How the figure is worked out
A cash balance plan's limit comes from the most it may pay out: a lifetime benefit of up to $290,000 a year at retirement, or your average pay if that is lower, phased in over your first ten years (IRC 415(b)). The calculator turns that into a lump sum at your retirement age and works out the largest first-year contribution that keeps the account within it, using the IRS segment rates and mortality table for 2026.
It then checks what your business can fund. A self-employed owner cannot deduct more than their net earnings, and a corporation pays the contribution from profit left after salary. A Solo 401(k) is added alongside, with the full salary deferral and employer profit sharing held to 6% of pay under the combined deduction limit.
This is the same calculation the estimate uses. The estimate also asks about your state, filing status and other income, and shows what the contribution saves in tax.
What it assumes
- Retirement at 62, or five years after the plan starts if that is later
- Earlier years of pay matched this year's, up to the 2026 compensation limit
- No other retirement plan for the business, and no employees
- The plan is designed around the largest contribution; you can choose any amount in the range each year
An enrolled actuary sets the actual range for your plan each year from your plan document and verified pay. It can be higher or lower.