This is for those who are established in their DPC practice and are finally making some money. Trust me, this time will actually come. I hope you all have a retirement plan because it is crucial. My wife and I were putting our regular $15K or so a year each towards our retirement each year but there was one more option that we tapped into. It’s called a Safe Harbor 401 K.

The following is from the IRS website but that is always subject to change: 

A 401(k) plan is a qualified plan that includes a feature allowing an employee to elect to have the employer contribute a portion of the employee’s wages to an individual account under the plan. The underlying plan can be a profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan. Generally, deferred wages (elective deferrals) are not subject to federal income tax withholding at the time of deferral, and they are not reported as taxable income on the employee’s individual income tax return. 

401(k) plans are permitted to allow employees to designate some or all of their elective deferrals as “Roth elective deferrals” that are generally subject to taxation under the rules applicable to Roth IRAs. Roth deferrals are included in the employee’s taxable income in the year of the deferral. 

What does this mean? Well, again, run it by your accountant but in reality, it means you have to have at least one employee (assistant, RN, LPN, MA, phlebotomist) who you are paying who is not a family member, even if you are paying your family member to be a practice manager like I did. Then your accountant will work with you to figure out a salary for you and your family member if they are working with you. Once that is done you basically create a profit-sharing plan. You will need help from a benefit manager, another third party, to do this and keep the IRS happy. You will also need to work with a financial company that is in charge of where the profits are invested, like a 401 K and the Roth IRA. We put money both toward the 401K and a Roth IRA. 

This enables you to give your employee a retirement option. He or she will decide the amount she gives to his/her plan each month and you have to match some or all of that. Therefore, you are all putting some money each month away. But here comes the best part. At the end of the year, you can put whatever profits you make towards your retirement in one lump sum as long as you give your employee a minimal amount of that as well. This amount is discretionary and really up to you. There were times we were putting an extra $30K to $40K a year into our retirement fund. How cool is that? This brought our taxes down tremendously. It also made my assistant extremely happy and this is one example of how to retain employees. 

Sounds complicated. It is! You will need help with this but it is a way to plow money into your retirement account and save money on taxes as well.

I swiped most of the above (and fixed some typos) from my book but another resource for you is to read this post here. It was sponsored by Nicholas Shiver after I interviewed him at the DPC Summit and he seemed very knowledgeable about this topic. He may be an option for you. This is for you to decide but you need someone with experience in this field. DO NOT WAIT ON THIS.