At the age of 40, my friend Al hit a sweet spot in his medical career. He now puts close to $140,000 per year into his retirement accounts — tax-free … thanks to his pension plan.

That sounds impossible. The contribution limit for a 401(k) plan in 2020 is only $19,500.

But it is doable if you meet a few prerequisites.

My advice here is only relevant if you’re over 40 and earn at least a couple of hundred thousand dollars as a business owner or contractor.

If that’s not you, don’t fret. Simply maxing out your 401(k) every year will get you well on your way to financial freedom.

But if you‘re over 40 and enjoying a nice run in your business, you have options that aren’t available to the rank and file.

If you’re fortunate enough to be making a good chunk of change every year and want to supersize your retirement savings, this is the single best way I’ve ever seen to do it.

Al has a 401(k) plan, just like you and me. And he maxes out his account every year.

But he also pairs his 401(k) plan with a good old-fashioned defined benefit pension plan. He can dump in an extra $100,000 as a result.

Here’s how the numbers shake out.

The current maximum salary deferral in a 401(k) plan is $19,500. That max bumps up to $26,000 if you’re 50 or older — which Al isn’t.

But he is able to stash away up to 6% of his salary via profit sharing, which also goes into the 401(k) plan. The IRS caps the salary you can use in the calculation at $285,000. So his maximum profit-sharing contribution is $17,100 for 2020.

Between the 401(k) salary deferrals and the profit-sharing, he’s able to shield $36,600 from the taxman in 2020.

Now for the fun part…

The Art of Supersizing Your Retirement Contributions

Al supersizes his account with an additional $100,000 by contributing to a defined benefit pension plan.

These plans are a nightmare for companies to administer. And they can be wildly expensive. That’s why most large companies have switched to defined contribution plans like 401(k)s.

But you wouldn’t mind the burden of funding a pension plan if you were the only beneficiary. And that’s exactly how this arrangement works.

With the help of a professional, Al created what is called a “cash balance pension plan.” Its legal structure mirrors pensions run by the United Auto Workers or American Airlines. The only difference is that Al is the lone participant.

Under current actuarial assumptions based on his age and income, he’s able to contribute around $100,000 per year, all tax-free. Were he 10 or 20 years older, that number could be two or three times as high.

When the plan reaches a value of approximately $3 million, he’ll have to stop making new contributions. At that point, he can simply shut down the plan and roll it into a traditional individual retirement account to avoid the hassle of administering the pension.

If any of this sounds complicated … it’s because it is.

Don’t try setting up a cash balance pension plan without professional help. Mistakes are costly and can result in tax penalties.

The good news is that there are plenty of companies that specialize in these arrangements. And the costs aren’t unreasonable.

If you make enough money to warrant setting up a pension plan like this, a couple of thousand dollars to set it up is well worth the peace of mind you’ll get knowing it’s done correctly.

If you’re fortunate enough to be making a good chunk of change every year and want to supersize your retirement savings, this is the single best way I’ve ever seen to do it.

Money & Markets contributor Charles Sizemore specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.

Follow Charles on Twitter @CharlesSizemore.