Help Clients Stop Leaving Money on the Table: How Cash Balance Plans Can Boost Their Wealth

Rohit Punyani, Co-Founder • April 9, 2024

A Strategic CPA Guide to Shielding Client Income Through Pre-Tax Retirement Planning



Cash Balance Plans: A Tax-Efficient Strategy for High-Income Clients

As a CPA, your clients count on you to help them grow and protect wealth—especially through smart tax deferral strategies. One often-overlooked tool is the cash balance plan, a powerful retirement vehicle designed for high-earning business owners and 1099 contractors.


Unlike 401(k)s, which have limited annual contributions, cash balance plans allow contributions up to 10x higher, depending on age and income. This gives your clients the opportunity to significantly reduce taxable income while building retirement assets.


Understanding Cash Balance Plans and Why They Matter for Your Clients


Cash balance plans are employer-sponsored defined benefit plans, but they look and feel like a defined contribution plan to the participant. They’re expressed as hypothetical account balances, making them easy to understand and track.


Benefits your clients will care about:


  • Massively higher contribution limits vs. 401(k)s (especially for older, high-earning business owners)


  • Pre-tax deductions that reduce current-year income


  • Optional life insurance funding within the plan—providing tax-deferred growth, liquidity, and estate planning advantages


  • Exit strategies like “superfunding” an IRA at plan termination



CPAs can use these tools to dramatically improve after-tax cash flow and retirement readiness—especially for clients with large year-end income or one-time windfalls.


Check out our other post on Understanding DB vs. DC Plans for Business Owners.


Implementing a Cash Balance Plan: What CPAs Should Know


Helping clients implement a cash balance plan doesn’t have to be complicated. Here’s a breakdown of what to expect:


Funding Level Determination


  • Contribution limits are based on age, income, and structure. Older clients can typically contribute significantly more.



Plan Design & Customization


  • The plan can be tailored to business goals (e.g., higher contributions to the owner, strategic benefits for employees).



Third-Party Administration (TPA)


  • A TPA is engaged to manage the plan, file Form 5500, and ensure IRS compliance. Setup fees are similar to a 401(k).



Deductibility Across Structures


  • Cash balance plans are flexible—useful across C Corps, S Corps, partnerships, LLCs, and sole proprietorships. TPA and setup costs are fully deductible.


Key Takeaways for CPAs Advising Business Owners


Higher deductions = lower current-year taxes


Contributions to cash balance plans can sharply reduce taxable income—ideal for clients with high Schedule C or K-1 income.



Easier to understand than traditional DBs


Clients get a “balance” to track, making the concept less abstract than pensions.



Life insurance integration


Inside the plan, life insurance can grow tax-deferred and be distributed in-kind tax-free, offering added retirement or estate planning value.



Exit strategy built in


Upon plan termination, clients roll their balance into IRAs—preserving tax deferral.




Time-Sensitive Tax Tip for Your Clients


Many CPAs don’t realize this:

Cash balance plans can be funded for the previous tax year if formed in Q1 (or even into Q2) of the current year.


Example: A plan created in early 2024 can still provide a 2023 tax deduction—if finalized by July 15, 2024 (the final extended filing deadline).

Encourage clients who are filing on extension to consider this move before it’s too late.


Let’s Partner to Build a Custom Plan for Your Clients


At Fusion Strategies, we collaborate with CPAs like you to custom-design and administer these plans. Whether you’re helping a solo 1099 client or a growing S Corp with several employees, we provide turnkey solutions that simplify implementation while maximizing benefit.


Contact us today at team@fusion-strategies.com to explore how a cash balance plan could strengthen your client’s tax strategy and retirement readiness.

Using Life Insurance to Fund Real Estate: What CPAs Should Know

By Rohit Punyani, Co-Founder • December 13, 2024
As a CPA, you’re often the first call when clients evaluate how to finance real estate investments—particularly those interested in leveraging tax-advantaged liquidity and minimizing opportunity costs. One lesser-known but increasingly relevant tool in this space is dividend-paying whole life insurance, specifically through policy loans against cash value.

How Long Does It Take to Build Cash Value with Whole Life Insurance?

By Rohit Punyani, Co-Founder • October 9, 2024
As a CPA advising clients on wealth preservation, tax planning, and retirement strategy, you’ve likely been asked about the use of whole life insurance as a financial asset—especially in the context of “legacy banking,” where clients use a dividend-paying whole life policy to build tax-advantaged cash value and access it during their lifetime.

When Is the Best Time for Clients to Buy Cash Value Life Insurance?

By Rohit Punyani, Co-Founder • September 24, 2024
As a CPA, you’re often guiding clients through financial decisions that affect not just their taxes, but their balance sheets, long-term planning, and legacy. One increasingly relevant topic in this context is cash value life insurance, particularly dividend-paying mutual whole life insurance, used in advanced strategies such as legacy banking, estate planning, and tax diversification.

Is Life Insurance Tax Deductible? A Guide for CPAs Advising Business Owners and High-Income Clients

By Rohit Punyani, Co-Founder • August 26, 2024
As a CPA, you’re often the first line of inquiry when clients ask about the tax implications of financial products, including life insurance. The answer to whether life insurance premiums are tax-deductible isn’t straightforward—it depends on entity type, ownership structure, and the policy’s purpose. This guide is designed to help CPAs understand when and how life insurance interacts with the tax code and how it can be strategically leveraged for tax planning, liquidity, and wealth transfer.

Legacy Banking and Debt Management: What CPAs Need to Know

By Rohit Punyani, Co-Founder • August 7, 2024
For CPAs working with high-net-worth clients, managing debt, liquidity, and asset growth requires more than just conservative planning. Increasingly, clients are exploring more integrated strategies—especially those that combine asset growth with tax efficiency and flexible access to capital.

Life Insurance as a Strategic Financial Planning Tool

By Rohit Punyani, Co-Founder • June 11, 2024
As a CPA, you’re often the first point of contact when clients seek guidance on building long-term financial security. While traditional investment vehicles like stocks, bonds, and qualified plans dominate most portfolios, a growing number of high-income earners and business owners are looking for alternatives that offer both tax efficiency and financial stability.

Key Person Insurance: A Strategic Business Continuity Tool for Your Clients

By Rohit Punyani, Co-Founder • May 21, 2024
As a CPA advising closely held businesses or professional service firms, you’ve likely helped clients navigate risk in many forms—from tax exposure to succession challenges. One often overlooked yet essential area of business risk planning is the loss of a critical team member whose expertise, leadership, or institutional knowledge is central to the company’s continued success.

Whole Life Insurance as a Strategic Wealth Tool for Your Clients

By Rohit Punyani, Co-Founder • March 19, 2024
As a CPA, your clients trust you to provide insight not only on taxes but on long-term wealth preservation and strategic planning. Increasingly, high-income earners and business owners are seeking tools that offer stability, tax advantages, and liquidity—without relying solely on volatile markets or tax-deferred accounts. One often-overlooked yet highly effective strategy involves dividend-paying whole life insurance policies issued by mutual insurance companies. These policies offer your clients significant financial benefits beyond a death benefit—including tools for tax planning, liquidity, and wealth transfer.

Guiding Clients Through Estate Planning: A Strategic Asset for CPAs

By Rohit Punyani, Co-Founder • February 14, 2024
As a CPA, your role often extends beyond tax filings and compliance—you’re a trusted advisor on matters of long-term wealth, retirement, and legacy. One area where your guidance is especially critical is estate planning.

A Guide for CPAs: Helping Clients Understand the Distinctions Between Defined Benefit (DB) and Defined Contribution (DC) Plans

By Rohit Punyani, Co-Founder • December 28, 2023
As a CPA advising small business owners and 1099 clients, your role in guiding them toward the right retirement strategy is critical. Understanding the core features of defined benefit and defined contribution plans can help your clients align their tax strategies and retirement goals.