|A defined benefit plan or cash balance plan permits the owner(s) to contribute significantly larger amounts to the plan than permitted under the annual limits imposed on defined contribution plans.
The business owner could receive a deductible contribution up to $200,000 per year. The older the owner then the larger the contribution that is permissable.
This approach also increases the percentage that the owner receives from the overall contribution. The breakdown is similar to the class profit sharing plan with significantly larger contributions to the business owner.
If you are business owner looking for a significant tax deduction that primarily benefits the owner then this arrangement may be suitable.
A 401(k) deferral may also be added to increase the flexibility.