How Defined Benefit Plans Can Save High-Income Earners Over $200K in Taxes

You’ve maxed out your 401(k. You’ve hit the ceiling on your SEP IRA. You’re earning real money, but your tax bill keeps climbing.

So let’s ask the question most CPAs won’t.

What if the very retirement accounts you’ve been sold are actually limiting your savings—and costing you six figures in tax exposure every year?

Because they are, and if you’re a high-income business owner nearing retirement, relying solely on traditional plans is a mistake that compounds.

Here’s the uncomfortable truth:
401(k)s and IRAs are designed for the middle class. The contribution limits? Rigid. The tax deductions? Capped. The upside? Choked by ceilings you outgrew years ago.

And yet, high earners keep pouring money into tools built for employees, not employers.

Why? Because they’ve never been shown an alternative. Because their accountant avoids complexity. Because most advisors weren’t trained to build tax shelters—they were trained to fill out forms.

I’ve seen it too many times. A business owner pulling in $500K to $2M+ per year, stuck in the wrong game. They’ve outgrown the strategy but haven’t outgrown the mindset.

Here’s what that costs:

• Tens of thousands lost in overpaid taxes—year after year
• Missed opportunities to deduct 5–10x more than a 401(k) allows
• Compounded tax savings left on the table during their highest-earning years

That’s not strategic. That’s surrender.

If you’re reading this, you’re probably already asking yourself what else is possible. And that question alone puts you ahead of most. Because real tax strategy doesn’t start with products—it starts with thinking differently.

In the next section, I’ll show you what the defined benefit plan does that no 401(k) or IRA can even come close to matching.

What Is a Defined Benefit Plan—And Why Haven’t You Heard About It From Your CPA

Most retirement plans come with a ceiling. A limit. A quiet, invisible “you’ve saved enough” message stamped by the IRS.

Defined benefit plans? They do the opposite.

They reward high earnings. They reward age. They reward long-term planning.
They were built for high-earning professionals—doctors, lawyers, entrepreneurs—who need to move large amounts of income out of taxable reach fast.

So why haven’t you heard about them?

Because most CPAs won’t touch them.

Defined benefit plans require actuarial calculations. Legal structuring. Ongoing adjustments. They’re not set-it-and-forget-it. They’re not “plug in a number and file.” They’re strategic vehicles, not retail products.

And here’s the kicker: they allow business owners to contribute—and deduct—well over $100,000 to $300,000+ per year, depending on age and income.

That means if you’re earning half a million, you don’t have to crawl toward retirement with a $22,500 401(k) contribution limit. You can legally shift six figures into a protected retirement account, lower your taxable income, and compound your savings pre-tax.

But most professionals never hear this. And if they do, it’s brushed off as “too complex” or “not worth the setup.”

That’s a lie. Complexity is a barrier to entry—not a reason to settle. You’re not building someone else’s dream. You’re protecting yours. And that requires more than off-the-shelf strategies.

So if your CPA has never mentioned a defined benefit plan, ask yourself this:

Are they simplifying your finances—or simplifying their job?

Next, I’ll break down exactly how defined benefit plans outperform 401(k)s—and why the difference isn’t incremental. It’s exponential.

Defined Benefit Plans vs 401(k): Which Builds More Wealth Faster

Let’s settle this the way business owners think—by the numbers.

You’re earning $400K, $750K, maybe more. You’re staring down a tax burden that could swallow a luxury car or two. You’ve already maxed out the usual suspects: 401(k), SEP IRA, maybe even a backdoor Roth. And you’re wondering if there’s a smarter way to keep more of what you earn.

There is. But the difference isn’t subtle—it’s seismic.

Here’s a straight comparison:

Plan Type	Max Annual Contribution (2025)	Tax Treatment	Best For
401(k)	$23,000 ($30,500 w/ catch-up)	Pre-tax, capped growth	Employees, low-to-mid earners
SEP IRA	~25% of compensation, up to $69,000	Pre-tax, employer-funded	Self-employed with modest income
Defined Benefit Plan	$100,000–$300,000+	Pre-tax, actuarially defined	High-income business owners, 45+

A defined benefit plan isn’t about percentages. It’s about outcomes. It says: “What retirement income do you want?” and works backward to calculate how much you can contribute now to get there—tax-deferred.

Let’s run a scenario.

Case Study: Solo business owner, age 52, net income $600,000/year

• 401(k) max contribution: $30,500
• SEP IRA max: $69,000
• Defined benefit plan: Up to $190,000+ in deductible contributions

That’s over $120,000 more in write-offs this year alone.

Now project that over 5–10 years of peak earnings. That’s a seven-figure tax shelter—compounding tax-free—while reducing your adjusted gross income today.

401(k)s give you a tool.
Defined benefit plans give you a strategy.

And the moment you understand that difference, you stop asking, “How much can I put away?” and start asking, “How much can I keep?”

Coming up next, I’ll show you how these tax savings hit immediately—and why the compounding power multiplies in your favor with every passing year.

The Tax Savings Are Immediate. The Wealth is Lasting.

You don’t have to wait ten years to see the benefit. You see it the moment you file.

Defined benefit plans slash your tax bill now—not later.
This isn’t theory. It’s math.

Every dollar you contribute is a dollar off your taxable income.
That means if you contribute $200,000 this year, your taxable income drops by that amount. Instantly. No waiting. No slow drip. Just a massive reduction in what you owe.

Let’s break it down:

• You’re 50 years old
• Your business earns $750,000
• You contribute $250,000 to a defined benefit plan

Your new taxable income? $500,000.
You just erased $250K from the IRS’s radar—and shifted it into your retirement, where it compounds tax-deferred.

And if you’re a business owner with employees?
That contribution is still deductible—even with parallel plans like a 401(k) or profit-sharing setup in play. The IRS allows it. If done correctly, it’s a legal fortress.

Here’s what that unlocks:

• Immediate deduction against your highest tax bracket
• Lower AGI (Adjusted Gross Income), which can improve QBI deductions under Section 199A
• Reduced exposure to Net Investment Income Tax and other surtaxes
• No phaseouts, no stealth taxes—just clean, legitimate savings

This isn’t loophole hunting. This is IRS-structured law used with precision.

And here’s the kicker:

Those contributions don’t just reduce your taxes. They compound.

Inside the plan, your money grows untouched by annual taxes. No capital gains. No income tax drag. Just clean, uninterrupted growth for the next 5, 10, or even 15 years.

That’s what makes this strategy lethal.
It defends your income now and multiplies your wealth later.

This is how high-income business owners break free from the middle-class playbook.
They stop plugging away at capped contributions and start using plans that scale with their ambition.

Up next, we’ll talk about exactly who qualifies for this kind of plan—and why it’s not for everyone.

Who Qualifies: Not for Everyone—But Perfect for These 3 Types

Not everyone can use a defined benefit plan.
And that’s exactly the point.

These plans weren’t built for the masses. They were built for high-income, high-responsibility professionals who need to protect what they’ve earned—and do it fast.

So, who qualifies? Let’s cut through the noise.
Here are the three profiles that fit like a glove:

1. High-Income Professionals With Consistent Earnings

Think doctors. Think attorneys. Think consultants billing $500K+ per year. These individuals don’t need a financial gimmick—they need a vault. And that’s exactly what this plan provides. It locks in major deductions while letting income compound untouched by annual taxes.

If your revenue is steady and your earnings are high, you’re a fit.

2. Business Owners Nearing Retirement (Ages 45–65)

This is the power zone. The IRS allows larger contributions as you age because you have fewer years to fund your benefit target. That means someone age 55 can contribute two to three times more than someone in their 30s.

That’s not a penalty. That’s an opportunity.

You’re already thinking about the exit. Now is the time to reduce your tax liability while building your payout.

3. Solo Entrepreneurs or Small Business Owners With Few Employees

Running lean? Even better. Defined benefit plans shine brightest when you don’t have to fund massive contributions for staff. You get the lion’s share. You call the shots. You control the funding schedule.

In most of these setups, the owner keeps 90–95% of the benefit.

Not a fit if:

• Your income is unstable
• You can’t commit to multi-year funding
• You’re looking for “easy” over effective

This isn’t for everyone. But if you’re earning real money, if taxes are draining your momentum, and if you’re tired of capped accounts giving you capped results—then this strategy might be the most powerful financial decision you make this decade.

Coming up next: real numbers. Real savings. Let’s look at how much you can actually deduct—based on your age and income.

How Much Can You Deduct? Real Scenarios for 2025

Let’s get out of theory and into raw numbers.

How much can you actually deduct with a defined benefit plan in 2025?
The answer depends on two things: your age and your income.
And if you’re over 45 and earning north of $300,000, you’re entering prime territory.

Here’s why.

The IRS allows higher contributions the closer you are to retirement. Why? Because the plan must fund your promised benefit in fewer years. That means more money can be pushed into the plan today—and deducted today.

Here are the numbers that matter:

Example 1: Solo Business Owner, Age 45, Net Income $400,000

• Potential Contribution: $130,000
• 401(k) Max: $23,000
• SEP IRA Max: ~$69,000
• Tax Savings (Combined Federal + State): ~$45,000+

Example 2: Consultant, Age 52, Net Income $600,000

• Potential Contribution: $185,000
• Stacks with 401(k): Yes
• Tax Savings (High Bracket): ~$70,000+

Example 3: Real Estate Professional, Age 60, Net Income $900,000

• Potential Contribution: $290,000+
• Defined benefit + 401(k) + Profit Sharing Combo: Yes
• Total Pre-Tax Contributions: Up to $350,000+
• Immediate Tax Savings: Could exceed $125,000 annually

And remember—these aren’t deferrals. They’re deductions. This is money that no longer shows up on your taxable income. You don’t owe on it. You don’t report it as earnings. You keep it, inside a compounding vehicle.

You’re not just moving income. You’re changing the equation.

For high earners, the difference isn’t just larger contributions—it’s larger outcomes.
More savings. More control. More retained capital to fuel exit plans, retirement income, or business continuity.

And when combined with other plans? That’s when things really start to scale.

In the next section, I’ll walk through how the setup costs compare to the ROI—and why, for the right business owner, the return isn’t incremental. It’s explosive.

Setup Costs vs ROI: Why Smart Owners See This as an Investment

Let’s kill the objection before it even starts.

Yes—defined benefit plans come with setup costs.
Yes—they require annual maintenance.
But here’s what most business owners miss:

This isn’t an expense. It’s a strategy.

If you’re in the top income bracket, saving $50,000 to $150,000 in taxes every year, the plan pays for itself in the first 60 days.

Let’s look at the numbers:

Typical Costs

• Setup (Year One): $2,000–$5,000
• Annual Administration: $1,500–$3,000
• Actuarial Calculations: Included in most admin fees
• IRS Filings: Included when using the right provider

Now compare that to this:

Typical Year-One ROI Example

• Contribution: $200,000
• Tax Savings: ~$75,000
• Cost to Operate: ~$4,000
• Net Benefit in Year One: ~$71,000
• Compounding Growth Over Time: Untaxed until distribution

You’re not guessing. You’re not hoping.
You’re executing a legal, high-yield, IRS-compliant tax shelter with real math behind it.

And if you’re already maxing out a 401(k) or profit-sharing plan?
This stacks right on top. The ROI isn’t just positive—it’s exponential.

Here’s what that means for your business:

• More retained capital = more reinvestment
• Lower tax exposure = higher post-tax income
• Faster retirement funding = earlier exit or sale

And here’s what it means for your future:

• Greater control
• Greater compounding
• Greater peace of mind during high-income years

You don’t scale wealth by pinching pennies. You scale it by multiplying opportunities.

Up next, I’ll show you how to keep the IRS out of your rearview—because bigger deductions invite bigger scrutiny. That’s where experience matters, and most advisors fall short.

IRS Compliance and Audit Protection: The Hidden Value You Can’t Ignore

Here’s the part most financial blogs leave out.
Bigger deductions bring bigger scrutiny.

If you’re writing off $150,000 to $300,000 a year through a defined benefit plan, the IRS notices. That’s not paranoia. That’s reality.
But that doesn’t mean you should back off.

It means you need to be precise, legal, and bulletproof.

Defined benefit plans aren’t illegal. They’re not gray. They’re not aggressive when done correctly. They’re written directly into the tax code.
The problem is—most advisors don’t know how to protect them.

I’ve seen business owners audited because their plan was structured by someone who treated it like a 401(k).
Wrong funding schedules.
Incorrect actuarial assumptions.
Missing documentation.
All of it invites IRS flags. And once the flag goes up, you’re on defense.

That’s where Silver Tax Group changes the game.

We don’t just help you fund the plan.
We help you defend it.

We build it with audit resistance baked in from day one. That means:

• Structuring with a qualified actuary
• Preparing full documentation on assumptions and benefit formulas
• Filing the correct IRS forms (Form 5500, Schedule SB, etc.)
• Backing every move with legal and procedural precedent

We’ve handled tax court cases. We’ve negotiated with the IRS at the highest levels. We don’t rely on hope.
We rely on experience—and results.

Here’s the rule:
If your strategy can’t survive an audit, it was never a strategy.

So don’t settle for a cookie-cutter setup. And don’t risk six-figure deductions without airtight defense.

In the next section, we’ll tackle what happens when you’re ready to retire, sell your business, or simply walk away. Because how you exit matters just as much as how you enter.

The Exit Plan: What Happens When You Retire or Sell Your Business

Most financial advice stops at setup.
But the real value of a defined benefit plan shows up at the exit.

Because what you do when the income stops matters just as much as what you did when it was flowing.

Here’s the good news: you’re in control.
Unlike rigid employer plans or government timelines, defined benefit plans offer multiple exit strategies—each designed to protect your retirement and preserve your tax position.

Let’s walk through them.

Option 1: Rollover to an IRA

You can terminate the plan and roll the balance into a traditional IRA.
No taxes now. No penalties. Just continued tax-deferred growth.

This is the cleanest transition and keeps your money protected until you choose to withdraw it in retirement.

Option 2: Lump Sum Distribution

Want access to the full value? Take a lump sum.
Yes, it’s taxable, but in certain low-income years—like after retirement or business sale—it can be a strategic move.

Key: this should be calculated, not casual.

Option 3: Annuity Payout (Guaranteed Income for Life)

Some business owners choose to convert the plan into a lifetime income stream through annuitization.
This offers stability, predictability, and protection against market volatility—especially if you no longer want to manage investments.

What About Selling Your Business?

If your business is part of your succession or sale strategy, timing matters.
A defined benefit plan can increase your valuation by reducing taxable income on the books and showing a disciplined financial structure.
Just make sure you terminate the plan properly—before transferring ownership—or risk serious compliance issues.

Biggest Mistake? Waiting Too Long to Plan the Exit.

You don’t build the parachute on the way down.
You build it in advance, with tax-smart distribution strategies, coordinated timelines, and clear beneficiary plans.

At Silver Tax Group, we don’t just help you set up the plan—we help you land it.

That way, your exit isn’t reactive. It’s strategic.
Your retirement isn’t delayed. It’s accelerated.
And your savings? Locked in, tax-deferred, and audit-ready.

Up next—the final piece: why Silver Tax Group isn’t just a service provider, but your unfair advantage in high-ROI retirement tax planning.

Why Silver Tax Group? High-ROI Strategy Meets Legal-Grade Protection

At this point, you’ve seen the power of a defined benefit plan.
You understand the savings. You see the upside. You know the exit paths.

So the real question is this:
Who do you trust to build it right—and defend it when it matters most?

Because let’s be clear.
A defined benefit plan isn’t just a tax move.
It’s a financial weapon. And like any weapon, it’s only as effective as the expert wielding it.

Here’s what separates Silver Tax Group:

1. IRS Strategy First, Planning Second

We don’t come from the world of retirement product sales.
We come from courtrooms, settlements, and IRS showdowns.
We know how the IRS thinks—because we’ve defended clients when it mattered most.
And we build every plan with that endgame in mind: protection, compliance, and legal resilience.

2. Legal + Tax Under One Roof

Most financial firms bring in a lawyer after the fact.
We build your plan with tax attorneys at the table.
That means your structure isn’t just legal—it’s legally strategic.
Every form, every assumption, every filing—bulletproofed from day one.

3. High-Income Specialists

We don’t work with just anyone.
Our clients are high-income earners, professionals, and business owners who understand the value of strategy.
You’re not looking for theory. You’re looking for execution.
That’s what we deliver.

4. Real Results
   We’ve helped clients cut tax liabilities by six figures.
   We’ve defended plans under audit and walked away clean.
   We’ve structured defined benefit setups that saved businesses from bleeding cash to the IRS.

This isn’t a brochure. It’s a track record.

Here’s the bottom line:
If you’re a business owner making serious money, you need a serious plan.
You need savings that matter. Protection that holds. Strategy that wins.

That’s what Silver Tax Group delivers.

And it starts with one move:

Book your strategy call. Let’s build the smartest retirement tax plan you’ve ever had—before the year closes and another opportunity slips away.