What does a plan cost?
Most costly type of plan
Most administratively complex plan
The IRS's own words for this plan type. Read IRS, Defined benefit plan page in full (opens in a new tab)
The short answer
The IRS calls the defined benefit plan the most costly type of plan, and every plan pays each year for an enrolled actuary, an administrator and the federal filings. Published fees are each seller's own figure on the date shown, and the plan firm's itemized fees are quoted to you in writing before you sign. A federal pension insurance premium applies only to a plan the PBGC covers, and the PBGC does not cover a professional service employer's plan that has never had more than 25 active participants at any time after September 2, 1974.
How much does a cash balance plan cost each year?
No law sets the price, and each provider sets its own fees. The IRS calls the defined benefit plan the most costly type of plan. Every plan pays each year for an enrolled actuary, an administrator and the federal filings, and some plans also pay a federal insurance premium. Get every fee in writing before you sign.
A cash balance plan is a kind of defined benefit plan, so the rules in this answer apply to it.
The table below lists each service a plan needs, one line for each. If you adopt a plan, the design, document, actuarial and administration fees are quoted to you in writing before you sign, line by line.
Internal Revenue Service, Defined benefit plan page (opens in a new tab)| Service | What it covers | How often | Fee | Source |
|---|---|---|---|---|
| Plan design and plan document | The written plan, including the formula that sets each person's benefit | First year, and again when the plan is amended | Quoted to you in writing before you sign | 29 U.S.C. 1102(a) (opens in a new tab) |
| Trust or insurance contract | The account that holds the plan's money in the plan's name | Set up in the first year | Quoted to you in writing before you sign | 29 U.S.C. 1103(a) (opens in a new tab) |
| Actuarial valuation | An enrolled actuary values the plan and certifies the minimum and maximum contribution | Every year | Quoted to you in writing before you sign | IRS, Defined benefit plan page (opens in a new tab) |
| Schedule SB | The actuary's signed funding report, filed with Form 5500. A missing one draws a penalty of $1,000 for each failure. | Every year | Quoted to you in writing before you sign | 26 U.S.C. 6692 (opens in a new tab) |
| Form 5500 | The plan's yearly return, due by the last day of the 7th month after the plan year ends | Every year | Quoted to you in writing before you sign | DOL, 2025 Form 5500 instructions (opens in a new tab) |
| Coverage and nondiscrimination tests | Tests on your census that decide what staff must receive | Every year | Quoted to you in writing before you sign | 26 U.S.C. 401(a)(26); 26 U.S.C. 410(b)(1)(A) (opens in a new tab) |
| Fidelity bond | A bond on the people who handle plan money, at least 10 percent of the funds handled, where the law requires one | Every year | Priced by the company that issues the bond | 29 U.S.C. 1112 (ERISA 412) (opens in a new tab) |
| PBGC premium | The federal pension insurance premium, for a plan the PBGC covers | Every year, covered plans only | Set by the PBGC: $111 per participant for 2026, plus a variable premium | PBGC, 2026 premium instructions (opens in a new tab) |
| Notices to participants | Written notice before an amendment cuts future benefits | When the plan is amended | Quoted to you in writing before you sign | ERISA 204(h); 26 CFR 54.4980F-1, Q&A-9 (opens in a new tab) |
| Ending the plan | Notices to participants, the actuary's final work and, for a covered plan, the PBGC filing | Once, when the plan ends | Quoted to you in writing before you sign | PBGC, standard termination instructions (opens in a new tab) |
How much does it cost to set up?
Published fees are each seller’s own figure on the date shown. The Journal of Accountancy (2023) put startup costs for a small cash balance plan at $2,000 to $3,000 and ongoing costs at about $3,000 a year for 4 to 5 participants. One administrator’s public schedule lists $1,500 for design and documents and $2,350 a year for an owner-only plan.
One brokerage lists setup from $2,250 plus annual service fees. The Journal of Accountancy adds that costs rise for larger plans. Get every fee in writing before you sign.
| Publisher | What the figure covers | Figure | Date | Source |
|---|---|---|---|---|
| Journal of Accountancy | Startup costs, cash balance plan with a handful of participants | $2,000 to $3,000 | Published 2023 | Journal of Accountancy, 2023 (opens in a new tab) |
| Journal of Accountancy | Ongoing yearly costs for 4 to 5 participants | About $3,000 a year | Published 2023 | Journal of Accountancy, 2023 (opens in a new tab) |
| One administrator | Design and documents, owner-only plan, first year only | $1,500 | Read October 15, 2026; the schedule says it is subject to change | One administrator’s fee schedule (opens in a new tab) |
| One administrator | Administration each year, owner-only plan, including the first year | $2,350 a year | Read October 15, 2026; the schedule says it is subject to change | One administrator’s fee schedule (opens in a new tab) |
| One administrator | Design and documents, cash balance plan with a 401(k), up to 5 participants, first year only | $3,500, plus $150 for each additional participant | Read October 15, 2026; the schedule says it is subject to change | One administrator’s fee schedule (opens in a new tab) |
| One administrator | Administration each year, the same plan, up to 5 participants | $5,400 a year, plus $150 for each additional participant | Read October 15, 2026; the schedule says it is subject to change | One administrator’s fee schedule (opens in a new tab) |
| One brokerage | Setup, personal defined benefit plan, plus annual service fees | From $2,250 | Read October 15, 2026 | One brokerage’s plan page (opens in a new tab) |
What are the actuary and administrator fees for?
An enrolled actuary, licensed by the federal Joint Board for the Enrollment of Actuaries, values the plan each year, certifies the minimum and maximum contribution, and signs Schedule SB of the plan’s Form 5500. IRS Publication 560 says an actuary must figure the deduction limit. The administrator’s fee pays for the filing, the tests and the records.
Federal pension law has the plan’s administrator engage an enrolled actuary on behalf of the participants, and the IRS requires the actuary’s signed Schedule SB every year. A missing Schedule SB draws a penalty of $1,000 for each failure under section 6692 of the tax code.
29 U.S.C. 1023(a)(4)(A) (opens in a new tab)Internal Revenue Service, Defined benefit plan page (opens in a new tab)Internal Revenue Service, Publication 560 (opens in a new tab)U.S. Department of Labor, 2025 Form 5500 instructions (opens in a new tab)Does the plan cost more than it saves?
Weigh the tax deferred on the deduction above what a 401(k) already allows against the plan’s yearly fees and the contributions your staff receive. Fees that look large beside a small deduction can look small beside a large one. Your CPA and the actuary’s proposal supply the figures for that test, year by year.
The deduction is deferred tax, not tax avoided, so the test also counts the tax due when the money comes out of the plan.
Are there fees to terminate the plan?
Yes. Ending a plan is a project of its own, with the actuary’s final work, notices to participants and filings, and each step carries a fee. The plan document and the law set the steps, and the plan firm sets the price. Ask for the termination fees in the written quote before you sign.
If the PBGC covers the plan, the plan must give participants a notice of intent to terminate 60 to 90 days before the termination date, and must file a standard termination notice with the PBGC within 180 days after that date, or 60 days before any distribution if that is earlier. The PBGC does not cover a professional service employer’s plan that has never had more than 25 active participants at any time after September 2, 1974.
Pension Benefit Guaranty Corporation, standard termination instructions (opens in a new tab)Checked on October 15, 2026.