Advanced Tax Strategy

Keep More of What
Your Franchise Earns.

Q: Do I need employees to establish a profit sharing or cash balance plan?

No. Both plans can be established for a business with only the owner and spouse as participants. If you have employees, IRS nondiscrimination rules require coverage testing — which is why we model this before recommending any structure.

You don't own the land. You don't own the building. You run the operation — and you're profitable. The retirement plan stack is one of the most significant tax shelter strategies available to you. Many franchise advisors don't raise it.

$355,000+

Maximum annual tax deferral: owners age 60 to 63

A franchise operator aged 60 to 63 using a coordinated 401(k) + Profit Sharing + Cash Balance Plan stack can legally shelter over $355,000 per year in taxable income, depending on compensation, census, and nondiscrimination testing. Every dollar reduces your federal tax burden in the year it is contributed.

FIND OUT WHAT YOU CAN SHELTER →

Is This Right for You?

Who Benefits Most from the Stack

High-Profit Operations

Single or Multi-Unit Operators

You operate 3–20 locations, your personal income exceeds $250,000, and you're paying more in taxes than you want to. You don't own real estate. The retirement stack is your primary shelter — and it's widely underused.

Age is an Advantage

Owner-Operators Over Age 45

The cash balance plan becomes dramatically more valuable as you age. An owner in their late 50s can shelter roughly $272,000 to $329,000 a year. In their late 40s, it's closer to $186,000 to $227,000. The earlier you start, the more you accumulate — but it's never too late.

Multi-Entity Structures

Franchise Groups with Multiple EINs

Multi-brand operators can structure a coordinated plan across controlled group entities — allowing the owner to receive contributions from multiple business units and compounding the annual shelter significantly.

Exit Planning

Operators Planning an Exit in 5–10 Years

Building toward a sale? A cash balance plan accelerates wealth in a protected, portable vehicle. Sale proceeds are taxed. Retirement plan assets grow tax-deferred. The stack matters most in the final years of ownership.

The Asset-Light Reality

Your Biggest Tax Shelters Don't Apply to You

Traditional Tax Strategies Were Built for Real Estate Owners

Cost segregation. Bonus depreciation. 1031 exchanges. Every major corporate tax strategy assumes you own the asset.

Many franchise operators don't. You signed the franchise agreement. You hired the team. You built the customer base. But the real estate? The landlord owns it.

That means the strategies your accountant uses for real estate investors don't apply to you — and the retirement plan stack is one of the few tools the IRS gives you to legally defer substantial operating income.

Traditional tax shelters that don't apply to asset-light operators:

Not Available Cost segregation studies on leased space

Not Available Bonus depreciation on property you don't own

Not Available 1031 exchanges on operating income

Not Available Accelerated depreciation beyond equipment schedules

Not Available Passive loss offsets from real estate you don't hold

What You DO Have The retirement plan stack — widely underused by many franchise operators

The Solution

Stack Three Plans. Multiply the Shelter.

01 401(k) Plan

$35,750 Max deferral — age 60–63 (2026)

The foundation. Employee elective deferrals reduce W-2 income dollar for dollar. Employer matching adds more. The question is whether it's configured to maximize the shelter available to the owner.

02 Profit Sharing Plan

$72,000 Total additions limit (2026)

Layered on top of the 401(k). The employer makes a discretionary profit sharing contribution — in a strong year you contribute more, in a lean year less. Ideal for franchise operators whose income fluctuates with the business cycle.

03 Cash Balance Plan

$290,000+ Annual benefit limit — age-dependent

A defined benefit plan that sits on top of the 401(k) and profit sharing. Contributions are determined by an actuary and can be substantially larger — particularly for owners aged 45 and above. This is where the largest tax shelters live.

Combined Annual
Potential Deferral

$155k – $355k+

Actual amounts depend on owner age, compensation, plan design, and actuarial assumptions. We model your specific scenario before recommending any plan structure.

The Numbers

What You Can Shelter — By Age

Owner Age	401(k) + Profit Sharing	Cash Balance Contribution	Approximate Total Deferral
40–44	Up to $72,000	$83,000 – $114,000	$155,000 – $186,000
45–49	Up to $72,000	$114,000 – $155,000	$186,000 – $227,000
50–54	Up to $80,000	$145,000 – $192,000	$225,000 – $272,000
55–59	Up to $80,000	$192,000 – $249,000	$272,000 – $329,000
60–63	Up to $83,250	$238,000 – $274,000	$321,000 – $357,000

Illustrative estimates based on 2026 IRS limits and typical actuarial assumptions. Actual amounts are determined by plan design and a qualified actuary. Figures assume owner compensation at or near the annual limit of $360,000 (IRS notice 2025-67).

The Process

How We Structure the Stack

01 Phase One

Model Your Scenario

We start with your age, compensation, number of eligible employees, and current plan. Our actuarial partner models the maximum contribution available to you under each plan type — before we recommend anything.

COMPLIMENTARY MODELING

02 Phase Two

Design & Establish

We design the 401(k), profit sharing, and cash balance plan as a coordinated unit. Plan documents are prepared, filed, and funded by your tax return deadline — including extensions, up to October of the following year.

PLAN LIVE IN 30 DAYS

03 Phase Three

Monitor & Adjust

Cash balance contributions are recalculated annually by the actuary. As your business grows or you approach retirement, we adjust the stack to maximize what goes in while maintaining fiduciary compliance year after year.

ANNUAL ACTUARIAL REVIEW

$155k Minimum Annual Shelter

$357k+ Maximum Annual Shelter

$0 Blackout Cost to Employees

1 Point of Contact

Common Questions

What Franchise Operators Ask

Do I need employees to establish this?

No. Both a profit sharing plan and a cash balance plan can be established for a business with only the owner and spouse as participants. If you have employees, IRS nondiscrimination rules require coverage testing — which is why we model coverage before recommending any structure.

Are cash balance contributions tax deductible?

Yes. Employer contributions to a cash balance plan are fully deductible as a business expense in the year they are made — reducing your federal and state taxable income dollar for dollar, subject to the annual deduction limit.

How does the cash balance interact with the 401(k)?

They operate as separate plans with separate contribution limits. The 401(k) and profit sharing are capped at $72,000 in 2026. The cash balance plan has its own annual benefit limit of $290,000 in 2026. They stack on top of each other — which creates the large combined deferrals shown in the table above.

Can I establish a cash balance plan mid-year?

Yes. A cash balance plan can be established and funded by the business's tax return deadline including extensions — typically as late as October 15th of the following year for calendar-year businesses.

What does this cost to set up and administer?

Cash balance plans require an enrolled actuary, typically $2,000–$4,000 per year. Combined with 401(k) administration, the full stack runs $4,000–$7,000 annually — a fraction of the tax savings for operators sheltering $200,000 or more per year.

What if my income varies year to year?

The profit sharing component is discretionary — you choose each year how much to contribute up to the limit. The cash balance plan has more fixed actuarial requirements, but can be designed with flexibility. We model a range of contribution scenarios before recommending a structure.

Take the Next Step

Find Out How Much Your Operation Can Shelter

We'll model your specific scenario — age, income, entity structure, and number of eligible employees — and show you exactly what a coordinated stack looks like for your business. No obligation. No generic answers.

SCHEDULE YOUR STRATEGY CALL → REQUEST A BENCHMARK REPORT

Your Franchise. Your People. Your Plan.

Isn't It Time Your Franchise Had a 401(k) Built for It?

Franchise ownership creates retirement plan complexity that generic providers were not designed for. A complimentary benchmark review takes 30 minutes and shows you how your current plan's costs, structure, and fiduciary process compare to the market.

Request Your Benchmark Report Schedule a Consultation

Start a Plan Now

Ready to benchmark your franchise 401(k) plan?

Capital Investment Company of Virginia and Franchise 401k Plans are trade names of Retirement Fiduciaries of VA, LLC. Investment advisory services are offered by J. Andy Ingram, an investment adviser representative of Sollinda Capital Management, a Registered Investment Adviser. An additional advisory fee applies for investment advisory services. This fee is separate from and in addition to the plan administration, recordkeeping, and AUM fees described on this site, and varies based on total plan assets and whether the engagement involves a new plan or a plan conversion. This website is for informational and educational purposes only and does not constitute an offer or solicitation to buy or sell any securities or investment products. Past performance is not indicative of future results. All plan design, consulting, and fiduciary services are subject to a formal written engagement agreement. Nothing on this site constitutes tax or legal advice. Please consult your tax professional or attorney regarding specific tax questions, including eligibility for federal tax credits under SECURE 2.0. Retirement plan consulting services are provided in connection with qualified plan platforms governed by applicable ERISA regulations.

Keep More of WhatYour Franchise Earns.