A real estate developer I work with holds rental properties, including a condo in Telluride, inside his Cash Balance plan. Most people don’t realize pension plans can hold real estate, trust deeds, gold, art, wine — anything that isn’t a publicly traded security. For owners who already invest in these asset classes, this opens up a way to do it with tax-deductible dollars and contribution limits well above what an IRA or 401(k) allows.

Rosa, a nurse practitioner and medical spa owner, had been contributing $100,000 a year to her Defined Benefit pension plan for a decade when her TPA told her she'd reached the plan's maximum benefit limit. Her CPA connected her to me, and after reviewing the plan the real constraint turned out to be her W-2 salary, which hadn't changed in ten years. With a compensation adjustment, her annual contributions could jump to upward of $300,000. A second scenario involving an architecture firm illustrates a different but related problem: what happens when a 401(k) gets set up through a payroll provider with no consulting and nobody revisits the design for five years.

A CPA called about Dr. Jones, a 52-year-old neurologist earning $350,000 who was maxing out his solo 401(k) profit sharing plan at $77,500 a year. The CPA wanted to know if there was anything else worth considering. After establishing a Cash Balance pension plan, his total deductible contributions jumped to $277,000, translating to roughly $80,000 in tax savings in a single year. We also identified an additional opportunity involving his spouse that could shelter another $75,000 annually.