How to Optimize Tax Savings Under the New Tax Law

Advantages of cash balance retirement plans

As an owner of a medical practice or small business the new tax law offers significant tax advantages for owners with pass-through income. Unfortunately if you fall under the professional service firm classification as most doctors, lawyers and other businesses fall under, then limits for the pass- through deduction become more difficult. Cash Balance retirement plans provide a way for owners to reduce AGI enough to qualify for the full deduction, 20% of qualified business income (QBI).

Are you eligible for the new 20% pass-through income deduction?

Taxable Income1

< $315,000

Business type

Any pass-through entity, including proffessional service businesses.2

Pass-through deduction

YES, can deduct 20% of QBI.

Taxable Income1

$315,000 – $415,000

Business type

All pass-through entities.

Pass-through deduction

LIMITED: wage/capital limitation3 phases in for all firms, and deduction phases out for specified services firms.

Taxable Income1

> $415,000

Business type

Not a proffessional service business.

Pass-through deduction

LIMITED to the lesser of 20% of QBI or wage/capital limitation.

Taxable Income1

> $415,000

Business type

Proffessional service business.

Pass-through deduction

NO deduction allowed, excluded from new tax law benefits.

Recieve $500 Off Your Set-Up Fees When You Fill Out Our Contact Form


Cash Balance Plans help you to lower your taxable income since they reduce both taxable income AND adjusted gross income (AGI), while also letting you save more money for retirement.


What Can a Cash Balance Plan Do For You?

Medical Group Partner, 60, married

  • AGI: $650,000

  • No Cash Balance Plan Not eligible for pass-through deduction.

  • Add a Cash Balance Plan to 401(k) Profit Sharing Plan With combined retirement plan contributions of $335,000, AGI is lowered to $315,000 allowing 20% pass-through deduction and reducing the effective tax rate to 20.1%.


  1. Case study from Kravitz Inc., an Ascensus Company. Used with permission. This website is for informational purposes only. Please consult with your tax advisor to review your specific case.