An example
For a 46-year-old author whose book royalties and course sales run through a single-member LLC, the 2026 figures work out like this:
- Cash balance plan, first year
- $164,000
- Solo 401(k) alongside
- $30,000
- Both plans
- $194,000
- A Solo 401(k) on its own
- $72,000
- Federal income tax saved
- $44,600
Federal income tax only, compared with making no retirement contributions. State tax saved depends on where you live: see savings by state. An illustration from the same calculation as the estimate, not a quote.
Authors and creators are generally sometimes a specified service business for the 20% qualified business income deduction, depending on what exactly the work is. That changes how much a contribution saves at higher incomes. How the deduction interacts with contributions
Which creative income counts
Two rules do most of the work. Royalties are self-employment income, reported on Schedule C, when you are in business as a writer or artist; otherwise they go on Schedule E. And the tax code treats income from licensing property you created by your own efforts as earned income for retirement plans.
| Income | Can it support a plan? |
|---|---|
| Royalties on books or other work you wrote, while in business as a writer | Yes |
| Courses, newsletters, templates and other products you create and sell | Yes, when your own work is a material part of producing the income |
| Sponsorships, brand deals, speaking and appearance fees | Yes, as self-employment income |
| Platform ad revenue from content you actively produce | Generally yes, as income of the business |
| Royalties on work you inherited or a catalog you bought | No. You did not create the property |
| Distributions of profit from your S corporation | No. Only salary counts |
See sole proprietors and single-member LLCs for how earned income is calculated.
Uneven income
Creative income arrives in launches, advances and breakout months. A cash balance plan asks for a minimum contribution every year, and the benefit it can fund is based on your average pay over your highest three consecutive years, not on one great one. It suits a creator whose income has been solid for a few years and is expected to stay that way, more than one coming off a single hit. See minimum contributions and lean years.
Royalties from a backlist often form a steady base, with new books, launches and deals on top. The base is the better guide to what a plan can commit to each year; the upside can go toward the top of the contribution range in the years it arrives.
Creators who have moved their business into an S corporation face one more constraint: the plan counts only the salary the corporation pays, and that salary has to run through payroll by December 31. See S corporation owners.
Editors, assistants and contractors
Many creators rely on a video editor, designer or assistant. Genuine independent contractors, working for several clients on their own terms, do not affect your plan. Someone working full time only for you, under your direction, may be an employee whatever the contract says, and an employee would have to be covered by the plan once they meet its age and service conditions. See hiring your first employee.
Is it a specified service?
Writing is not on the specified service list. Two categories can still reach creators:
- Performing arts, which covers actors, singers, musicians, entertainers and directors performing in that capacity.
- Reputation or skill, which the regulations limit to three kinds of income: fees for endorsing products or services; fees for licensing your name, image, likeness, voice, signature or trademark; and appearance fees, including appearances on radio, television or other media.
So book royalties are generally outside the list, while a creator whose income is mostly endorsements and appearances may be inside it. A business with gross receipts of $25 million or less is not a specified service business if less than 10% of its receipts come from specified services, which is why a mixed business needs a closer look. See the QBI deduction and retirement contributions.