If you’re a law firm partner earning in the high six figures and already contributing to a 401(k), you’re ahead of the curve. You’ve checked the right boxes, taking care of your team, putting something away for yourself, and following what most CPAs would call “a smart plan.”
But if you’re still staring at an oversized tax bill every spring, it’s worth asking: Is there anything else I can do?
Here’s the truth: your 401(k) isn’t broken, it’s just incomplete.
Think of it like this: the 401(k) covers your base layer. It does a decent job of helping you put away some money, with a contribution limit that tops out around $66,000 to $70,000 per year, depending on age and structure. However, that cap starts to feel small when your taxable income exceeds $500,000, $750,000, or more.
That’s where adding a Cash Balance Plan (CB plan) comes in, not to replace your 401(k) entirely, but to complete it. When done right, this kind of retirement layering strategy allows you to multiply your deductions, keep more by reducing taxable income through IRS-qualified, pre-tax contributions, and dial down your taxable income, sometimes significantly.
This article takes you through what layering a CB plan means for your firm and why it’s the next move for high-income partners who feel boxed in by contribution limits.
And if you already have a 401(k) in place? That’s not a hurdle; you have gotten yourself a great head start.
Already have a 401(k)? Good. But if you’re still facing a painful tax bill, this article shows how layering a Cash Balance Plan can help you contribute more, reduce taxable income, and put more away pre-tax without changing your firm’s structure or increasing your administrative burden.
If your firm already has a 401(k) in place, you’re not starting from scratch, you’re halfway to a far more powerful setup. That’s because a CB plan doesn’t replace your 401(k), it builds on it.
Here’s the critical advantage: most CB plans require a 401(k) to satisfy IRS nondiscrimination testing. So, if you already have one, you’ve cleared a significant hurdle. You’ve already built the foundation needed for a foolproof retirement layering strategy.
That also means adding a CB plan is often more efficient and less expensive than it would be for a firm starting cold. The cost of providing retirement benefits to rank-and-file employees is already baked into your current structure. What’s missing is the upside for the partners.
Without a CB plan, you’re already doing the heavy lifting, paying to cover employee retirement benefits, while leaving hundreds of thousands in potential pre-tax contributions on the table. That’s a win for compliance, but not necessarily for you.
Layering your 401(k) with a CB plan helps you take full advantage of the structure you’ve already built. It allows you to redirect more of the firm’s profit into retirement savings for the people driving that profit, yourself and your fellow partners.
When a 401(k) is already in place, layering in a Cash Balance Plan minimizes additional employee cost while maximizing what the partners can put away for themselves.
If you're already contributing to your employees' 401(k) plans, especially through a profit-sharing component, you're already covering the most expensive part of a retirement plan: nondiscrimination testing and employee contributions.
What most partners don’t realize is that you may be able to significantly increase your own tax-deferred contributions without a major increase in employee costs.
But once your income crosses into the $400,000+ range, that cap starts to fall short. You’re still facing a steep tax bill, especially if you’re in or approaching the 32%, 35%, or even 37% marginal brackets. This is where a CB plan offers you the flexibility to do something more.
They allow for significantly higher tax-deferred contributions. Depending on your income, age, and plan design, you can put away anywhere from $100,000 to $300,000 per year, in addition to your 401(k) contributions.
To be clear, these are contributions, not tax savings. The actual savings depend on your bracket.
For example, if you’re in the 35% bracket and contribute $300,000 to a CB plan, you could reduce your current tax bill by roughly $105,000. At the 37% bracket, it could be even higher. But if you’re in the 24% bracket, the same contribution would save about $72,000.
Here’s a side-by-side view for context*:
| Plan Type | Max Annual Contribution | Estimated Tax Reduction at 35% Bracket |
| 401(k) Only | ~$66,000 | ~$23,100 |
| 401(k) + Cash Balance* | ~$300,000+ | ~$105,000 |
What makes this so effective is that you’re not just increasing your deductions, you’re dialing your taxable income, potentially keeping yourself out of a higher tax bracket altogether.
This kind of strategic deduction is exactly why retirement layering strategies resonate so strongly with high-income partners. It’s not just about saving for the future; it’s about taking control of what you keep this year.
If you’re married and filing jointly, the tax math behind CB plans gets even more compelling. Here's why.
In 2025, the federal tax brackets for joint filers show a sharp jump between the 24% and 32% ranges. Specifically:
That one-dollar difference brings a sudden 8% increase in what you owe on your next dollar of income. And if your taxable income is already hovering around that range, you’re right at the pain point.
This is where a CB plan can do more than just defer tax; it can pull your income back down into a more favorable bracket.
Let’s say an attorney earning $582,500 jointly with a spouse doesn’t want to pay 32% federal tax on her next dollar.
By contributing $187,900 to a Cash Balance Plan, she reduces their taxable income to $394,600, keeping them entirely in the 24% bracket and avoiding the 32% marginal rate.
That move saves her about $60,000 in federal taxes this year, all while building personal retirement wealth.
This works not just because of the size of the contribution, but because of where it puts your income on the tax table. CB plans offer high earners a compliant way to manage taxable income precisely, utilizing pre-tax contributions to avoid bracket jumps and maximize year-end savings.
So, what’s the takeaway? If you’re married and your income is bumping up against that $400,000 mark, a CB plan may be the most efficient tool available to control what you owe, without changing how your firm operates.
You might be closer to a six-figure deduction than you realize. We’ll run a free tax-saving analysis based on your actual income and 401(k) setup.
If your income is north of $400,000, you’re standing at the edge of a steep jump. In 2025, the 24% tax bracket tops out at $394,600 for married filers. Go a dollar over, and you're paying 32% on the rest. That shift can cost tens of thousands in federal taxes just for earning a little more.
Most partners in this range aren’t looking for long-term projections. They’re reviewing the tax bill due this year and inquiring about ways to reduce it.
This is where planning around tax brackets can be just as important as planning for retirement.
Instead of sending 32 cents of every next dollar to the IRS, a CB plan gives you a way to move that income into your future. You still control the money. You can still access it later. But this year, it’s off your tax return.
Let’s say your taxable income this year is sitting at $425,000. That’s well into the 32% bracket.
With a properly structured retirement layering strategy, you could contribute $100,000 to $300,000 into a CB plan and bring your taxable income back down, potentially all the way into the 24% zone or even the 22% and below bracket.
You’re not just contributing more. You may avoid entering a higher tax bracket, depending on your total income and deductions. For high-income partners, this isn’t about deferring income for some distant future. It’s about reducing exposure now, in a way that’s precise, compliant, and based on real numbers.
One of the biggest concerns we hear from firm partners is, “Am I going to have to overhaul everything just to make this work?” The short answer: No.
Adding a CB plan doesn’t mean undoing your current 401(k). It doesn’t require changing how you compensate your team, run payroll, or manage your firm. In fact, the best CB plan setups keep everything in place, just with a smarter layer on top.
Here’s what stays the same:
And here’s what actually changes:
This isn’t a new system to manage. It’s an upgrade to the system you already have. And, if your current setup is working, we keep it that way and just make it work harder for you.
If you’re coming off a strong year and feeling the sting of your tax bill, that’s usually the signal.
A CB plan is most effective when your income is high and your current deductions are tapped out. It’s built for years where you’ve already hit the 401(k) limit, and you’re still left with too much taxable income on the books.
You’re likely a good fit if:
Here’s when it might not be the right year for your firm:
That said, we work with firms every day to map out contribution ranges that flex with income. Even if this isn’t your biggest year ever, a well-designed plan can still provide meaningful tax savings without locking you in. And if you’re not sure? We’ll help you figure it out with a precise, numbers-first analysis without the pressure or any of the overwhelming jargon.
We get it, your time’s billable. If you skipped to the end, here’s what you need to know:
Bottom line: You’re probably paying more in taxes than you need to. We’ll show you how to fix that.
If you already have a 401(k), you’ve done what most partners never get around to: putting a solid retirement plan in place for your team and yourself.
But if your income is high, your tax bill is higher, and your 401(k) contributions are already maxed out, then it’s time to ask what else is possible.
A CB plan isn’t about starting over. It’s about building on what’s already working to give you more control, more deductions, and more of your income back.
And if the goal is to keep more this year, not just plan for someday, then it’s worth knowing what the numbers look like for you.
Find out how much more you could be putting away this year.
*Estimated tax reduction based on marginal rate. Actual savings depend on filing status and total deductions.
**401(k) + Cash Balance: up to ~$300,000+ depending on age, income, and plan design (in addition to 401(k))
Disclosure: The information provided on this website is for general informational and educational purposes only and is not intended as legal, tax, or investment advice. Actual tax savings will vary based on your individual circumstances, including filing status, income level, existing retirement plans, and other deductions. Cash Balance Plans and other retirement strategies must be carefully structured and administered to comply with IRS regulations. You should consult with a qualified tax advisor, financial planner, and/or pension specialist before implementing any strategy discussed here.