CPAs often have a unique vantage point into the financial lives of business owners.
By Jeff Herman
You see when income increases.
You know when a business has moved from survival mode to consistent profitability.
You see the tax liability.
And you may be one of the first to learn how much wealth an owner is accumulating inside the business.
Together, these insights create an important retirement planning opportunity as the strategy pivots from simply earmarking funds for a retirement account to more strategic activities that take full advantage of the owner’s ability.
A 401(k) May Be Only the Starting Point
Consider an independent consultant, physician, attorney, contractor, or other business owner with substantial earned income and no employees other than perhaps a spouse.
A one-participant 401(k), often called a Solo 401(k) or I 401(k), allows the owner to participate in two capacities: employee and employer.
For 2026, the employee elective-deferral limit for a 401(k) is $24,500. The overall defined-contribution limit can reach $72,000 before eligible catch-up contributions, subject to compensation and other applicable limitations.
That creates planning flexibility beyond simply making an employee contribution.
Depending on the business structure, income, and plan design, an owner may be able to combine an employee deferral with employer contributions, including profit-sharing contributions.
For CPAs, that creates an important question: When a client says, “I maxed out my 401(k),” what exactly do they mean?
They may have reached their individual elective-deferral limit without having exhausted the retirement-plan opportunities available through the business.
Then There Is Another Layer
For certain highly profitable businesses, particularly those with owners who want to accelerate retirement savings, a defined-contribution plan may still not be the end of the conversation.
A cash balance plan is a type of defined benefit plan. It can potentially be maintained alongside a 401(k), depending on the circumstances and plan design.
Unlike a 401(k), where contribution limits generally govern how much can go into the participant’s account, a cash balance plan promises a formula-based retirement benefit.
Funding requirements are determined actuarially based on factors that can include age, compensation, and the benefit the plan is designed to provide.
For the right business owner, that can potentially create capacity for substantially greater retirement funding than a 401(k) alone.
But it also adds complexity, funding obligations, and administrative requirements.
That is precisely why CPAs do not need to become cash balance plan experts. They need to know when to recognize the opportunity.
Which Clients Should Raise a Flag?
A retirement-plan review may be worth considering when you encounter a business owner who:
- Has consistently strong business income.
- Wants to save more for retirement than current arrangements allow.
- Is in their peak earning years.
- Has significant current taxable income.
- Has stable enough cash flow to consider ongoing retirement-plan funding.
- Has relatively few employees—or a workforce structure that may support additional plan design.
- Started saving seriously for retirement later than intended.
- Is already maximizing existing retirement-plan opportunities.
Not every client who meets those criteria should establish a cash balance plan or even a Solo 401(k). In fact, cash balance plans remain a relatively specialized strategy.
While the U.S. has millions of small and independent businesses, only about 25,000 cash balance plans are currently on file nationwide. That gap doesn’t mean millions of owners should have one, but it does suggest the strategy remains far from commonplace. SOURCE
However, while cash balance plans are still relatively uncommon, they are gaining ground. The number of plans increased nearly 70% from 2015 to 2024, and they now account for roughly 65% of all defined-benefit plans in the U.S. SOURCE
The opportunity is the conversation.
The CPA Doesn’t Have to Solve It
Retirement-plan design frequently requires coordination among the CPA, financial advisor, third-party administrator, actuary, and, when appropriate, ERISA or other legal counsel.
The CPA’s value can be introduced much earlier.
You may be the first person to recognize that the client’s current retirement plan no longer matches the economics of the business. That awareness can uncover planning opportunities that otherwise remain hidden for years.
For some business owners, the next opportunity isn’t another investment. It may be a better-designed retirement plan. Consider how business owners increasingly expect more than compliance from their tax professionals. In Thomson Reuters’ 2026 State of Tax Professionals Report, 73% of U.S. respondents said most clients strongly want their tax professional to act as a trusted advisor in addition to filing their taxes.
If you have a business-owner client who fits this profile, let’s talk. I’m happy to work with you to evaluate the opportunity, bring in the appropriate retirement-plan specialists, and determine whether a Solo 401(k), cash balance plan, or other structure deserves a closer look.