Cash balance plans have critical deadlines and contribution limits. The most important date to remember is the cash balance plan contribution deadline.
Many clients set up plans, get their investment accounts established and then fail to meet the funding deadlines. It is rare, but it does happen.
Thanks to the SECURE Act, the cash balance plan start-up deadline for a 2022 plan is September 15th, 2023 (with an extension filing). This allows you to reduce 2022 taxable income.
In this post, we will discuss the contribution deadline. We will also detail a few of the compliance requirements when funding your plan. Let’s dive in!
Table of contents
Some background
A cash balance plan is technically a defined benefit plan. But it looks similar to a defined contribution plan. That’s why it is generally know as a “hybrid” plan.
The advantage of a cash balance plan is that companies can make much large contributions compared to many other retirement structures. They can be established and funded by just about every company structure, including S-Corps, C-Corps, partnerships and sole proprietors.
Contributions are determined based largely on compensation, age and actual investment returns. The IRS has established annual and lifetime contribution limits.
Age-weighted contributions mean that a plan can have older employees making a considerable contribution while younger employees contribute less. However, each company should ensure this benefits only some employees, invalidating the plan.
One significant advantage of defined benefit plans is that they can be combined with other retirement vehicles, often a 401k profit-sharing plan. The 401k plan will give an extra contribution as an employee deferral and a profit-sharing contribution.
Cash balance plan funding deadline
First, some good news. Plans no longer need to be set up before the end of the calendar year or company fiscal year. A plan can be set-up and approved by the date the company files its tax return.
Contributions must be made by the deadline of the company’s tax return (which includes extensions). But no later than September 15th.

So for sole proprietorships and C-Corporations the tax deadline is April 15th and September 15th (if an extension if filed). For partnerships and S-corporations, the tax deadline is March 15th and September 15th (if an extension is filed).
So what if required contributions are not made by the deadline? The company will incur a 50% IRS excise tax as a penalty.
The excise tax is non-deductible by the company. This is certainly not a situation any company wants to find itself in.
When does a cash balance plan need to be funded?
Solo or owner-only cash balance plans have the same funding deadlines that apply to plans that have many participants. The contribution is required to be made no later than 8 ½ months following the end of the plan year. This is September 15th for a calendar year plan.

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Many business owners are aware of the contribution deadline and plan their tax payments and contributions accordingly. For example, let’s assume an S-Corporation estimates that it will earn $500,000 for a given year before any cash balance contribution. Let’s also assume that the company expects to make a $100,000 contribution to the plan and that the owner will have a $100,000 tax liability.
But what if the company (and the owner) does not have the $200,000 required to fund the cash balance contribution and the pay the tax liability? The owner can then make sure that an extension is filed for both the business and his or her personal return. The owner can then make a $100,000 extension tax payment before April 15th.
Since the business tax return is under extension, the owner can then take up to six months to save up the additional $100,000 required for the cash balance plan. Once the contribution is funded by the deadline, the owner can then file his or her personal return.
Assuming the expected tax liability was accurate, the owner would have no late payment penalties or interest. This can be a win-win scenario.
The good news is that you can make contributions up to the date you file your tax return. This also includes extensions (but not later than September 15th). So you don’t have to rush and get the contributions in before year-end.
Where are the contributions deducted?
Sole proprietors deduct these contributions on line 28 of Schedule C (on Form 1040), C-corporations deduct them on line 23 of form 1120 and S-Corporations deduct them on line 17 of form 1120-S.
Partnership rules are a little different. Contributions made by the partnership on your behalf are shown on Schedule K-1 of form 1065.
Unlike salary deferral made under a 401k plan, cash balance plan contributions will not show up as a salary reductions or in an information bow on form W2.
The contributions should then be accrued and deducted on the tax return. If the contribution deadline is missed, the contribution will be deducted on the subsequent year tax filing.
You must also state in writing to the plan administrator (or plan trustee) that contributions made subsequent to year-end represent contributions for the prior year. Alternatively, the company may simply deduct the contributions on the prior year tax return.
Make sure to work closely with your accountant so that the deadline is not missed. Unfortunately, many CPAs are not even aware of many of the requirements.
Do you have to contribute to a cash balance plan every year?
Yes, employers that sponsor cash balance plans are generally required to contribute to the plan every year. Cash balance plans are defined benefit plans, which means that the employer is responsible for providing a promised benefit to the plan participants.
The employer’s contribution to the cash balance plan is typically based on a formula specified in the plan document, which takes into account factors such as the participant’s age, compensation, and years of service.

The employer is required to make contributions in order to ensure that there are sufficient funds in the plan to pay the promised benefits. The amount of the required contribution may fluctuate from year to year based on a variety of factors, such as changes in the plan’s funding status or the demographics of the plan participants. Employers must ensure that they meet the minimum funding requirements for the plan as set forth by the IRS and the Department of Labor.
It is important to note that the rules and regulations governing cash balance plans can be complex, and employers should consult with a qualified financial advisor or attorney for guidance on specific questions related to their plan.
Cash balance plan contribution deadline
Issue | Deadline (calendar year plan) |
Plan Set-Up 👉 | Tax Filing Deadline |
Funding Deadline 👉 | Tax Return Deadline |
Latest Filing Date | September 15th |
5500 Filing | July 31st |
Final thoughts
As you know by now, cash balance plans have many deadlines that you must follow. The most important of which is the funding or contribution deadline and contribution limits. The most important date to remember is the cash balance plan contribution deadline.
So if you have examined the pros and cons of cash balance plans and decide one is right for you, take note of the cash balance plan contribution deadline. Regardless of the deadline, the contribution must be made before you file your tax return for the prior year.
You don’t want to find yourself with penalties and even worse – the loss of the plan tax deduction.