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Retirement benefits
What are the typical retirement account benefits for a private practice partner?
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16 Replies
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Fully funded 401(k) or similar.
Cash balance plan.
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Defined benefit retirement plan.
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Quote from fw
Defined benefit retirement plan.
As in a SERP? Those carry some danger, particularly if the government decides to pluck low-hanging fruit.-
Quote from DoctorDalai
Quote from fw
Defined benefit retirement plan.
As in a SERP? Those carry some danger, particularly if the government decides to pluck low-hanging fruit.
As in a traditional defined benefit pension plan, no different from Bethlehem Steel or a railroad company. As confiscation of those is also going to hit their union clientele, I doubt the collectivists are going to decide to raid those.-
Quote from fw
As in a traditional defined benefit pension plan, no different from Bethlehem Steel or a railroad company. As confiscation of those is also going to hit their union clientele, I doubt the collectivists are going to decide to raid those.
Please. There are multiple roads leading from all the dead and raided pension funds, raided by the corporate profiteers with Congress’s blessing leaving nothing behind for the pensioners, union or not except 10 cents on the dollar, if that, and that 10 cents was paid for by the taxpayers.
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Quote from Frumious
Quote from fw
As in a traditional defined benefit pension plan, no different from Bethlehem Steel or a railroad company. As confiscation of those is also going to hit their union clientele, I doubt the collectivists are going to decide to raid those.
Please. There are multiple roads leading from all the dead and raided pension funds, raided by the corporate profiteers with Congress’s blessing leaving nothing behind for the pensioners, union or not except 10 cents on the dollar, if that, and that 10 cents was paid for by the taxpayers.
As one of the Bowler hat weraring owners of the company, I would be the one raiding the plan, right ?-
Maximum contributions to defined benefit plans (cash balance plans , while functioning more like defined contribution plans in many ways, are considered defined benefit plans) are based on age and when combined with 401k /profit sharing +/- 457 plans, you can put well into six figures away pre tax. As a ~40ish year old, I am going to be able to contribute >150k pre tax this year. And Only defined benefit plans that are <90% funded for 3 consecutive years or <80% funded for a single year are considered Underfunded and thus subject to withdrawal Restrictions
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Anyone have a good reference to research retirement planning better? I thought the maximum pre-tax contribution to a 401k was 19k/yr, yet you guys are talking about over 6 figure contributions, how is that possible? We had no teaching on this subject throughout any of our medical education yet it seems rather salient to know to plan one’s future. Thanks for any advice/references people can offer.
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White Coat Investor.
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401K profit sharing contributions are limited to $57k this year. Thats different than just a regular employee 401k plan that limits you to $19,500 this year.
Cash balance contributions are age based and depend on the defined benefit. As you age you can put multiple 6 figures away pretax, albeit for lower returns than you can choose to swing for in your 401k plans.
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Most corporate and academic institutions are not offering CBP or DBP, but you will get some kind of match to 401k/403b, finances allowing. Non-profit may give you access to 457b but unless it is gov, it is a potential asset to creditors and roll overs upon change of employment wont be an option.
One of the benefits of PP is that likeminded physicians can create generous tax deferred retirement plans well above anything offered in an employee situation.
There are the gov and Kaiser NorCals that offer DBPs too, though current generations are more often than not getting a significantly reduced benefit compared to older generations. Kaiser NorCal being a real exception with a pretty rich DBP and standard retirement. There is good stuff out there.
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You can do this as an individual, but it costs money to set-up and maintain.
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Ahh ok, that makes more sense. Thanks for the responses. WCI is a great resource too.
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A few things.
We have a defined [b]contribution [/b]plan which is deferent from a defined benefits plan.
In general a contribution is funded by the employer while a benefits plan is funded by the individual.
For 2020 max is 57k and same as 401k.
As for the amounts to get to 57k it is the following.
1. individual can contribute up to 19.5k (additional 6.5k catch up if over 50)
2. the remained of the 57k is made up of employee match and safe harbor contribution.
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401K + Profit Sharing Plan
Cash Balance Plan
Should be able to put away six figures pretax per year.-
max for 401k is 57k this year with additional 6.5k catchup for those over 50
same numbers for defined benefits plan.
The risk with a DBP is that it has to be fully funded for anyone to take their money out. Fully funded is 110% of plan. So if their is a big correction and someone want to retire they don’t have access to the money.
In general almost all private practices offer a 401k. in my experience very few a defined benefits plan.
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