Blog

• 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.

Read more

Defined Benefit Plans for Physicians, Dentists and Small Medical Practices

Smart Way for Physicians to Catch Up on Retirement

2-minute Calculator: You Can Compare Defined Benefit Plan vs. SEP for Doctors?

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 When she retires, the doctor will roll the assets into an IRA where they will continue to grow tax-deferred until withdrawn.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.