Updated July 28, 2026. Quick answer: The very large contributions cash balance plans are marketed on are not available in year one. IRC §415(b)(5)(A) multiplies the limit by your years of participation over ten. Open a plan at 60 and your first year is capped at one tenth of the headline benefit, phasing up over a decade. Almost no article that quotes a big number mentions this.
The provision
IRC §415(b)(5)(A): for an employee “who has less than 10 years of participation in a defined benefit plan,” the limit is multiplied by a fraction “the numerator of which is the number of years (or part thereof) of participation … and the denominator of which is 10.”
| Years of participation | Share of the limit available |
|---|---|
| 1 | 10% |
| 2 | 20% |
| 5 | 50% |
| 10 or more | 100% |
This is the fact that decides whether a cash balance plan makes sense for you, and it is routinely omitted. Marketing copy pairs “over 60” with a very large annual figure. Both halves can be true only for someone who has already been in the plan for ten years. A 60-year-old opening one today is in year one.
Why age helps at all, and it is indirect
Nothing in the statute says older participants may contribute more. IRC §415(b) caps an annual benefit, and §415(b)(2)(C) anchors that benefit to age 62. Funding under §430 must accumulate the present value of that benefit by then — so fewer remaining years means a larger annual contribution to reach the same target. Age raises the contribution through the present-value maths, not through any age term in a limit.
Which is why the two effects fight each other: age pushes the required contribution up, and the phase-in holds the ceiling down. The plan is at its most powerful for someone who starts in their late forties or early fifties and still has ten years to run, not for someone starting at sixty-two.
And the contribution is not optional once you commit — funding is legally required, not discretionary.
Every dollar limit in this area is indexed and changes annually. The figures printed in the Code itself — $40,000 for the defined-contribution limit, $160,000 for the defined-benefit limit, $15,000 for elective deferrals — are 2001 and 2005 base amounts that will never be updated in the statute; IRC §415(d) and §402(g)(4) do the adjusting. Get the current year’s figures from the IRS cost-of-living notice for that year rather than from any article, including this one. Nothing on this page states a dollar amount for that reason.
Sources
IRC §414(i) and §414(j); §411(a)(13)(B) and (C); §412(a) and §412(b); §430(a) and §430(h)(1); §415(b)(1)(A), §415(b)(2)(C) and §415(b)(5)(A). All read July 2026.
This states what the cited authority says. It is not tax advice, and retirement-plan design turns on facts about your business and your other entities that no page can see. Every dollar limit referenced here is indexed and changes annually.