Why We Created a Cash Balance Plan Case Study, and What’s on the Line for Clients.
It’s not too late to implement a Cash Balance Pension Plan (CBPP) for the 2024 tax year, but time is ticking. High-income business owners can still retroactively fund a CBPP up to September 15, 2025, and generate massive tax deductions while securing their retirement. Let’s get right into our cash balance plan case study.
Goals: What We Set Out to Accomplish
- Introduce CBPPs to CPA partner clients before the 9/15 deadline
- Maximize tax-deductible contributions for immediate and long-term tax savings
- Build a tax-efficient exit strategy using life insurance for future income
Meet the Client: Jim, Age 65
Jim is a sole proprietor pulling in $881,000 in self-employment income this year (Schedule C filer). He’s looking at retirement and is interested in reducing current tax liability.
Jim’s Profile:
- 65-year-old business owner
- Schedule C income: $881,000
- Wants to contribute $100K+ annually
- Facing steep tax liability
- Needs accelerated retirement savings
Strategy: Bigger Deductions, Better Outcomes
Step 1: High-Octane Contributions
We worked with Jim’s CPA to design a CBPP structure that supercharged his deductions. Jim contributed:
- $239,103 to the CBPP’s pension account
- $232,233 in additional optional pre-funding
Total Pension Contribution: $471,336 (fully tax-deductible)
Step 2: Exit-Optimized Life Insurance
We layered in $168,000 of life insurance premiums through the CBPP. Why?
- It builds tax-free retirement income
- Acts as a tax-efficient business exit tool
- Protects the plan’s assets, even if Jim passes early
Total Strategy Contribution: $639,336
Results: ROI Speaks Volumes
Metric |
Value |
| Immediate Tax Savings (2024) | $313,275 |
| 8-Year Estimated Tax Savings | $2,007,018 |
| Tax-Free Life Insurance Income | $1,655,239 |
| Total Projected Benefit | Over $3.6M in tax savings + future income |
Case Study Takeaways: Why CPAs and Business Owners Should Care
CBPPs aren’t just for large corporations — they’re a game-changer for high-earning solopreneurs and small business owners, and the numbers in this cash balance plan case study are the norm, not the exception. When combined with life insurance, CBPP plans offer:
- Massive above-the-line tax deductions
- Flexible contribution strategies
- Early exit options without tax landmines
- Tax-free income streams in retirement
Action Plan: Implement a 2024 Cash Balance Plan In Partnership With A Qualified Firm.
We’re actively building mutually-beneficial partnerships with CPAs to deliver high-impact plans to qualified business owners, and the door is open until September 15, 2025.
Let’s design a plan that gets your clients a massive tax win in 2024.
Reach out to Jennifer Baker, CPA, CFP®, RICP®
Founder, Baker Wealth Strategies
