As a Medical and Dental professional, you have unique challenges and circumstances to take into consideration when determining the best retirement plan for your practice. You want to offer a comprehensive plan, but also choose a plan that will be in the best interest of your business.
While there are multiple options available to you when deciding on what retirement plan you will implement for your practice, the defined benefit/defined contribution combination plan is a particularly attractive option due to the above-average income physicians and dentists earn.
Businesses are allowed to combine a Defined Benefit Plan and a Defined Contribution Plan. These “hybrid” plans offer features from each plan and are really two different plans working in tandem.
As a result, your practice along with employees enjoy the benefits of both kinds of plans. The business receives tax deductions for contributions to the plan, and as a qualified plan under the Employee Retirement Income Security Act (ERISA), the employee’s pension provides asset protection from bankruptcy creditors and has the opportunity to grow tax-deferred.
The potential reward of combo plans is they provide an opportunity for physicians and dentists to boost their own retirement savings as well as receive tax benefits. These plans are particularly popular with older physicians and dentists who need to make up for lost time in saving for retirement. Hybrid plans substantially increase the amount that can be saved towards retirement compared to a stand-alone defined contribution plan.
With the Pension Protection Act, many plans now allow employer an additional contribution of up to 6% toward the defined contribution plan on top of the usual $18,000 ($24,000 for those over 50) allowed. Compared to a stand-alone defined benefit plan, the combination plan reduces the cost to the employer considerably, as some plans include a defined benefit plan for owners and only a defined contribution plan for employees. There are a variety of combination plans available, each specifically suited to different kinds of situations.
The plethora of retirement plan options available can be confusing and intimidating. When choosing a retirement plan for your medical practice, it is always important to work with a qualified financial professional who can help you navigate the complexities and find the plan that is best suited to your needs.
Rick Helbing is a financial advisor and a co-founder of Suncoast Advisory Group, a firm that specializes in providing innovative financial and practice planning for physicians, dentists, and family-owned businesses. Along with nearly three decades of experience in financial services, Rick has advanced knowledge of and training in financial planning, holding the Chartered Financial Consultant® and CERTIFIED FINANCIAL PLANNER™ certifications. Guiding the vision of Suncoast Advisory Group, Rick has led the firm to gain national recognition, and Medical Economics named him one of the top 150 advisors in the country for physicians from 2009 through 2013. While headquartered in Sarasota, Florida, he has the technology and ability to work with clients nationwide. To learn more, connect with him on LinkedIn or visit www.suncoastadvisorygroup.com.
Investment advisory services provided through Partnervest Advisory Services, LLC, Registered Investment Advisor, with Financial Life Planning and Insurance services offered through Suncoast Advisory Group.