Many professionals—doctors, dentists, lawyers—and small business owners often find they have spent so much time and effort developing their thriving practices and growing their profitable businesses that they just didn’t have the time to plan for their own personal retirement situation.

Many small business owners and professionals, however, have consistently been contributing to qualified retirement programs like 401k, profit sharing, Simple IRA or SEP plans. But market conditions haven’t gotten them to where they had hoped to be. The tech bubble of 2000 and 2001 and the financial crash of 2008 were setbacks that most accounts have barely recovered from. They now find that they’ve had to push their retirement back to a date much later than they had hoped for. OR…

Many professionals and small business owners hope their businesses and practices will be their retirement.

They hope they will be able to grow their practice and develop their business until they can sell the business and live off the proceeds in retirement.

They unfortunately find out and, in most instances they find out too late, that their practice isn’t worth what they envisioned it would be.

Or they find out as part of the terms of sale of the business (because in many respects they are the business) they have to stay on in an active capacity for a protracted period of time.

In either of these scenarios, that’s usually not the type of retirement they had thought all their hard work would reward them with.

401ks, profit sharing plans, simple IRAs, and SEPs are all valuable retirement planning tools for small business owners and professionals.

However, as we’ve seen, they’re not risk-free . . . they don’t guarantee outcomes . . . and oftentimes, by themselves, they just won’t get the job done.

A different type of qualified plan can help out. It’s not meant to replace the 401k/profit sharing plan/Simple IRA/SEP. It’s called a cash balance plan and works best when it is used in conjunction with 401k/profit sharing/simple IRA/SEP.

Doctors, lawyers, dentists, accountants and other small business owners and professionals should be asking themselves if they are maximizing their ability to BUILD THEIR RETIREMENT SAVINGS AND LOWER THEIR CURRENT TAXES.

Professionals and small business owners typically start generating revenue later in life and thanks to Congress, there are ways to make up for that.

Helping people save for retirement through tax-advantaged plans is sound public policy.

One such plan . . . the cash balance plan . . . has been growing in popularity. Traditional pension plans have been declining while cash balance plans have been increasing.

That growth driver is a small business owner. Doctors and dentists account for 38% of all cash balance plans.

Cash balance plans work best when they supplement existing 401k/profit sharing / Simple IRA/SEP. In fact, 96% of all cash balance plans exist with another qualified plan—a plan like a 401k/profit sharing plan/simple IRA/SEP.

Cash balance plans allow professionals and small business owners to compress 20 years of retirement savings into 10 years and generate additional tax savings that are substantial.

Let’s take a look at a hypothetical example.

Dr. Jones has a well-established pediatric practice with two employees.

As is the case with other doctors, he spent most of his energy building his practice in the early years, putting off saving for retirement until later.

He paid off medical school loans, got married, bought a house and educated his children. He started a 401k plan at work, but now he’s concerned the plan will not be enough for him to retire on in 10 years when he’s 65.

He is putting aside the maximum permitted—$24,000 in 2015—but that’s really not enough to make a difference for him. .

With a cash balance plan, Dr. Jones can set aside about $200,000 a year and he can deduct that entire amount from his taxable income. Over 10 years, he’ll have contributed enough to reach about $2.5 million, which is the IRS’s maximum benefit limit.

Then he can close the plan and roll the proceeds into an IRA.

From there he/she can work with a fiduciary advisor to develop their distribution strategy.

The older you are, the higher the possible cash balance plan contributions . . . which means you can accelerate your retirement savings and substantially reduce your current tax liability.

For example, if you were born in 1950, your maximum contribution and accordingly, your maximum tax deduction, could be as much as $260,000 ($237,000 cash balance plus $24,000 401k). If you were born in 1960, you’d be looking at about $199,000 in contributions and current tax deductions, and if you were born in 1970, you would be able to put away tax deferred about $120,000.

Cash balance plans allow small business owners and professionals to compress 20 years of retirement savings into 10 years and realize substantial additional, above the line, tax savings at the same time.