Designer DB Plus® Explained | Wealth Protection Advisory

What Designer DB Plus® is

Designer DB Plus® is the cash balance plan design framework developed by Stephen Arnold and the Wealth Protection Advisory team. It is a custom-designed combo plan — cash balance plus 401(k)/profit-sharing — built around the owner-participant's compensation, target retirement age, and broader household tax plan. The IRS rules are the same as any cash balance plan; the difference is in the design choices made inside those rules.

vs. an off-the-shelf cash balance plan

Decision	Off-the-shelf prototype	Designer DB Plus®
Pay credit formula	Flat % of pay (e.g., 5%)	Custom per owner-participant
Allocation classes	Single PS class	Cross-tested age/rate-weighted classes
Interest crediting rate	Generic (5% or fixed)	Coordinated with investment policy
Funded status target	Drift	Managed close to 100%
Owner deduction concentration	Modest	Maximized within IRS testing
Staff cost	Often 8–12% of pay	Typically 5–7.5% of pay

The three design pillars

1. Custom benefit formulas

Each owner receives a tailored pay credit aligned to their compensation history, target retirement age, and the household's lifetime tax model — not a generic 5% formula that leaves deduction on the table for older owners and overshoots for younger ones.

2. Cross-tested allocation groups

The 401(k)/PS side uses age- and rate-weighted classes to satisfy IRS general non-discrimination testing while concentrating the deduction with owner-participants. The combined plan is tested as a single program — that is what allows the cash balance side to be heavily owner-weighted.

3. Coordinated investment policy

Plan assets are managed against the document's interest-crediting rate so the funded status stays close to 100%. Overfunded plans lose deduction; underfunded plans require contribution shock. Coordination removes both failure modes.

Who it fits

Owner age 45+ with $400,000+ in consistent profit.
Practices and partnerships with stable staff demographics.
Households already maxing 401(k)/PS and needing more deduction.
Pre-exit owners trying to compress wealth into qualified plans before sale.
Commitment to at least 3–5 years of contributions.

Implementation timeline

Weeks 1–3: census collection, design modeling, deduction projection, staff cost estimate.
Weeks 4–6: plan document drafting, IRS opinion letter, recordkeeper setup, custodian onboarding.
Week 7: employee notice and enrollment, investment menu finalization.
Plan year: contributions made by 8.5 months after year-end; Form 5500 with Schedule SB filed annually.

What happens at exit

At plan termination — typically at sale of the business or owner retirement — each participant's hypothetical account balance is paid as a lump sum. Owners almost always roll the balance into an IRA, where it continues tax-deferred and becomes the source for the Roth conversion ladder discussed in our other guides.

See the firm's business owners overview and the cash balance plans guide for related detail.

Frequently Asked Questions

What is Designer DB Plus®?

Designer DB Plus® is the custom cash balance plan design framework developed by Stephen Arnold and Wealth Protection Advisory. It combines tailored owner benefit formulas, cross-tested allocation groups in the paired 401(k)/profit-sharing plan, and coordinated investment policy to maximize owner deductions while controlling staff cost.

How is it different from a regular cash balance plan?

The IRS rules are the same. The difference is in the design choices: per-owner custom pay credits instead of a generic flat percentage, age- and rate-weighted allocation classes on the 401(k)/PS side, and an investment policy explicitly tied to the plan's interest-crediting rate.

How much can a Designer DB Plus® plan deduct?

Annual deductions depend on owner age and compensation. A 50-year-old owner often deducts $170,000+ on the cash balance side plus the 401(k)/PS combined limit; a 60-year-old often exceeds $300,000 on the cash balance side alone.

What does the staff cost look like?

Most well-designed combo plans target 5–7.5% of staff compensation, including the safe-harbor 401(k) match and profit-sharing allocation. Younger staff demographics push it lower; older or longer-tenured staff push it higher.

How long does setup take?

Typically 6–8 weeks from census collection to first contribution eligibility. A plan can be adopted retroactively for a tax year up to the business's tax filing deadline (with extensions) under SECURE 2.0.

What if my income drops in a future year?

The actuarial minimum contribution is owed regardless of cash flow once the plan year closes. Plans should be sized below peak-year capacity so a soft year does not force termination. Plan amendments can adjust formulas going forward.

Can solo owners use Designer DB Plus®?

Yes. Solo or owner-only practices have the simplest design — no staff non-discrimination testing constraints — and often hit the highest per-owner deduction.

What happens to the plan when I sell my business?

The plan is typically terminated at sale and each participant's account balance is paid as a lump sum. Owners almost always roll the balance into an IRA for continued tax-deferred growth and future Roth conversion eligibility.

Designer DB Plus®: Custom Cash Balance Design for Small Business Owners