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    Weighing the best retirement plan for practice, employees

    Understanding various programs can help physicians make appropriate choice



    If a physician wants a plan that encourages employees to save for retirement, a SIMPLE IRA might be appropriate. To be eligible for this plan, physicians must have 100 or fewer eligible employees who earned $5,000 or more in compensation in the preceding year and have no other employer-sponsored retirement plans to which contributions were made or accrued during that calendar year.

    There are no annual IRS fillings or complex paperwork, and employer contributions are tax deductible for the practice. The plan encourages employees to save for retirement through payroll deductions and contributions are immediately 100% vested.

    The maximum salary deferral limit to a SIMPLE IRA plan cannot exceed $12,500 for 2016. If an employee is age 50 or older before Dec. 31, then an additional catch-up contribution of $3,000 is permitted.

    Each year the physician must decide to do either a matching contribution (the lesser of the employee’s salary deferral or 3% of the employee’s compensation) or non-matching contribution of 2% of an employee’s compensation (limited to $265,000 for 2016). All participants in the plan must be notified of the physician’s decision.

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