How much can I put away?
Effective January 1, 2026, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $280,000 to $290,000.
A yearly benefit limit, not a contribution limit. Read IRS Notice 2025-67 in full (opens in a new tab)
The short answer
Federal law caps the yearly benefit a defined benefit plan may pay, $290,000 for 2026, and sets no dollar limit on the deposit that funds it. An enrolled actuary figures each year's contribution from your age, your pay and the plan's assumptions, and older owners can contribute more because fewer years remain to fund the same capped benefit. No law sets a contribution for a given age, and the figure for your age comes from an actuary's illustration on your own census.
How much can I contribute to a cash balance plan each year?
Federal law sets no dollar limit on a defined benefit contribution. For 2026 the law caps the annual benefit a plan may pay at $290,000 (or 100 percent of the participant's average pay for the highest three years, if lower) and counts pay only up to $360,000.
A cash balance plan is a kind of defined benefit plan, so the rules in this answer apply to it.
The enrolled actuary calculates the contribution needed to fund that benefit for your age and pay, so the contribution can be more or less than $290,000. You may have seen $24,500 and $72,000 quoted for 2026: $24,500 is the limit on an employee's own 401(k) deferrals, and $72,000 is the limit on total additions to a defined contribution account. Neither limits a defined benefit plan.
An enrolled actuary is an actuary licensed by the federal Joint Board for the Enrollment of Actuaries. IRS Publication 560 gives the reason: “The deduction for contributions to a defined benefit plan is based on actuarial assumptions and computations. Consequently, an actuary must figure your deduction limit.”
Source: IRS Notice 2025-67. (opens in a new tab)Internal Revenue Service, Publication 560 (opens in a new tab)How much can I contribute at my age?
Older owners can contribute more because fewer years remain to fund the same capped benefit. No law sets a contribution for a given age, and the provider tables published by age disagree with one another and print few of their assumptions. The honest answer for your age is the actuary’s illustration on your census.
Is there a lifetime limit on a cash balance plan?
In effect, yes. The law caps the yearly benefit, $290,000 for 2026, and the largest lump sum a plan may pay is that benefit converted at interest rates and a mortality table the tax code prescribes. The lump sum moves with those rates and with your retirement age, so the law prints no lifetime dollar amount.
Time in the plan matters too. An owner with fewer than 10 years of participation gets only a fraction of the dollar limit: the years in the plan divided by 10, under section 415(b)(5)(A).
26 U.S.C. 415(b)(5)(A) (opens in a new tab)Is the contribution a percentage of revenue, or a dollar amount I pick?
Neither. You and the actuary choose a benefit formula inside the federal caps, and the actuary figures each year’s contribution from your pay, your age and the plan’s assumptions. Revenue is not part of the formula. Pay is, and for 2026 the plan counts it only up to $360,000 under section 401(a)(17).
Because the formula runs on pay, the contribution changes when the pay the plan counts changes, and the actuary certifies a new range each year.
IRS Notice 2025-67; 26 U.S.C. 401(a)(17) (opens in a new tab)Is there a minimum contribution?
The contribution is not optional. Each year the enrolled actuary certifies a minimum and a maximum, and the employer may pay any amount between them. The minimum is due eight and a half months after the plan year ends, and an unpaid minimum draws a 10 percent excise tax, rising to 100 percent if it stays unpaid.
In a hard year an employer can pay only the minimum, draw on a prefunding balance built in better years, amend the plan to reduce future credits after giving participants notice, or apply to the IRS for a hardship waiver, which is allowed in no more than 3 of any 15 plan years. None of those tools cuts a benefit already earned.
26 U.S.C. 430(j)(1) (opens in a new tab)26 U.S.C. 4971(a)(1) and (b) (opens in a new tab)26 U.S.C. 412(c)(1)(A) (opens in a new tab)The two due dates for a 2026 plan year: When is the deadline to start?
What counts as compensation for the plan?
For an S corporation owner, the plan counts W-2 wages. For a sole proprietor or a partner, the plan counts earned income from the business, figured after the plan deduction itself. For 2026 the plan ignores any pay above $360,000, under section 401(a)(17) of the tax code.
Reasonable compensation rules apply to S corporation wages, so the wage that drives the formula is one your CPA sets and can defend.
Internal Revenue Service, Publication 560; 26 U.S.C. 401(c)(2) (opens in a new tab)IRS Notice 2025-67; 26 U.S.C. 401(a)(17) (opens in a new tab)What are the 2026 defined benefit plan limits?
For 2026, IRS Notice 2025-67 caps the annual benefit a defined benefit plan may pay at $290,000 and the pay a plan may count at $360,000. The other figures in the table belong to 401(k) and other defined contribution plans. The IRS will print the next year’s figures in its next notice.
| Limit | 2026 figure | What it limits | Source |
|---|---|---|---|
| Defined benefit annual benefit limit | $290,000 | The yearly benefit a defined benefit plan may pay. A benefit limit, not a contribution limit. | IRS Notice 2025-67, 415(b)(1)(A) (opens in a new tab) |
| Annual compensation limit | $360,000 | The most pay any plan may count for one person. | IRS Notice 2025-67, 401(a)(17) (opens in a new tab) |
| Elective deferral limit | $24,500 | An employee’s own 401(k) deferrals. Sets no defined benefit limit. | IRS Notice 2025-67, 402(g)(1) (opens in a new tab) |
| Defined contribution annual additions limit | $72,000 | Everything added to one person’s defined contribution account in a year. Does not limit a defined benefit plan. | IRS Notice 2025-67, 415(c)(1)(A) (opens in a new tab) |
| Catch-up contribution, age 50 and over | $8,000 | Generally applies for individuals aged 50 or over. A 401(k) figure. | IRS Notice 2025-67, 414(v)(2)(B)(i) (opens in a new tab) |
| Catch-up contribution, ages 60 to 63 | $11,250 | Applies for individuals who attain age 60, 61, 62, or 63 in 2026. Unchanged from 2025. A 401(k) figure. | IRS Notice 2025-67, 414(v)(2)(E)(i) (opens in a new tab) |
| Highly compensated employee threshold | $160,000 | Who counts as highly paid when the plan’s coverage is tested. | IRS Notice 2025-67, 414(q)(1)(B) (opens in a new tab) |
| Key employee threshold | $235,000 | For top-heavy plan purposes. | IRS Notice 2025-67, 416(i)(1)(A)(i) (opens in a new tab) |
How a 401(k) runs beside a pension plan: Can I keep my 401(k) too?
What are the risks?
The IRS lists the defined benefit plan as the most costly and the most administratively complex type of plan. The employer bears the investment risk: benefits do not depend on asset returns, so a shortfall raises future contributions. The contribution is mandatory each year within the actuary’s range, and the employer pays fees every year.
The money is locked until age 59½, separation or plan termination, with a 10 percent additional tax on early distributions. Staff must be covered and credited under federal tests, and the share they receive comes from the actuary’s test on your census.
Internal Revenue Service, Defined benefit plan page (opens in a new tab)26 U.S.C. 72(t)(1) (opens in a new tab)Checked on October 15, 2026.