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    Weighing the best retirement plan for practice, employees

    Understanding various programs can help physicians make appropriate choice

     

     

    401(k) plan

    This plan may be right for a practice if a physician wants to motivate employees to save towards retirement and give them a way to share in the firm’s profitability. 401(k) plans are best suited for practices seeking flexible contribution methods.

    When choosing this plan type, physicians show know that the employee and employer have the ability to make contributions. The maximum salary deferral limit for a 401(k) plan is $18,000 for 2016.

    If an employee is age 50 or older before Dec. 31, then an additional catch-up contribution of $6,000 is permitted. The maximum amount a physician can contribute is 25% of the eligible employee’s total compensation (capped at $265,000 for 2016).

    Individual allocations for each employee cannot exceed the lesser of 100% of compensation or $53,000 in 2016. The allocation of employer profit-sharing contributions can be skewed to favor older employees, if using age-weighted and new comparability features. Generally, IRS Forms 5500 and 5500-EZ (along with applicable schedules) must be filed each year. 

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