If you work with clients who are making a lot of money, you probably get as much pleasure as we do in learning how they make their money. Because Dedicated DB works with financial advisors and CPAs nationwide, we see a wide range of surprising occupations that produce high income.
Here are 5 clients that surprised us:
A 62 year old Lobster fisherman in Maine paid himself $35,000 in 2015. He has had his C-corp since 2008 and based on higher income for three consecutive years in the past, he can contribute and deduct $50,000 a year to his new defined benefit plan for the next 5 years or until he retires.
A 30 year old Skateboard champion set up a combined defined benefit and 401(k) plan cover him and his wife. The plan that will allow them to contribute $136,000 annually on an estimated income of $1,100,000 from winnings and endorsements.
A 57 year old Women’s ClothingSales Rep who has been netting over $400,000 as a sole proprietor for the past several years, never had a retirement plan. She will contribute $140,000 to a defined benefit plan for herself and $12,000 for her assistant for the next 8 years until she retires at age 65. This will allow her to accumulate over $1.6 million tax deferred for her own retirement which she can then roll over into an IRA.
A 48 year old Lobbyist in Virginia who earned $2 Million in 2015 will be contributing $145,000 for the next 5-10 years in a defined benefit plan and another $33,000 each year to a one person 401(k).
A 64 year old Farmer in Nebraska paid himself $245,000 in 2015. He can contribute that much to a Cash Balance plan and another $56,000 to a Safe Harbor 401(k) Profit Sharing plan for himself, bringing his total deductible contribution to over $300,000 annually for himself for the next five years. His total contribution for his one younger employee will be about $5,000 each year.
The majority of our clients are one person companies, or a husband and wife in business together. Each year, and 2015 was no exception, medical professionals are 20-25% of our clients. While fewer doctors are working as sole practitioners, we are seeing a surge in ER doctors, psychiatrists, audiologists, and physicians who work as contractors. As contractors, they travel to interesting parts of the country for several months at a time or just fill in locally at different hospitals and clinics; some of them see contracting as a way to ease into retirement.
This past year we introduced OwnersPlusTM Retirement Program, a cash balance plan that combines with a Safe Harbor 401(k) Profit sharing plan and better meets the needs of the small practice with up to a dozen employees. Medical professionals from Dentists to Orthopedics to Pediatricians have been able to set up these tax-advantaged plans and make deductible contributions of $200,000-$300,000 towards their own retirement.
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