Retirement used to be described as a three legged stool: your personal savings, Social Security, and a work pension. For many workers the pension leg is gone. Social Security is present but it’s often mentioned with uncertainty. That leaves most people relying heavily on employer plans like a 401k plus their own savings and investments.

For high income earners, the issue is rarely discipline. It’s capacity. You can afford to save more, but standard retirement plan limits can prevent you from fully taking advantage of your peak earning years. That’s why understanding the major plan types matters.

A 401k is the baseline for many employees and business owners. It’s simple, consistent, and often includes an employer match. The match is free money and usually should not be left on the table. But high earners quickly run into contribution ceilings and plan rules that may limit how much they can shelter each year.

Profit sharing can help when it is available. Profit sharing is an employer contribution layered on top of the 401k. It can increase total annual retirement contributions and, when structured correctly, can improve tax efficiency for the business. This is also where W2 employees get squeezed most, because they are typically limited to whatever plan features their employer offers.

For many high income earners who want to accelerate retirement savings beyond what a 401k can reasonably accomplish, defined benefit plans enter the conversation. These plans are designed around a targeted retirement benefit, rather than annual contribution limits. These plans can allow much larger deductible contributions for certain individuals, depending on age, income, business structure, and plan design. For the right person, a defined benefit plan can feel like restoring the pension concept using modern tools, while deferring taxes in a big way.

Often once maxed out in these plans the solution is usually to stockpile more cash in checking or savings. Beyond liquidity needs, too much idle cash can create opportunity cost, and FDIC coverage is generally capped at $250,000 per depositor, per insured bank, per ownership category.

Now here’s the next level many executives ask about once they have saved as much as they can under the ERISA rules: nonqualified deferred compensation, or NQDC. These plans are not ERISA qualified retirement plans, so they are not limited the same way a 401k is. The goal is to defer part of compensation today and receive it later, often in retirement or during years when taxes may be lower. When used well, NQDC can help smooth taxable income and create a pension-like payout schedule.

Think of these plans as levers. The 401k builds the base. Profit sharing can widen the funnel when it is available. Defined benefit plans can expand how much can be set aside for certain high earners. And NQDC can add another layer when qualified limits are no longer enough. When the levers are understood and coordinated, retirement planning becomes less about hope and more about math.

Stan LeConte, CFP®, CRPC®, is the founder of IAA Private Wealth Advisors, an independent fiduciary wealth management firm based in Aventura. He holds both 2-15 and 2-20 licenses, owns a separate property and casualty insurance agency, and specializes in tax planning, estate planning, and investment strategy for high-net-worth individuals, professionals, and business owners.