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  • Retirement account advice

    I started my pediatric dental practice a little over two years ago and am curious about retirement accounts for my situation.

    I have a SIMPLE IRA set up for my office (I have 5 employees). The SIMPLE IRA was recommended by my accountant. I contribute 13k and get a 3% match of my payroll salary. My wife also contributes 13k and gets a small match as we pay her about 14kish.

    We contribute to an HSA each year and backdoor roth IRAs.

    We've paid off most of my student loans, but have held off the last little due to the interest freeze.

    A significant portion of my income comes from contract work with a public health clinic where I am a 1099 employee (Last year in my first full year is was ~66% and this year it will probably be ~50%). I don't plan to terminate this relationship in the future.

    I wondered if my current setup is as good as it gets. I will have my debt paid off this year and am nowhere close to putting 20% of my income towards retirement with the pretax options I have. I don't mind putting a lot in a taxable account, but wondered/hoped I could put more away in a pretax accounts.

    Any advice is helpful,

  • #2
    No, your current setup definitely is not as good as it gets.

    Are you paying pro-rata tax on your backdoor Roth conversions every year? A SIMPLE is not the best solution unless you are past the 2-yr mark and are able to empty the account to an old solo-k before 12/31 each year.

    With 5 employees, it's time to look at a safe harbor 401k, at a minimum. Will cost more (SIMPLEs are basically free) but you'll avoid pro-rata taxes and be able to contribute $19,500 yourselves. Of course, I would give serious pause to paying your wife and taking the 15.3% hit on her payroll + possible SUI when you are prob paying only 2.9% on yourself. A lot more needs to be said, but I've got to run, will ck back in tonight.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      I am not familiar with a safe harbor 401k. It looks like I need to do some research. Is $19,500 the amount I can contribute including employer contributions? Or can the company then contribute/match a portion of that amount?

      My accountant recommended my wife be on the payroll in order to contribute to the SIMPLE, but it sounds like that might not be the best idea. It looks like I'm going to have to change some things and potentially set up a safe harbor 401k. Any good recommendations for companies who can help with this process?

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      • #4
        Originally posted by bzpedsdds View Post
        I am not familiar with a safe harbor 401k. It looks like I need to do some research. Is $19,500 the amount I can contribute including employer contributions? Or can the company then contribute/match a portion of that amount?

        My accountant recommended my wife be on the payroll in order to contribute to the SIMPLE, but it sounds like that might not be the best idea. It looks like I'm going to have to change some things and potentially set up a safe harbor 401k. Any good recommendations for companies who can help with this process?
        I hope others will jump in with recommended companies. Some people love Employee Fiduciary - cheap and simple, I understand - others have problems getting support. Schwab runs a good TPA service. But, yes, you need to do a little studying.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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