{"id":8113,"date":"2020-06-01T00:00:18","date_gmt":"2020-06-01T07:00:18","guid":{"rendered":"https:\/\/todaysveterinarybusiness.com\/?p=8113"},"modified":"2022-06-15T17:46:18","modified_gmt":"2022-06-15T17:46:18","slug":"retirement-plans-work-for-you","status":"publish","type":"post","link":"https:\/\/navc.sitepreview.app\/todaysveterinarybusiness.com\/retirement-plans-work-for-you\/","title":{"rendered":"Retirement Plans Work for You"},"content":{"rendered":"

The decision to sell a veterinary practice is loaded with financial considerations, but don\u2019t gloss over the need to clearly understand what you want to achieve. Are you tired? Frustrated? Burned out? At retirement age? Overloaded with management duties? Do you want to maximize the sale price or transfer the practice to an associate veterinarian at favorable terms? Do you want to walk away completely or practice at a reduced level?<\/p>\n

As you consider the future of your veterinary practice, both personally and professionally, remember that a smartly designed 401(k) plan can play a vital role. In consulting with practices across the country, we\u2019ve found that retirement plans work as a financial Swiss Army knife. Done right, they help reduce your income taxes, invest for your retirement, and recruit, retain and reward valuable long-term employees.<\/p>\n

We\u2019ll address the types of retirement plans, explore a case study on intelligent plan design, explain fee benchmarking and finally, examine incentives created under the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.<\/p>\n

From SIMPLE to Cash Balance<\/h3>\n

During 30 years of working with veterinarians and other professional practices, we\u2019ve noticed a common progression with their retirement plans. The sophistication of the right type of retirement plan generally tracks with the size or profitability of the practice. For example, when a practice is initially formed, the owner often feels as though he is in the dark and feeling around for the light switch. Cash flow is most important and, since it doesn\u2019t exist right away, funding a retirement plan might not be on the radar.<\/p>\n

Once a practice begins to generate revenue, a SIMPLE IRA, or Savings Incentive Match Plan for Employees Individual Retirement Account, is often enacted for the owner and the employees. This is an easy way to get started. It\u2019s a payroll-deduction investment plan (including up to a 3% employer match) that requires little administration. However, contributions can become limiting as the owner reaches maximum limits.<\/p>\n

The fiduciary responsibility can be cumbersome. Employees have their own investment account, but the practice owner has a supervisory responsibility to ensure reasonable investments in each account. Without a simple way to compile and aggregate employees\u2019 account information, the practice owner\u2019s responsibility can easily turn into a liability.<\/p>\n

The practice owner then might decide to move to a Safe Harbor 401(k) profit-sharing plan.<\/p>\n

The triggers for this are threefold:<\/p>\n