Anesthesiologist Triples Retirement Savings
11th Dec 2017

Key Takeaways
- Defined Benefit and Cash Balance plans allow self-employed physicians and owners of small medical practices to make the largest IRS approved tax-deductible contributions each year, often $150,000 or more.
- Contributions made for these retirement plans are tax deductible in the year they are paid.
- Our client, a 59-year-old anesthesiologist, opened a Defined Benefit plan and will have an estimated tax savings of $79,000 and will accumulate $1.4 million in her plan.
An anesthesiologist, age 59, who was working as part of a group of 15 other anesthesiologists at a medical center in California, decided to become an independent physician in 2017 for one reason: to make up for lost time in saving for retirement. It’s important to note that Defined Benefit and Cash Balance plans are tax-advantaged plans that allow self-employed physicians and owners of small medical practices to make large tax-deductible contributions each year, often $150,000 or more. These plans are attractive to high-income medical professionals because all contributions are tax deductible in the year they are paid.
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Under the company’s 401(k) plan, the anesthesiologist was limited to $59,000 in retirement plan savings last year no matter how much she earned. The physician, who is now an independent contractor, opened a Defined Benefit pension plan for 2017 and will contribute $208,300 annually for five years. Her estimated annual tax savings will be $79,000, assuming a 38% combined federal and state tax rate. In five years, she will accumulate $1.4 million in her defined benefit retirement plan. When she retires, the doctor will roll the assets into an IRA where they will continue to grow tax-deferred until withdrawn.
Are you a medical doctor or medical professional who is looking for a small business retirement plan? A defined benefit plan may be a good option for you.

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