𝗪𝗵𝘆 𝗣𝗵𝘆𝘀𝗶𝗰𝗶𝗮𝗻𝘀 𝗡𝗲𝗲𝗱 𝗮 𝟰𝟬𝟭(𝗸) 𝗦𝘁𝗿𝗮𝘁𝗲𝗴𝘆 - 𝗡𝗼𝘁 𝗝𝘂𝘀𝘁 𝗮 𝟰𝟬𝟭(𝗸)

Physicians are among the highest-earning professionals, yet many still don’t feel financially prepared for retirement. The challenge is often not income. It’s that physicians have a very different financial journey from most other professionals: years of medical training, a later start to peak earnings, high tax exposure, multiple sources of income, and, for practice owners, additional complexity around employees and retirement plan design.

That’s why simply having a 401(k) may not be enough. How the plan is structured and how it fits into your overall financial strategy matters.

𝗧𝗵𝗲 𝗖𝗼𝗺𝗽𝗿𝗲𝘀𝘀𝗲𝗱 𝗖𝗮𝗿𝗲𝗲𝗿 𝗧𝗶𝗺𝗲𝗹𝗶𝗻𝗲

By the time many physicians sign their first attending contract, their college peers may already have a decade of retirement contributions working for them. That doesn’t mean physicians can’t catch up. A thoughtfully designed 401(k), combined with employer contributions or profit sharing when appropriate, can help physicians make better use of that shorter accumulation period.

𝗬𝗼𝘂𝗿 𝗧𝗮𝘅 𝗕𝗿𝗮𝗰𝗸𝗲𝘁 𝗠𝗮𝘁𝘁𝗲𝗿𝘀

Many physicians are in relatively high federal and state income-tax brackets. Traditional 401(k) contributions may allow you to defer a meaningful amount of current taxable income while building assets for retirement.

𝗔𝘀𝘀𝗲𝘁 𝗣𝗿𝗼𝘁𝗲𝗰𝘁𝗶𝗼𝗻 𝗠𝗮𝘁𝘁𝗲𝗿𝘀, 𝗧𝗼𝗼

Physicians also face professional liability risks that many other professionals do not. Qualified retirement plans generally provide significant creditor protections under federal and/or state law, although the specific protections depend on the type of plan and individual circumstances.

𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲 𝗢𝘄𝗻𝗲𝗿𝘀 𝗛𝗮𝘃𝗲 𝗠𝗼𝗿𝗲 𝗢𝗽𝘁𝗶𝗼𝗻𝘀

If you own a medical or dental practice, your 401(k) deserves even more attention. Depending on your practice structure, the right plan design may allow significantly greater tax-advantaged retirement savings.

𝗚𝗲𝗻𝗲𝗿𝗶𝗰 𝟰𝟬𝟭(𝗸) 𝗣𝗹𝗮𝗻𝘀 𝗠𝗮𝘆 𝗡𝗼𝘁 𝗙𝗶𝘁 𝗠𝗲𝗱𝗶𝗰𝗮𝗹 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀

Medical practices are unusual businesses. The compensation structure can create challenges with nondiscrimination testing and may limit what highly compensated employees can contribute if the plan is not designed appropriately. 

𝗦𝗘𝗖𝗨𝗥𝗘 𝟮.𝟬 𝗛𝗮𝘀 𝗖𝗿𝗲𝗮𝘁𝗲𝗱 𝗡𝗲𝘄 𝗢𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀

SECURE 2.0 expanded tax incentives for eligible small businesses that establish retirement plans, including credits related to startup and administrative costs and, in certain circumstances, employer contributions.

A 401(k) is a retirement account. A 401(k) strategy asks a bigger question. That is the conversation we believe physicians and clinicians should be having.

Learn more:

https://www.wealthydoctorinstitute.com/ourinvestmentstrategies/401kstrategy

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