Case Studies

Defined Benefit plans help high income professionals in a variety of situations greatly reduce their tax bills every year.

The following case studies illustrate different scenarios in which self-employed professionals and small business owners use Defined Benefit plans to save tens of thousands in taxes each year while rapidly building large retirement nest eggs.

Each individual or married couple's circumstances are unique, but Defined Benefit plans are flexible enough to be used in a wide variety of situations. We will work with you to customize your Defined Benefit plan so it has the most favorable and tax-efficient structure for your specific circumstances.


Lawyer, Solo Practice

Background: Nick is a 52 year old lawyer who earns $375,000 per year.  He has two children in high school and his wife works part time.

Goal: Nick would like to retire in 10 years.  He and his wife want to travel and live comfortably in retirement, so Nick wants to rapidly build up his retirement nest egg.  At the same time, he would like to cut his annual tax bill as much as he can.  Nick and his wife have already saved for their kids' college, so they can put a considerable percentage of their income toward retirement.  

Solution: Nick decides they will put $190,000 in a DB plan and another $30,000 in a 401(k). Together, the two plans will save them over $77,000 in taxes per year and rapidly build their retirement wealth. 


Married Business Partners, No Employees

Background: Jane and David are married and run a consulting business together. They have no employees. Jane is 51 and David is 55. 

Goal: Jane and David love what they do, but they would like to retire in ten years and have a substantial retirement fund to tap while they enjoy traveling and doing volunteer work.  

Solution: They decide that after their expenses, they can contribute $280,000 per year to a DB plan. This contribution saves them almost $100,000 in taxes per year and puts them on course to build a retirement nest egg of over $3.7 million in 10 years.


University Professor with Side Income

Background: Anne, 57, works full-time as a university professor, but she also does freelance consulting work on the side. She typically earns $175,000 per year from consulting.  She is married and her husband is also a university professor. 

Goal: Anne and her husband earn enough from their university salaries to fund their lifestyle so they would like to protect as much of Anne's freelance income from taxes as possible while also saving for retirement. Anne would like to retire at 65.

Solution: Anne decides to contribute $125,000 per year of her side income to her new Defined Benefit plan. This plan will save her roughly $43,000 in taxes each year and allows her to build a $1.7 million nest egg by retirement.

business woman retirement plan


Dentist with 3 Employees

Background: Dr. David Andrews, 58, is a successful dentist with three employees.  He earns about $325,000 each year.  He enjoys his practice and would like to continue working for ten more years before retiring.  His employees are: Susan, 38, who earns $45,000, Amy, 35, who earns $40,000, and Carla, 26, who earns $35,000.   

Goal: As his practice has grown, David has felt his take-home pay drained by his high tax bill.  He would like to reduce his tax bill substantially while boosting his retirement savings considerably in the next ten years.  David values his employees and would like to keep them at his practice. He is willing to contribute to retirement plans for them, while still maximizing his contributions to his own plan.

Solution: David will create a Cash Balance Plan and Safe Harbor 401(k).  He will contribute $170,000 to his Cash Balance Plan and about $25,000 to the 401(k) for himself.  For his employees, he contributes almost $10,000 total divided between the Cash Balance and the Safe Harbor 401(k) based on age, salary and years with the practice.  With this plan in place, David will roughly $68,000 in taxes every year.  In ten years, he will have accumulated $2.6 million for his retirement.


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