# Cash balance and defined benefit plan valuation support

Canonical: https://finbryn.com/us/services/actuarial-services/cash-balance-defined-benefit-plans

Finbryn provides valuation support for cash balance and defined benefit plans, preparing design illustrations, funding workpapers and Schedule SB support schedules from the 2026 IRS limits (a $290,000 annual benefit cap, Notice 2025-67). The plan's enrolled actuary signs Schedule SB, filed with Form 5500 by July 31 for calendar-year plans.

A cash balance plan is a defined benefit plan that shows each participant a hypothetical account. The account grows by a pay credit each year and an interest credit, and the employer funds the plan on an actuarial basis, with a minimum it must pay and a maximum it can deduct. Small professional practices use these plans because the contribution range can be far higher than a 401(k) allows. The range is not a number you can guess. It comes from a valuation.

Finbryn prepares that valuation work. For a new plan it builds the design illustration: contribution ranges by participant under a few pay credit choices, so the owner and the plan's advisor can compare. For an adopted plan it prepares the annual funding valuation workpapers using the IRS segment rates and mortality table for the plan year, calculates the minimum required and maximum deductible contributions, and builds the schedules that support Schedule SB and the PBGC premium filing where the plan is covered.

The signature rule does not move. Schedule SB must be prepared and signed by the plan's enrolled actuary, with a PDF of the signed schedule attached to the Form 5500, and the engagement letter confirms who signs it for your plan. Finbryn sends its workpapers to that actuary. Nothing from Finbryn goes to the IRS or the PBGC under Finbryn's name.

Timing drives the calendar. The minimum contribution is due 8.5 months after the plan year ends, quarterly installments apply to plans that were underfunded the year before, and the Form 5500 is due on the last day of the seventh month after year end. A design study has its own clock and should start well before the contribution is made. See [white-label actuarial support](/services/actuarial-services/white-label-actuarial-support) if you are a TPA or accounting firm sending plans, or [plan termination support](/services/actuarial-services/pension-risk-transfer-plan-termination) if the plan is ending.

A plan sponsor reporting under GAAP also needs an [ASC 715 valuation](/services/actuarial-services/asc-715-pension-opeb-valuations).

What you get: Plan design illustration showing contribution ranges by participant; Annual funding valuation workpapers using the IRS segment rates and mortality tables for the plan year; Minimum required and maximum deductible contribution calculations; Schedule SB support schedules for the enrolled actuary's review and signature; PBGC premium calculation support where the plan is covered; A funding calendar with installment and filing dates for the plan year

Software we work in: Microsoft Excel, Python

How filing works: We prepare the return and the working papers. A credentialed signer or licensed partner signs and files it, or you file it yourself.

## What are the 2026 IRS limits that shape a cash balance plan?

Four annual limits set the outer edges of a plan design for 2026, all from IRS Notice 2025-67. The annual benefit limit under section 415(b) is $290,000. The compensation limit under 401(a)(17) is $360,000, so pay above that is ignored when benefits are computed. The defined contribution limit under 415(c) is $72,000, which matters when the practice also runs a 401(k) or profit-sharing plan next to the cash balance plan. The elective deferral limit under 402(g) is $24,500.

| Limit | Code section | 2026 | 2025 |
| --- | --- | --- | --- |
| Annual benefit, defined benefit plan | 415(b)(1)(A) | $290,000 | $280,000 |
| Annual additions, defined contribution plan | 415(c)(1)(A) | $72,000 | $70,000 |
| Compensation limit | 401(a)(17) | $360,000 | $350,000 |
| Elective deferrals | 402(g)(1) | $24,500 | $23,500 |
| Catch-up, age 50 and over | 414(v)(2)(B)(i) | $8,000 | $7,500 |
| Highly compensated employee | 414(q)(1)(B) | $160,000 | $160,000 |
| Key employee, officer | 416(i)(1)(A)(i) | $235,000 | $230,000 |

Source: IRS Notice 2025-67 and the IRS COLA page (reviewed 2026-08-24, opened 2026-10-02). These limits cap the design. They do not tell you what an individual owner can contribute.

## Which interest rates and mortality table does the 2026 valuation use?

A funding valuation discounts benefits using three segment rates built from corporate bond yields, and a mortality table fixed by IRS notice. For valuation dates in 2026 the mortality table comes from Notice 2025-40, which sets the static tables for plans allowed to use them and the unisex table used for lump sums. The segment rates change monthly. The table shows the latest figures from Notice 2026-57, published in September 2026.

| Rate set | 1st segment | 2nd segment | 3rd segment |
| --- | --- | --- | --- |
| 24-month average, September 2026, unadjusted | 4.36 | 5.32 | 6.02 |
| Adjusted, September 2026, plan years beginning in 2026 | 4.75 | 5.25 | 5.99 |
| Adjusted, September 2026, plan years beginning in 2027 | 4.75 | 5.25 | 5.89 |
| Spot rates for lump sums, August 2026 | 4.65 | 5.75 | 6.73 |

Adjusted rates are held within a corridor of 95 to 105 percent of the 25-year averages, and a 25-year average under 5 percent is treated as 5 percent. Source: IRS Notice 2026-57 (rates in percent). Which month's rates a plan uses follows its plan document and the funding rules. Finbryn documents the choice in the workpapers for the plan's enrolled actuary.

## How does a calendar-year plan's year run?

A calendar-year plan has seven dates that matter: the January 1 valuation date, three quarterly installments if the plan was underfunded, the fourth installment 15 days after year end, the Form 5500 due date and the final minimum contribution deadline. The diagram shows them in order.

The valuation date is the first day of the plan year, with an exception for plans that had 100 or fewer participants every day of the prior year (26 CFR 1.430(g)-1), which lets such a plan designate any day of the plan year, so January 1 applies only to a plan not using that exception. The installments fall on April 15, July 15 and October 15 of the plan year and January 15 after it; each is 25 percent of the required annual payment. The final minimum contribution is due 8.5 months after year end, which is September 15. Form 5500 is due July 31, and an extension can be requested on Form 5558. Schedule SB is signed by the enrolled actuary before the 5500 is filed, so Finbryn aims to hand over the review file well ahead of that signature.

Diagram: A calendar-year plan's funding calendar. Seven dates: January 1 valuation date, installments on April 15, July 15, October 15 and January 15, Form 5500 on July 31 and the minimum contribution deadline on September 15 of the following year.

## How do pay credits add up in a worked example?

Illustrative, made-up numbers: in this three-person practice the pay credits add up to $96,250 a year, which is neither the employer's contribution nor a maximum. The owner earns $500,000, but only $360,000 counts under the 401(a)(17) limit. The plan design gives the owner a 25 percent pay credit and each of two staff members 5 percent.

| Participant | Pay | Pay counted | Pay credit rate | Annual pay credit |
| --- | --- | --- | --- | --- |
| Owner | $500,000 | $360,000 | 25% | $90,000 |
| Staff member 1 | $70,000 | $70,000 | 5% | $3,500 |
| Staff member 2 | $55,000 | $55,000 | 5% | $2,750 |
| Total | | | | $96,250 |

Those are credits to hypothetical accounts, not the employer's contribution. The contribution has to fund those credits, interest credits and any gap between plan assets and the funding target. The valuation then produces two bounds: a minimum required contribution and a maximum deductible contribution, both computed from the segment rates, mortality table, plan assets and census. The employer chooses an amount between them. This example does not compute those bounds, because they cannot be found from these inputs, and it has not been tested for nondiscrimination.

## Cash balance plan pros and cons

A cash balance plan lets an owner deduct far more than a 401(k) allows, but the business must fund promised pay credits every year, including weak years. For 2026 a defined benefit plan can fund an annual benefit of up to $290,000, while a defined contribution plan caps annual additions at $72,000 (IRS Notice 2025-67, checked 2026-10-16).

| Pros | Cons |
| --- | --- |
| Larger deductible contributions than a 401(k) alone | Required funding each year, due 8.5 months after plan year end |
| Works alongside a 401(k) | Nondiscrimination testing can require contributions for staff |
| Contribution is set by plan design | A weak market raises later required contributions |
| Pay credits and rates are written in the plan | Actuary and administration costs recur, plus PBGC premiums where the plan is covered |

It suits steady, high-profit businesses with few employees. Before adopting, ask the plan's enrolled actuary to model a bad-market year and to give the expected annual actuarial, investment and administration fees as one total. Asset-based fees on top of actuarial fees are the warning sign.

## What does valuation support cost?

Cost follows the plan, and Finbryn quotes in writing after reviewing a sample of the data. The quote names who signs. The main drivers are the number of participants, whether the work is a design study, a first-year valuation or a recurring annual valuation, how many plans sit side by side (a cash balance plan next to a 401(k) needs combined limit work), data quality, the number of scenarios the owner wants in the design study and the date the Form 5500 is due.

We did not find a public fee schedule for private-practice cash balance plans, so this page publishes no price range. Our [guide to what a pension actuary costs](/guides/what-a-pension-actuary-costs) collects the dated public evidence that does exist: three providers' published small-plan prices and 2024 Form 5500 actuarial fees by plan size. When you compare quotes, ask whether the figure covers the design study, the annual valuation, Schedule SB, nondiscrimination testing and PBGC premium support separately, and who bills for each. Plan costs that are not provider fees, such as PBGC premiums for covered plans, are set by the PBGC and are explained on the [plan termination](/services/actuarial-services/pension-risk-transfer-plan-termination) page. See [pricing](/pricing).

## Who signs, and what does Finbryn prepare?

The plan's enrolled actuary signs Schedule SB, and the engagement letter confirms who that is. 20 CFR 901.2 says ERISA actuarial services provided through an entity may be provided on its behalf only by an enrolled actuary who is an employee, partner or consultant, and the Form 5500 instructions require Schedule SB to be prepared and signed by the plan's enrolled actuary. Finbryn prepares the data checks, model runs, contribution tables and support schedules. It does not choose the assumptions or certify the adjusted funding target attainment percentage. An enrolled actuary signs that certification, and the engagement letter confirms who.

If the combined plan limit under section 404(a)(7) applies, the same actuary reviews that test. The IRS notes that when employer contributions to a defined contribution plan with overlapping coverage, other than elective deferrals, stay at or under 6 percent of those participants' pay, the combined limit does not apply, and only the excess over 6 percent counts when it is exceeded.

## The process

1. **Collect plan and owner goals**: Pay, birth dates, hire dates, current plans and the contribution range the owner wants to explore.

2. **Check the census**: Flag missing dates, pay above the compensation limit and part-time staff, and return a written exceptions list.

3. **Build the design illustration**: Contribution ranges by participant under two or three pay credit choices, with the 2026 limits applied and assumptions listed.

4. **Prepare the annual valuation workpapers**: Funding target, minimum required and maximum deductible contribution under the plan year's segment rates and mortality table.

5. **Prepare Schedule SB support schedules**: Data and calculation exhibits laid out for the enrolled actuary, plus PBGC premium workpapers if the plan is covered.

6. **The plan's enrolled actuary reviews and signs**: The enrolled actuary named in the engagement letter sets assumptions, signs Schedule SB and any funding certification, and the plan administrator attaches it to Form 5500.

7. **Auditor or IRS questions go to the signer**: If a plan audit or IRS notice follows, the enrolled actuary answers actuarial questions; Finbryn supplies data support through you.

## Common problems we fix

| The problem | How we fix it |
| --- | --- |
| An owner wants a contribution number before any valuation | The design illustration shows a range by pay credit choice, labelled as an estimate, and says which inputs would move it. |
| Pay above the compensation limit is counted by mistake | The census check applies the 401(a)(17) limit for the plan year and lists every participant over it. |
| A quarterly installment is missed in an underfunded year | The funding calendar lists each installment date and the amount basis for the plan year, so the plan sponsor and CPA see it early. |
| The 401(k) and cash balance plan are designed separately | The workpapers test the combined deduction limit in section 404(a)(7) and the 6 percent rule before the design is final. |
| Interest crediting terms are not checked against the rules | The plan's crediting rate is compared with the market rate of return rules in 26 CFR 1.411(b)(5)-1, which deem a fixed 6 percent acceptable. |

## By the numbers

| Figure | What it means | Source |
| --- | --- | --- |
| $290,000 | 2026 annual benefit limit under section 415(b) for a defined benefit plan, up from $280,000 | [irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions) (2026-10-02) |
| $360,000 | 2026 compensation limit under section 401(a)(17), up from $350,000 | [irs.gov/pub/irs-drop/n-25-67.pdf](https://www.irs.gov/pub/irs-drop/n-25-67.pdf) (2026-10-02) |
| 8.5 months | deadline to pay a single-employer plan's minimum required contribution after the plan year closes | [ecfr.gov/current/title-26/section-1.430(j)-1](https://www.ecfr.gov/current/title-26/section-1.430(j)-1) (2026-10-02) |
| July 31 | Form 5500 due date for a calendar-year plan, the last day of the seventh month after year end | [irs.gov/retirement-plans/form-5500-corner](https://www.irs.gov/retirement-plans/form-5500-corner) (2026-10-02) |

## Glossary

- **Cash balance plan**: A defined benefit plan that states each participant's benefit as a hypothetical account growing with pay credits and interest credits.

- **Pay credit**: The amount credited to a participant's hypothetical account each year, usually a percentage of pay set by the plan formula.

- **Interest crediting rate**: The rate applied to the hypothetical account balance each year. It may not exceed a market rate of return under 26 CFR 1.411(b)(5)-1.

- **Segment rates**: Three interest rates from corporate bond yields, for near, middle and long-dated benefit payments, used to discount a plan's liabilities.

- **Funding target**: The present value of benefits accrued or earned as of the first day of the plan year under section 430(d).

- **Minimum required contribution**: The least an employer must pay for the plan year under section 430, generally due 8.5 months after year end.

- **Maximum deductible contribution**: The most an employer can deduct for the plan year, computed in the valuation and limited by section 404.

- **AFTAP**: Adjusted funding target attainment percentage, certified by the plan's enrolled actuary, used to apply benefit restrictions under section 436.

- **Schedule SB**: The single-employer defined benefit plan schedule to Form 5500, prepared and signed by the plan's enrolled actuary.

## Frequently asked questions: Cash balance and defined benefit plan valuation support

**Q: How much can an owner contribute to a cash balance plan in 2026?**

A: It depends on age, pay, plan design and funding rules, and no single number applies. The 2026 limits that cap the design are a $290,000 annual benefit limit and a $360,000 compensation limit (IRS Notice 2025-67, checked 2026-10-02). A valuation computes the minimum required and maximum deductible contribution for your plan.

**Q: What changed for cash balance plans in 2026?**

A: The IRS raised the section 415(b) limit from $280,000 to $290,000, the 401(a)(17) compensation limit from $350,000 to $360,000 and the 415(c) limit from $70,000 to $72,000 (Notice 2025-67). Valuation dates in 2026 use the mortality tables in Notice 2025-40.

**Q: Who signs Schedule SB for a cash balance plan?**

A: The plan's enrolled actuary prepares and signs it, and a PDF of the signed schedule is attached to the Form 5500, due July 31 for a calendar-year plan (IRS, reviewed 2026-07-20). Finbryn prepares data and workpapers for that actuary, and the engagement letter confirms who signs.

**Q: What is the deadline to fund a cash balance plan for a calendar year?**

A: The minimum required contribution is due 8.5 months after the plan year closes, which is September 15 for a calendar-year plan, under 26 CFR 1.430(j)-1 (eCFR, checked 2026-10-02). Plans that were underfunded the previous year must also make quarterly installments on April 15, July 15, October 15 and January 15.

**Q: Does the 401(k) limit reduce what a cash balance plan can hold?**

A: Not directly. The 415(c) limit of $72,000 applies to defined contribution plans. If the practice has both plans with overlapping coverage, the section 404(a)(7) combined deduction limit can apply, though it does not apply when employer contributions to the defined contribution plan, other than elective deferrals, stay at or under 6 percent of pay (IRS, reviewed 2026-06-28).

**Q: What does cash balance plan valuation support cost?**

A: It is quoted in writing from a data sample. The drivers are participant count, design study versus annual valuation, number of plans, data quality, scenarios requested and the filing date. We did not find a public fee schedule for private practices, so no range is published here.

**Q: How do I choose a cash balance plan actuary or valuation provider?**

A: Ask who the named enrolled actuary is and confirm enrollment with the IRS, what the quote covers (design, annual valuation, Schedule SB, testing, PBGC premium support), how late or changed data is priced, and how the provider keeps your census confidential. Ask for a sample design illustration with the assumptions stated.

**Q: Is a cash balance contribution calculator accurate?**

A: A calculator gives a range from stated assumptions, not a funding result. Published numbers differ between sites because the assumptions differ. Check that a calculator names its inputs, cites IRS Notice 2025-67 for the limits and says a valuation signed by an enrolled actuary governs.

**Q: What are the pros and cons of a cash balance plan?**

A: Pros: much larger deductible contributions than a 401(k), and it can sit beside one. Cons: the business must fund pay credits every year, including after a weak market, and nondiscrimination testing can require staff contributions. The plan's enrolled actuary should model a bad-market year first (IRS Notice 2025-67, checked 2026-10-16).

**Q: What happens to a cash balance plan in a down market year?**

A: The pay credits still have to be funded, and lower asset values raise the required contribution in later years, so the owner pays the difference. The minimum contribution is due 8.5 months after plan year end (26 CFR 1.430(j)-1, checked 2026-10-16). Model this before adopting.

Related services:
- [Defined benefit freeze and DB-to-DC conversion costing](https://finbryn.com/us/services/actuarial-services/db-to-dc-conversion-plan-freeze)
- [Pension asset-liability and cash flow studies](https://finbryn.com/us/services/actuarial-services/pension-asset-liability-cash-flow-studies)
- [White-label actuarial support for accounting firms and TPAs](https://finbryn.com/us/services/actuarial-services/white-label-actuarial-support)
- [Pension risk transfer and plan termination support](https://finbryn.com/us/services/actuarial-services/pension-risk-transfer-plan-termination)

Related guides:
- [How Much Does a Pension Actuary Cost? Fee Evidence for 2026](https://finbryn.com/us/guides/what-a-pension-actuary-costs)
- [Does My Retirement Plan Need an Actuary? 401(k) to Cash Balance](https://finbryn.com/us/guides/does-my-retirement-plan-need-an-actuary)

## Sources

1. [IRS, Notice 2025-67: 2026 cost-of-living adjustments for retirement plan limits](https://www.irs.gov/pub/irs-drop/n-25-67.pdf) (2026-10-02)
2. [IRS, COLA increases for dollar limitations on benefits and contributions](https://www.irs.gov/retirement-plans/cola-increases-for-dollar-limitations-on-benefits-and-contributions) (2026-10-02)
3. [IRS, Notice 2026-57: weighted average interest rates, yield curves and segment rates](https://www.irs.gov/pub/irs-drop/n-26-57.pdf) (2026-10-02)
4. [IRS, Notice 2025-40: updated static mortality tables for 2026](https://www.irs.gov/pub/irs-drop/n-25-40.pdf) (2026-10-02)
5. [eCFR, 26 CFR 1.430(j)-1 Payment of minimum required contributions](https://www.ecfr.gov/current/title-26/section-1.430(j)-1) (2026-10-02)
6. [eCFR, 26 CFR 1.411(b)(5)-1 Statutory hybrid plans, market rate of return](https://www.ecfr.gov/current/title-26/section-1.411(b)(5)-1) (2026-10-02)
7. [eCFR, 26 CFR 1.430(g)-1 Valuation date and asset valuation](https://www.ecfr.gov/current/title-26/section-1.430(g)-1) (2026-10-02)
8. [eCFR, 26 CFR 1.436-1 Benefit limitations, enrolled actuary AFTAP certification](https://www.ecfr.gov/current/title-26/section-1.436-1) (2026-10-02)
9. [eCFR, 20 CFR 901.2 Enrolled actuaries](https://www.ecfr.gov/current/title-20/part-901) (2026-10-02)
10. [IRS, Form 5500 Corner](https://www.irs.gov/retirement-plans/form-5500-corner) (2026-10-02)
11. [DOL, IRS and PBGC, 2025 Instructions for Form 5500 (Schedule SB)](https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2025-instructions.pdf) (2026-10-02)
12. [IRS, Combined limits under IRC section 404(a)(7)](https://www.irs.gov/retirement-plans/combined-limits-under-irc-section-404a7) (2026-10-02)

Reviewed October 2026

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