About the Defined Benefit Plan Contribution Calculator
This defined benefit plan calculator gives a first-pass estimate of how much a business owner could contribute each year to a one-person (solo) defined benefit plan. It works out the largest pension the IRS allows you to fund, converts it into the lump sum needed at retirement, and spreads that target into level yearly contributions.
It is designed for high-earning self-employed people, partners and small-business owners who already max out a 401(k) or SEP IRA and want to know whether a DB or cash balance plan is worth exploring. Because contributions are driven by the benefit you are funding and the years left to fund it, older owners with high, steady income can often deduct far more than the $72,000 defined contribution limit.
For 2026 the annual benefit cannot exceed $290,000 or 100% of your average compensation over your highest three consecutive years, with only $360,000 of pay counted. The dollar limit is reduced by one-tenth for each year of participation under 10. Real plans use IRS mortality tables and actuarial assumptions certified each year by an enrolled actuary, so treat this as an estimate to discuss with a plan provider, not a funding certification.
With the default inputs, the estimated yearly contribution is $205,522.66. Change any value above to recalculate instantly.
How to use the defined benefit plan contribution calculator
- 1Enter your age and the plan retirement age (62 or later for the full limit).
- 2Enter your average compensation over your best three consecutive years.
- 3Add any years already in the plan and any existing plan assets.
- 4Keep the 5% interest rate and 20 payment years, or use figures from your actuary.
- 5Read the estimated yearly contribution and compare it with your 401(k) or SEP limits.
Formula and method
The maximum benefit B is the lower of the 2026 §415(b) dollar limit ($290,000) and your high-3 average pay (capped at $360,000), reduced by one-tenth for each year of participation short of ten (strictly, the dollar limit phases in with years of participation and the 100%-of-pay limit with years of service; this tool assumes the two are equal, as they usually are for a new solo plan). That yearly benefit is turned into a lump sum at retirement by valuing N annual payments made at the start of each year at the interest rate i — a simplified annuity-certain stand-in for the mortality-based factors actuaries use.
The calculator then finds the level year-end contribution that, growing at the same rate for the n years to retirement, plus any existing assets, reaches that target. Actual allowable contributions follow IRS minimum-funding and maximum-deductible rules (IRC §§430 and 404), change with investment results each year, and must be certified by an enrolled actuary.
- B
- Maximum annual benefit at retirement
- i
- Interest / funding rate
- N
- Years of benefit payments valued
- n
- Years until plan retirement age
Worked examples
Age 50, $250k pay, new plan to 62
With 12 years of participation the full benefit applies, so the plan can fund 100% of $250,000 pay. Twenty start-of-year payments at 5% are worth about 13.09 times the benefit, a $3.27 million target, which takes roughly $205,500 a year for 12 years.
Age 55, $400k pay, capped by the limits
Pay above $360,000 does not count, so the benefit starts from the $290,000 dollar limit. With only 7 years of participation it is cut to 70%, or $203,000 a year, which still needs about $326,250 a year to build a $2.66 million target by 62.
Age 45 with $150,000 already saved
A $180,000 benefit needs about $2.36 million at 62. Existing assets of $150,000 grow to roughly $344,000 over 17 years, leaving the rest to be funded with about $77,845 a year.
Frequently asked questions
How much can I contribute to a defined benefit plan in 2026?+
There is no fixed contribution limit. Instead the benefit is capped: in 2026 the annual pension cannot exceed $290,000 or 100% of your high-3 average pay (only $360,000 of pay counts). Contributions are whatever an actuary calculates is needed to fund that benefit, which can exceed $200,000 a year for owners in their 50s and 60s.
What is the difference between a defined benefit plan and a cash balance plan?+
Both are defined benefit plans subject to the same §415(b) limits. A traditional plan promises a monthly pension, while a cash balance plan expresses the benefit as a hypothetical account with pay and interest credits, which many owners find easier to understand and to pair with a 401(k).
Can I have a defined benefit plan and a 401(k)?+
Yes. Many solo owners combine a DB or cash balance plan with a 401(k). Combined deduction limits can apply when both plans cover the same employees, so the employer profit-sharing contribution is often limited to 6% of pay when paired with a DB plan.
Why does age matter so much?+
The plan must build the same lump sum whether you start at 40 or 55, but an older owner has fewer years to do it. That makes yearly contributions — and tax deductions — much larger for owners closer to retirement.
What happens if I can’t make a contribution?+
Defined benefit plans have minimum funding requirements, so contributions are not fully optional. Skipping required contributions can trigger excise taxes. If your income is irregular, a cash balance plan with a funding range or a defined contribution plan may be a better fit.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.