# What are cash balance plan limits by age for owners?

By James Ustby, CFP®, APMA®. Published 2026-10-22. Canonical URL: https://jamesustby.com/articles/cash-balance-plan-limits-by-age

> A 2026 cash balance plan funds a benefit of up to $290,000 a year. One actuary's table runs from about $124,000 at age 40 to $349,000 at 61 to 65.

## Key takeaways

- A cash balance plan does not have a flat dollar contribution limit. The IRS cap is on the benefit: $290,000 a year at retirement for 2026, under the defined benefit limit.
- An actuary turns that benefit into a yearly contribution. The contribution rises with age because fewer years remain to fund the same benefit.
- Compensation that can count toward the benefit is capped at $360,000 for 2026. The benefit is also limited to 100 percent of high-three average pay.
- One administrator's January 2026 table, for a new plan and $360,000 of pay, shows about $124,000 at age 40 and $349,000 at ages 61 to 64. Those amounts are estimates, not IRS limits.
- Milliman's October 15, 2026 forecast puts the 2027 defined benefit limit at $300,000 and the compensation cap at $375,000. The IRS has not published 2027 limits.

## The short answer

A cash balance plan has no flat dollar contribution cap the way a 401(k) does. The IRS caps the benefit. For 2026, a defined benefit plan can fund an annuity of up to $290,000 a year at retirement, and only compensation up to $360,000 counts. An actuary converts that benefit into a deposit that is larger at older ages.

One administrator's 2026 table, for a brand-new plan, shows first-year amounts from $124,000 at age 40 to $349,000 at ages 61 to 64 when pay is $360,000. Those figures are the administrator's estimates. They are not IRS limits, and they are not a quote for your plan.

## What did the IRS actually publish for 2026?

| Limit | 2026, IRS | 2027, forecast |
|---|---|---|
| Defined benefit annual benefit, Section 415(b) | $290,000 | $300,000 |
| Compensation that can count | $360,000 | $375,000 |

The 2026 figures are on the IRS COLA table: defined benefit plan limit $290,000, annual compensation $360,000. The 2027 figures are Milliman's October 15, 2026 final forecast, which lists the same $300,000 and $375,000 that Marsh published. They are not IRS figures. This page will need an update when the IRS notice for 2027 is out.

Section 415(b) also limits the benefit to 100 percent of the participant's average compensation for the highest three consecutive years. Lower pay lowers the ceiling even when the dollar limit is $290,000. That is why the columns below diverge once pay is $200,000 or $150,000.

## What does one administrator's age table show?

The table below is from TRA's January 2026 sheet, "2026 Maximum Contributions for Cash Balance Plans." TRA labels the amounts as estimates for a new plan. The assumptions on that sheet: plan compensation held for at least three consecutive years, no past service credit, no other plan benefits, benefit adjustments using 5 percent interest and the 2026 applicable table, and a lump-sum conversion at 5.5 percent. TRA also says the benefit figures it used were the 2025 adjusted amounts and do not assume the limits will rise. Contributions to any other plan change the range and have to be tested.

Two cells in wide circulation do not match that PDF. At $150,000 of pay, TRA shows $120,000 at age 40 and $120,000 at age 45, not the same dollar figure as the $360,000 column. The table here follows the PDF.

| Age | $360,000 pay | $200,000 pay | $150,000 pay |
|---|---|---|---|
| 40 | $124,000 | $124,000 | $120,000 |
| 45 | $159,000 | $159,000 | $120,000 |
| 50 | $204,000 | $204,000 | $180,000 |
| 55 | $262,000 | $240,000 | $180,000 |
| 58 | $304,000 | $240,000 | $180,000 |
| 60 | $336,000 | $240,000 | $180,000 |
| 61 to 64 | $349,000 | $240,000 | $180,000 |
| 65 | $349,000 | $235,000 | $176,000 |

Hypothetical, for illustration only. Pat is 55, draws $360,000 of W-2 pay that has been level for three years, and has no prior defined benefit plan. On this one sheet, the first-year estimate at that age and pay is $262,000. Pat's actuary can land above or below that once interest credits, the census, and a paired 401(k) are in the valuation. The $262,000 is not a contribution Pat can choose off a menu.

A longer explanation of how owners use the plan, without this age grid, is [what a cash balance plan lets an owner contribute](https://jamesustby.com/articles/cash-balance-plan-owner-contribution).

## How do owners use the plan?

Many owners run a cash balance plan next to a 401(k) with profit sharing. The plans are tested together. Section 404(a)(7) can cap the combined deduction. The 401(k) side of that pairing, including the 2026 dollar limits, is in [solo 401(k) contribution limits](https://jamesustby.com/articles/solo-401k-contribution-limits). The [owner retirement plan calculator](https://jamesustby.com/owner-retirement-plan-calculator) is a separate illustration of contribution room. It does not replace the actuary.

Some owners look at a cash balance plan in the years before a sale, or in the year of a sale, because a large ordinary deduction can offset income that would otherwise be taxed at ordinary rates. Whether it fits depends on cash flow, employees, and how many years of funding remain. A plan adopted only for the closing year still has to satisfy the funding and coverage rules.

## What are the trade-offs?

It is a funding commitment. Section 412 sets minimum funding standards. This is not a plan you fund only in a good year and skip in a thin one.

Employees generally must be covered, and the plan has to pass nondiscrimination testing. A solo owner with no staff is a different census from an owner with a team. The IRS defined benefit page is the overview. The census is the actuary's work.

An enrolled actuary certifies the plan each year. That costs more to administer than a 401(k) alone.

Investment results matter. If assets earn less than the interest credit the plan promised, required contributions can rise. If they earn more, later contributions can be limited.

## The bottom line

The IRS number for 2026 is a $290,000 benefit, not a $290,000 deposit, and only $360,000 of pay counts. The deposits in the age table, including $124,000 at age 40 and $349,000 at ages 61 to 64 on $360,000 of pay, are one administrator's first-year estimates under stated assumptions. The 2027 benefit limit of $300,000 is a Milliman and Marsh forecast. Your contribution is whatever your actuary certifies for your census.

If you are pricing a cash balance plan from an age on a chart, have you asked what changes when the staff, the pay history, or a paired 401(k) go into the same test?

For the sale that sometimes prompts the question, the [business sale calculator](https://jamesustby.com/business-sale-calculator) shows an after-tax illustration. [What counts as a reasonable S corp salary](https://jamesustby.com/articles/s-corp-reasonable-salary) is the pay test that sits under the wages in the chart. Durham owners can start from the [financial advisor in Durham, NC](https://jamesustby.com/financial-advisor-durham-nc) page, and the [owner lessons](https://jamesustby.com/owners) hold the related pages.

## Questions people ask next

### What is the cash balance limit for 2027?

The IRS had not published it as of October 22, 2026. Milliman's final forecast of that date, also published by Marsh, puts the Section 415(b) dollar limit at $300,000, up from $290,000, and the compensation limit at $375,000, up from $360,000. Those are forecasts.

### Can I have a cash balance plan and a solo 401(k)?

Many owners do. The plans are tested together, and a combined deduction limit can apply under Section 404(a)(7). The 401(k) dollar limits are on the solo 401(k) page. Your actuary, not this table, says whether both fit.

### Why does the contribution rise with age?

The IRS limits the retirement benefit, not the deposit. Fewer years remain to fund the same maximum annuity, so the annual deposit the actuary solves for is larger at older ages, until pay and the high-three average cap it.

### Are the age-table dollars IRS maximums?

No. They are first-year estimates from one third-party administrator, TRA, dated January 2026. TRA says the amounts vary by case, exclude past service, and assume the stated interest rates. Your actuary's number will differ.

## Sources

- [IRS, COLA increases for dollar limitations on benefits and contributions](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions)
- [IRS, IR-2025-111](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500)
- [Milliman, 2027 IRS limits, final estimates, October 15, 2026](https://www.milliman.com/en/insight/2027-irs-limits-forecast-final-estimates)
- [TRA, 2026 Maximum Contributions for Cash Balance Plans, January 2026](https://tra401k.com/wp-content/uploads/2026/01/149-Maximum_Contributions_for_Cash_Balance_Plans_2026.pdf)
- [IRS, Defined benefit plan](https://www.irs.gov/retirement-plans/defined-benefit-plan)
- [IRS, Publication 560](https://www.irs.gov/publications/p560)
- [26 U.S. Code Section 415](https://www.law.cornell.edu/uscode/text/26/415)
- [26 U.S. Code Section 404](https://www.law.cornell.edu/uscode/text/26/404)
- [26 U.S. Code Section 412](https://www.law.cornell.edu/uscode/text/26/412)

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Author: James Ustby, CFP®, APMA®, Wealth Advisor, LPL Financial, Durham and Chapel Hill, North Carolina. This material is for general information only and is not intended to provide specific advice or recommendations for any individual. Examples are hypothetical and for illustration only. Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA / SIPC. Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP® and CERTIFIED FINANCIAL PLANNER® in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.