Stop Leaving Six Figures on the Table at Tax Time
If you’ve maxed out your 401(k) and you’re still writing a large check to the IRS every year, a Defined Benefit Pension Plan may be the most powerful tool you’re not using.
For the right business owner, a DB plan can shelter $100,000 to $250,000 or more in pre-tax income every single year — far beyond what any 401(k) or SEP IRA allows. The contributions are tax-deductible, the growth is tax-deferred, and the plan is built entirely around maximizing what goes to you, not a formula designed for a workforce of 500.
Legacy Life Planning has been building customized DB plans for business owners across Northeast Tennessee since 2004. Lance Evans will show you exactly what your numbers look like before you commit to anything.
📞 Call Lance: (423) 341-8601 📅 Schedule a Free Consultation »
How a Defined Benefit Plan Works
A Defined Benefit Plan is a retirement plan where the end benefit — not the annual contribution — is defined upfront. The plan is built around a target monthly income at retirement, and an actuary works backward each year to determine how much must be contributed to fund that promise.
That actuarial structure is what creates the large deductions. Unlike a 401(k), where the IRS caps what you can put in regardless of your age or income, a DB plan’s contributions are driven by what it actually takes to fund your target retirement benefit. For a high-income business owner in their 40s or 50s who got a late start on retirement savings, that number can be very large — and entirely deductible.
For 2026, the IRS maximum annual benefit under a Defined Benefit Plan is $290,000, and the compensation used in plan calculations is capped at $360,000. Those are the ceilings — most plans are designed well below them, calibrated specifically to the owner’s income, age, and retirement goals.
The Benefit-Focused Defined Benefit Plan
-Maximize owner contributions with the largest possible annual deductions
-Provide lifetime income for plan participants and their spouses — not just a lump sum at retirement
-Transfer wealth generationally with pre-retirement death benefits built into the plan
-Stack with other plans — Lance can combine the Benefit-Focused DB Plan with a 401(k) profit-sharing plan to push annual tax-deferred contributions even higher
Most financial advisors default to 401(k) profit sharing or cash balance plans because they're simpler to administer. Lance's focus on Benefit-Focused DB Plans means his clients consistently access deduction levels those other structures can't reach.
Defined Benefit Plan vs. SEP IRA vs. Solo 401(k): Which Saves You the Most?
The right plan depends on your income, the number of employees you have, and how aggressively you want to reduce your tax bill. Here’s a straightforward comparison:
| SEP IRA | Solo 401(k) | Defined Benefit Plan | |
|---|---|---|---|
| 2026 contribution limit | Up to $72,000 (25% of comp) | Up to $70,500 + catch-up | $100,000–$250,000+ (actuarially determined) |
| Best for | Simplicity, flexible contributions | Self-employed, no W2 employees | High-income owners, age 45+, catching up |
| Employees required | No | No (owner-only) | No (can be owner-only) |
| Admin complexity | Low | Low–Medium | Higher (actuary required annually) |
| Can be combined? | Limited | Yes, with DB plan | Yes, often paired with 401(k) |
| Tax deduction potential | Moderate | Moderate | Highest available |
The bottom line: If you’re earning $200,000+ consistently and want to reduce your tax burden while building retirement wealth, a DB plan almost always outperforms the alternatives on deduction potential. If your income fluctuates significantly year to year, a 401(k) or SEP IRA offers more flexibility. Lance will run your specific numbers to show you exactly which structure makes sense.
Who It's For
A Defined Benefit Plan is typically the right move for:
- Business owners 45 and older with high, consistent income who want to catch up on retirement savings quickly
- Professionals with owner-only businesses — physicians, attorneys, CPAs, consultants, and contractors — who want to shelter the maximum amount possible
- Northeast Tennessee small business owners who are tired of writing large tax checks because they’ve outgrown their current retirement strategy
- Business owners with employees who want a plan structure that prioritizes owner contributions while meeting IRS non-discrimination rules
- High-income earners who’ve maxed conventional options and need a next layer beyond a 401(k) ceiling
If you’re not sure whether you qualify or whether the numbers make sense for your business, that’s exactly what the free consultation is for.
Plan Stacking
One of the most effective strategies Legacy Life Planning implements is plan stacking — combining a Defined Benefit Plan with a 401(k) profit-sharing plan to maximize total annual deductions.
In a stacked structure, the DB plan carries the heavy lifting on contributions, and the 401(k) layer adds deferral on top. For the right business owner, combined annual contributions in a stacked plan can reach $150,000–$350,000 or more, depending on age, compensation, and plan design — all deductible.
Lance works closely with your CPA to ensure the structure is compliant, optimized, and built around your actual income picture — not a generic template.
Employee Benefits Add-on
For business owners with employees, Legacy Life Planning also offers benefit programs designed to reduce insurance claims, provide prescription and health cost assistance, and deliver tax benefits of $400 to $900 per employee annually — enhancing the overall value of your benefits package without significantly increasing your cost.
This isn’t a standard add-on most DB plan advisors offer. It’s part of what makes Legacy Life Planning’s approach to employee benefits more comprehensive than a standalone retirement plan setup.
Frequently Asked Questions
What's the difference between a Defined Benefit Plan and a 401(k)?
A 401(k) is a defined contribution plan — you know what goes in, but not what comes out. A Defined Benefit Plan works the other way: the retirement benefit is defined, and the contribution is calculated to fund it. That actuarial design is what allows DB plans to support much larger annual deductions, especially for owners who are older or who have high income.
What's the difference between a Defined Benefit Plan and a cash balance plan?
A cash balance plan is technically a type of defined benefit plan, but it expresses the benefit as a hypothetical account balance rather than a monthly income promise. Cash balance plans are popular with medical and legal practices because they’re easier to explain to participants. Traditional DB plans — especially the Benefit-Focused structure Lance builds — typically allow higher contributions for the right owner profile. Lance will walk through both if your situation could support either.
How much can I actually contribute in 2026?
The IRS maximum annual benefit under a DB plan is $290,000 for 2026, but your actual contribution depends on your age, compensation, years to retirement, and plan design. For a business owner in their late 40s or 50s earning $250,000+, annual contributions of $150,000 to $250,000 are common. Lance will calculate your specific number before you make any decisions.
Do I need employees to set up a Defined Benefit Plan?
No. Owner-only DB plans are common and often the most straightforward to administer. If you do have employees, the plan must meet IRS non-discrimination requirements — Lance designs around those rules to keep owner contributions as high as possible while staying fully compliant.
Is a Defined Benefit Plan complicated to run?
More complex than a SEP IRA or Solo 401(k), yes. DB plans require an actuary to calculate contributions annually and a third-party administrator to handle compliance and IRS filings. Legacy Life Planning handles all of that coordination so the administrative burden doesn’t fall on you.
Can I set up a DB plan if I already have a 401(k)?
Yes — and many of Lance’s clients do both. The two plans can be stacked to maximize total annual deductions beyond what either could accomplish alone. There are IRS rules governing how the plans interact, but that’s exactly what plan stacking is designed to navigate.
What happens to the plan if my income drops significantly?
DB plans do require minimum annual contributions based on the actuarial schedule. If your income drops, the plan can be amended to reduce future benefit accruals, or in some cases terminated. This is one of the key planning conversations Lance has upfront — the goal is to build a plan that’s right for your income level, not one that becomes a liability if circumstances change.
The Legacy Life Planning Approach to Employee Benefits
At Legacy Life Planning, we go beyond simply setting up retirement plans. We work closely with business owners to understand their goals, providing strategic advice on the best retirement solutions. Our team ensures that the plans we implement are flexible, compliant, and designed to maximize both employer and employee benefits.
*We also have employee benefit options that include services designed to assist employees with prescriptions and health needs, reduce insurance claims for the business, and provide tax benefits ranging from $400 to $900 per employee, enhancing the overall value for both employees and employers.
Find Out What Your DB Plan Numbers Actually Look Like
Lance will run your specific projections — contribution estimates, tax savings, and retirement income — in a free strategy session. No obligation, no product sale, just the math.
Areas Served
We serve the Tri-Cities in Northeast Tennessee and Southwest Virginia. This includes but is not limited to the areas below.