 401(k) also allows Roth contributions and can accept rollovers from other retirement accounts.

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