Retirement Options & Tax Benefits for Dental Practice OwnersSubmitted by Mission Financial Planning on January 24th, 2020
As a Dental Practice Owner, you have a huge advantage over a typical employee in your ability to fund a retirement plan, and the tax benefits are significant. "Uncle Sam" is helping you fund your retirement in the form of tax deductions.
In the early stages of your practice, you may not need to set up a company Retirement Plan at all. Start by funding a personal IRA. Personal IRAs can be deductible and, if you qualify, provide a tax break.
As your practice grows, a SIMPLE plan for the practice may be the next logical step. This plan allows you to save for your own retirement and has potential to increase your employee’s overall job satisfaction by expanding their benefits package.
SIMPLE plans are inexpensive to set up and maintain. The main "cost" is the practice’s contribution made on behalf of the employees, which doubles as an employee benefit, but is limited to 1 – 3% of the participating employees’ compensation. You can make contributions to your own account through salary deferrals up to the IRS limits.
As your business thrives, you may need to move to a plan with higher contribution limits and greater flexibility, like a 401k and/or a Cash Balance Plan. These plans allow for significant contributions, benefiting the owner with tax savings and setting aside money for the future.
Committing to consistent savings from your first year in business to the last means you’ve done your best to take care of your family now--and in the future. Contact Sharon to discuss which retirement investment account is best for your practice today.