Starting cash balance this year, but maxed out solo 401k already this year?

Hello, I had a consult with an actuary/administrator about starting a cash balance plan this year. However, I maxed out my solo 401k contributions 69,000 this year by myself with fidelity. He states that he can create a new solo 401k plan (?) and reclassify the excess as after-tax contributions for this year so I can start my cash balance plan this year.

A cash balance plan is a defined benefit plan.  Contributions to defined contribution plans don't affect DB plan contribution limits.  I wonder, though, whether the description of the proposal is accurate; "reclassify the excess as after-tax contributions for this year so I can start my cash balance plan this year" doesn't in fact make sense.

i probably am not understanding it/explaining it well enough. pretty much it was that if i were to start a cash balance plan this year, theres a limited maximum i could put into a solo 401k. However, i already contributed the max employer/employee into my solo 401k this year. so i asked him if i could remove what i already contributed into my solo 401k to be able to do a cash balance plan this year. he said it is possible to somehow change some of the solo 401k contributions to after-tax by changing/redoing a custom solo 401k plan?, so i don't go over the limit per cash balance plan? not sure if that helped... but thank you for your response

Yes it is possible. Generally, your employER contribution is going to drop from a max of 25% to 6%. After taking into account the max 401k deferral and the 6% max employER, the remaining money already contributed might be able to be considered an after tax contribution. If you are a sole proprietor, it's fairly easy. If you are operating a corporation and getting W-2 income, not so easy. It might be considered aggressive because in theory the money going in should be designated as what it is when it goes in. 

Tom, the issue is not the 415 limits but the combined deduction limit under IRC 404(a)(7). A substantial-owner DB plan would be exempt from PBGC coverage so the maximum deductible contribution between the two plans is limited to 31% of compensation, unless the deductible contribution on the DC plan does not exceed 6% of compensation.

I am not sure how you could "re-classify" contributions as employee after-tax contribution after they were made, since those types of contributions must be designated as such at the time they are contributed to the plan. But if you can figure out how to make that work then you could stay at the 415 limit in the DC plan since those contributions do not count towards 404, while keeping your deductible contributions to no more than 6% so you can make a large deductible contribution to the DB plan.

Another option would be to design a DB plan with a small contribution for the first year, such that the combined contributions between the two plans do not exceed 31% of compensation, and then increase the contributions next year. If you are close to retirement (within the next 10 years) and want to accrue the largest possible amount, this could be advantageous as it gives you another year of accrual towards your eventual 415 maximum.