Real-World Examples: How Doctors & Dentists Can Use Defined Benefit Plans to Build Wealth
Defined Benefit (DB) plans are one of the most powerful and underutilized tools for high-earning professionals looking to reduce taxes and rapidly accelerate retirement savings. While large corporations have long relied on them to provide pensions to their employees, small business owners—especially professionals like dentists, lawyers, and consultants—can also take advantage of DB plans to build serious wealth.
In this article, we’ll explore real-world, anonymized case studies of professionals using defined benefit plans in strategic and impactful ways. You’ll see how small practices use DB plans not only to create guaranteed retirement income but also to capture six-figure tax deductions year after year.
Why Defined Benefit Plans Are a Secret Weapon
Before we dive into the stories, let’s quickly recap why these plans are so valuable.
Unlike a 401(k) or SEP IRA, which have strict contribution limits (typically under $70,000 per year), defined benefit plans allow much higher annual contributions—often $100,000 to $300,000+, depending on your age and income.
These contributions are fully tax-deductible to the business, and the funds grow tax-deferred until retirement. For professionals who start saving later in life or want to accelerate their retirement funding, DB plans provide unmatched opportunity.
Case Study 1: Dr. Angela, the Solo Dentist Catching Up Fast
Profile:
Age: 54
Practice: Solo dental office in suburban Texas
Annual income: $420,000
Retirement savings so far: Less than $200,000
Employees: 1 part-time hygienist (excluded by plan design)
Challenge:
Dr. Angela had been focused on building her practice and paying off student loans and hadn’t saved much for retirement. With her practice now thriving, she wanted to aggressively save for the next 10 years before retiring.
Solution:
She worked with a retirement consultant to set up a defined benefit plan alongside a solo 401(k). Her age and income allowed her to contribute:
$180,000 to the DB plan
$30,500 to the 401(k) (including catch-up)
$20,000 employer profit-sharing contribution
Total tax-deductible contributions in Year 1: $230,500
Result:
Dr. Angela reduced her taxable income by over $230,000, saving more than $90,000 in combined federal and state taxes. With steady contributions over the next decade, she is projected to accumulate over $2.5 million in retirement savings—all in a tax-advantaged structure.
Case Study 2: The Law Firm Partners with Big Tax Bills
Profile:
Business: Small law firm with 3 equity partners
Ages: 48, 50, and 53
Annual income: $300,000–$450,000 per partner
Employees: 4 staff members, all under 40
Challenge:
The partners were already maxing out 401(k) contributions but wanted to save more aggressively and reduce their growing tax liabilities.
Solution:
They adopted a cash balance plan (a type of defined benefit plan that works well in firms with multiple partners) alongside their existing 401(k) plan. The plan was structured to benefit older partners while providing modest benefits to younger staff to meet IRS nondiscrimination rules.
Each partner contributed:
$175,000–$200,000 to the DB plan
$30,500 to their 401(k) + profit sharing
Total per partner: $200,000–$230,000/year
Result:
In the first year alone, the partners reduced their combined taxable income by nearly $650,000, generating over $250,000 in tax savings. The firm also contributed smaller amounts (about $5,000–$8,000 each) to staff accounts, helping retain talent and maintain compliance.
Over 10 years, the partners are on track to save $6 million collectively in retirement funds, with much of that coming from pre-tax dollars.
Case Study 3: The Solo Consultant Planning an Early Exit
Profile:
Name: “John” (anonymized)
Age: 58
Occupation: Independent technology consultant
Income: $350,000/year
Employees: None
Challenge:
John had accumulated some savings but wanted to retire by age 65 and worried that his traditional retirement vehicles weren’t growing fast enough. He also didn’t like paying a huge tax bill each year on his 1099 income.
Solution:
His financial advisor recommended a defined benefit plan + solo 401(k) combo. This would let him contribute aggressively for the next 7 years and retire with confidence.
In Year 1, he contributed:
$220,000 to the DB plan
$30,500 to the 401(k)
$23,000 employer profit-sharing (as sole proprietor)
Total tax-deferred savings: $273,500
Result:
John cut his federal tax bill by nearly $100,000 and projected that over 7 years, his retirement savings would grow to $2.1 million, allowing for a comfortable early retirement with guaranteed income streams.
Case Study 4: Husband-and-Wife CPA Team
Profile:
Age: 60 and 58
Business: Tax consulting partnership
Annual income: $500,000 combined
Employees: None (seasonal contractors only)
Challenge:
They were approaching retirement with moderate savings and wanted to make large contributions in their final working years to secure a tax-advantaged nest egg.
Solution:
They implemented a defined benefit plan that allowed each partner to contribute $150,000 annually for 5 years. They also continued contributing to their solo 401(k)s.
Combined Contributions per Year:
$300,000 to DB
$61,000 to 401(k) and catch-up
Total: $361,000
Result:
Over 5 years, they saved $1.8 million pre-tax, with projected growth to $2.2 million at retirement. Because they were in a high federal bracket and a high-tax state, they saved nearly $800,000 in taxes during the plan's lifetime.
Key Takeaways from These Case Studies
Let’s summarize the lessons from these professionals who leveraged DB plans to build wealth:
1. Defined Benefit Plans Work Best When You’re 45+
The IRS allows higher contributions as you age. The closer you are to retirement, the more you’re allowed to contribute to fund your promised retirement benefit.
2. You Don’t Need a Huge Company
Solo professionals and small partnerships are ideal candidates. With careful plan design, you can legally maximize benefits for owners while meeting IRS fairness rules for staff.
3. Pairing with a 401(k) Maximizes the Opportunity
Combining a DB plan with a 401(k) and profit-sharing plan allows for maximum legal contributions—sometimes over $300,000 per year.
4. The Tax Savings Can Be Massive
If you’re in the 35–45% marginal tax bracket (federal + state), each $100,000 you contribute might save you $35,000 to $45,000 in taxes today.
5. Plans Require Consistent Funding—but Offer Flexibility
You generally need to commit to funding a DB plan for at least 3–5 years. But plans can be frozen or terminated with professional help, giving you flexibility if your situation changes.
Is a Defined Benefit Plan Right for You?
You might be a great candidate for a DB plan if:
You're self-employed or own a small business
You're 45 or older
You earn $250,000+ annually
You want to accelerate retirement savings
You’d like to lower your current tax burden
You have steady cash flow and plan to work for several more years
As these case studies show, defined benefit plans are not just for Fortune 500 firms. They're powerful tools for small practice owners and self-employed professionals who want to dramatically increase their retirement savings and reduce their taxes.
From dentists and lawyers to consultants and CPAs, professionals across industries are using DB plans to build seven-figure retirement accounts—often in just a decade or less. These plans aren’t “set it and forget it,” but with the right advisor or third-party administrator (TPA), they can be smoothly integrated into your financial strategy.
If you’re earning strong income and want to make up for lost time—or get the most out of your remaining working years—a defined benefit plan may be the single most impactful step you can take toward a secure, tax-efficient retirement.