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Group defined benefit plan- good idea?

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  • #16
    I do remember the 'adivisor' telling me that I actually didn't want high returns b/c then he would have to reduce the amount I contribute which would in turn  limit my tax savings... :x

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    • #17




      Ok thanks- sorry for the confusion. This is a defined benefits plan which uses an indexed based annuity to fund it. The ‘guy’ who has advised the group to get this annuity ‘specializes’ in annuities and life insurance plans… The plan also USED to be a 412 plan but he changed the type.

      This has all been a big eye opener for me. I was shocked to find out 2 weeks ago that this was ‘mandatory’ (never mentioned in contract, during group meetings, etc) and have been struggling to make sense of it sense then. Thanks for your help!
      Click to expand...


      You do NOT have a mandatory contribution, thats total bs. Even if it was in your contract it still wouldnt be likely legal. Probably the more you look into things the more crazy stuff you'll find, its never one roach.

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      • #18
        I don't know what type of practice that you have or how many partners.  I do know that if you cannot trust the senior partner's decision making on something like your retirement plan to be fair for to you the young right out of residency doc then I agree with Zaphod that this might be the first roach you find in the practice.

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        • #19
          Well the people I work with are great, the setting is great, and the pay is much better than I could get almost anywhere else... so I don't think I'm gonna leave the practice over this. It might come down to 'stomach this to make everyone happy until I'm a partner' but I hope not. The practice seems reasonably setup otherwise.

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          • #20




            Well the people I work with are great, the setting is great, and the pay is much better than I could get almost anywhere else… so I don’t think I’m gonna leave the practice over this. It might come down to ‘stomach this to make everyone happy until I’m a partner’ but I hope not. The practice seems reasonably setup otherwise.
            Click to expand...


            Don't rock the boat.  This never works out.  You can always try to see if the partners want a 'second opinion' to have their plan reviewed by someone who is not going to sell them stuff, but if they don't want to hear about it, you might want to leave it at that because damaging relationship with the group over a disagreement on the plan is not worth it.  You might also ask them to eliminate the 'mandatory' contribution, and opt out of the DB plan altogether, which should be accommodated without any questions asked (and if not, ask why not).
            Kon Litovsky, Principal, Litovsky Asset Management | [email protected] | 401k and Cash Balance plans for solo and group practices, fixed/flat fee, no AUM fees

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            • #21
              You'd be surprised at how poorly run most practices are. Most doctors, even in highly successful practices dont run a good shop, they bleed money in dumb places, if they take insurance they let an astronomical amount of collections go uncollected, have people skimming left and right, dont know what procedures return the highest pay for time/risk involved, etc....

              Lots of docs will outsource these issues, and the consultants they hire are aware of all the above issues and take advantage accordingly. Many people over estimate their own contribution to their success rather than timing, location, first mover effect, and being established. There is typically so much money going around that they feel powerful and unstoppable, that there is no need to be good at business, and then it just ends sometimes.

              My friend joined the most prominent practice in his city that appeared to be making an absolute killing with something like 10-20 docs in the group around the city. They owned multiple offices, imaging centers, radiation centers, labs, etc...cash flowing out their ears. However, they were set up and run poorly, younger docs paying for lazy older ones, undemocratic setups, etc....

              It was too much and he went on his own, at the great mocking of many of the drs there and the warnings of the overall practice starter and owner. Fast forward only one year my friend is wildly successful, the group has dissolved and the once high flying owner cant retire now and calls my buddy to pick up work. It happens.

              You should fight for yourself, who cares if these guys want to blow their money after being told better, you shouldnt have to. It will not be pleasant and docs hate it but you should negotiate or see what you can do. Visit with a lawyer and see how "mandatory" it is. The time around negiotating isnt fun, but it blows over. I've negotiated several times in my 3 years out after learning where I was being taken advantage of and standing up for whats in my best interest, which has resulted in base raise of 40% (it didnt look like it on paper but effectively it was). Know your value to the practice, its unlikely they will put up much of a fight about it, they probably really dont care in the grand scheme of things. Im always shocked when people put up with such things, maybe Im crazy but I get after it if I dont like the situation.

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              • #22
                My specialty is one of the 'support' specialties (anesthesiology, rad, path, etc) so I am especially dependent upon contracts and workflow. If I went out on my own it would be incredibly difficult. Some other specialties in medicine are better equipped to start out on their own- I'm not.

                I do appreciate everyone's feedback. I'm gonna meet with the head and recommend that they have their retirement plan examined by outside experts/advisers. I don't necessarily want to be the one to recommend something over this plan. My experience has been that if you try to help people and the replacement doesn't work as good as the original part/plan, they blame you (regardless if it was right or wrong).

                If that doesn't work, I'll explore not contributing to the plan (need to see how they are declaring this mandatory).

                If that doesn't work, I'll probably suck it up and wait until I'm partner to complain more. Even if this money was totally lost, my job would still be better/pay more than surrounding practices so I'm not willing to bail over this.

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                • #23




                  My specialty is one of the ‘support’ specialties (anesthesiology, rad, path, etc) so I am especially dependent upon contracts and workflow. If I went out on my own it would be incredibly difficult. Some other specialties in medicine are better equipped to start out on their own- I’m not.

                  I do appreciate everyone’s feedback. I’m gonna meet with the head and recommend that they have their retirement plan examined by outside experts/advisers. I don’t necessarily want to be the one to recommend something over this plan. My experience has been that if you try to help people and the replacement doesn’t work as good as the original part/plan, they blame you (regardless if it was right or wrong).

                  If that doesn’t work, I’ll explore not contributing to the plan (need to see how they are declaring this mandatory).

                  If that doesn’t work, I’ll probably suck it up and wait until I’m partner to complain more. Even if this money was totally lost, my job would still be better/pay more than surrounding practices so I’m not willing to bail over this.
                  Click to expand...


                  Im sure just not contributing will not be a big deal at all, they shouldnt care and probably wont.

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                  • #24




                    Your friends issue and the OP aren’t necessarily similar. Don’t drag that into this conversation.

                    I’m 20 years out of residency and not every practice is poorly run.
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                    Of course not, but it doesnt mean there isnt a lot of room for improvement in many, if not the majority of practices. There may not be the amount of private practices around as there used to be, so maybe those remaining are the well run ones and that may continue as the pressures are only increasing.

                    Obviously, you're on here and are a subset of doctors and those in practice that are more astute overall, this is not the norm overall though I do have hope it is improving since it has to for anyone to go private now. Kind of an opportunity for those willing to do it.

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