Many physicians worry that their current retirement plan does NOT meet their retirement savings goals.
Physicians, along with the retirement committee members, want to have larger tax deductions and accelerated retirement savings.
They are looking for a plan that’s more reliable, safe and has the potential to more than double their tax-deferred contribution amounts and drive down tax liability.
This is where a Profit-Sharing 401(k) plan with a Safe-Harbor Non-Elective option along with a Cash Balance Plan can help achieve their goals.
Here is an actual 401(k) plan design to take a look at. In this plan design we have a total of 174 employees, 56 partner physicians over 50 years of age, 58 non-partner physicians over 40 years of age, 10 nurse practitioners over 36 years of age and 12 staff members over 48 years of age. See chart.
With this plan design, physicians, along with the retirement committee members, would achieve their goals and have larger tax deductions with accelerated retirement savings. One more advantage to point out is that ALL of the contributions to the plan are creditor protected.
Taking Advantage of the NEW Tax Law
Before we summarize, let’s break this down even further with a quick example. Qualified retirement plan contributions like Cash Balance remain the gold standard of deductions, since they reduce both taxable income AND adjusted gross income (AGI).
Before & After Adding a Cash Balance Plan
Medical Group Partner, 60, married
AGI: $650,000
No Cash Balance Plan: Not eligible for pass-through deduction.
Add a Cash Balance Plan to 401(k) Profit Sharing Plan: With combined retirement plan contributions of $335,000, AGI is lowered to $315,000 allowing 20% pass-through deduction and reducing effective tax rate to 20.1%.
By the way, if your medical group is not this large, than this is the article for your practice What Business Owners Need To Know
The bottom line is any retirement committee along with the physician partners would be more than happy with these results. Just imagine what this plan design would look like after having the plan in place for several years. Many of the doctors would see dramatic improvement in their retirement accounts, and this outstanding plan aids in physician retention, physician satisfaction and happier employees within the medical group as well.
If you belong to a large medical group and are asking yourself how can we upgrade our current retirement plan for these larger tax deductions and accelerated retirement savings? Let us show you how, contact us at info@crosspointwealth.com or 773-255-0411.
Until Next Time…
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Scott Krase is the founder and principal of CrossPoint Wealth and specializes in retirement planning for individuals over age 50. His blog is CommonFinancialSense.com
For Professional Speaking Engagements Click Here https://www.commonfinancialsense.com/speaking-engagements/
Thank you to Zak and all the staff at www.trinitypension.com for their contributions to this article.
