Cash Balance Plans for Doctors: Who Benefits and Why
A Cash Balance (CB) plan is a defined benefit plan that looks like an account and can sit on top of a 401(k)/profit sharing plan to allow substantially larger, tax‑deductible retirement funding with predictable, age‑weighted benefits.
Why physicians are a strong fit
High, stable income enables meaningful pre‑tax savings beyond 401(k) limits (subject to current IRS limits).
Age‑weighted benefits help later‑career physicians ‘catch up’ faster than pure DC plans.
CB pairs well with 401(k): coordinated designs can maximize owner value while controlling staff cost.
ERISA framework provides creditor‑protection features and predictable funding targets.
How CB works (one minute)
Each year the plan credits a pay credit (flat dollar or % of pay) plus an interest credit (fixed or permitted market‑rate formula).
Because it’s a pension, the plan requires annual design/testing/certification.
Common physician scenarios
Solo or two‑partner practice seeking large deductions with modest staff cost.
Late‑career physician targeting accelerated, predictable funding to a retirement date.
Multi‑specialty group using CB + 401(k) to balance partner equity and compliance.
How Pension Services, Inc. helps
Fit Check (15 minutes).
Custom illustration based on demographics and objectives.
Adopt & coordinate (plan doc, testing, funding guidance, Form 5500; 316 fiduciary available).
Plan Sponsor Action Checklist
Talk to our team