The Best Retirement Plans for Physicians

11th Sep 2016

Frustrated Doctor


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Doctor’s Rx for the Tax Headache

Doctors consistently earn high incomes but also have high tax liabilities. They are looking for ways to reduce their taxes and maintain their lifestyle in retirement.

Large Savings, Year After Year

Each year over 20% of the Defined Benefit and Cash Balance plans we open are for independent physicians and small medical or dental practices. Many of them come to us directly, without a financial advisor.  Do you know doctors without a plan?

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Advantages of Defined Benefit and Cash Balance Plans for Physicians  

  1. These IRS-approved qualified plans provide for the largest annual contributions to retirement plans, often exceeding $150,000 annually on behalf of the physician.
  2. All contributions and fees for these plans are tax deductible in the year they are paid.
  3. The older the physician, generally, the higher the contribution.  Most physicians begin their practices with school debt and incur high expenses to set up a practice.  As their practices mature and they are older – 45+ – they have the cash flow to support high retirement contributions. Starting at age 52, a physician who pays himself $265,000 in W-2 income from his C-Corporation can accumulate $2.6 million in 10 years.

Contribution Chart

*This chart makes the following assumptions. If the actual situation differs, the contribution may be different.

  • Retirement Age: The later of age 62 or 5 years of participation in the plan
  • Business Start Date: January 1, 2016
  • Entity Type: Corporation; Contributions might differ for sole proprietors
  • Income Type: W-2

Defined Benefit vs. Cash Balance Plans 

Although the overall percentage is shrinking, a large number of physicians still operate independently. Are there anesthesiologists, radiologists, ER doctors, endodontists, psychiatrists, or podiatrists in your community who work on their own and have significant income? Traditional defined benefit plans, like OnePersonPlus® work best for the solo practitioner or doctor with spouse or family practices. OnePersonPlus® Defined Benefit Plans also work well for medical practices that employ excludable workers, such as part-time employees and union employees.

When a medical practice includes common law employees, we recommend our OwnersPlus™ Retirement Program, which combines a Cash Balance Plan with a Safe Harbor 401(k)/Profit Sharing Plan. This is a great program for small office practices such as Audiologists, Pediatricians, Pain Management Clinics, Orthopedic practices, Oral Surgeons, etc. Depending on several factors, such as the ages of the doctors and employees, often more than 90% of the total contribution can be for the owners’ retirement.

Dates to keep in mind: 

  • Safe Harbor plans must be opened by October 1, for maximum 2016 deferrals
  • Defined Benefit and Cash Balance plans must be opened by the end of the doctor’s fiscal year, generally December 31st


Quick Links

Calculator — See how much tax relief you can provide!

Sales Plan for Physicians — Tips for prospecting and signing up physicians

Presentation for Physicians — Download PowerPoint slides to present to medical professionals

Illustration Request Form — Provide info for custom illustration


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