The credit rate can be as low as 10 percent or as high as 50 percent, depending on the participant’s adjusted gross income. The maximum contribution eligible for the credit is $2,000. The amount of the credit is based on the contributions participants make and their credit rate. A tax credit, known as the Saver’s Credit, for certain low- and moderate-income individuals who make contributions to their plans.The credit equals 50 percent of the cost to set up and administer the plan, up to a maximum of $500 per year for each of the first 3 years of the plan. A tax credit for small employers enabling them to claim a credit for part of the ordinary and necessary costs of starting a simplified employee pension (SEP), SIMPLE or certain other types of retirement plans.The “catch-up” amount varies, depending on the type of plan. “Catch-up” rules that allow employees age 50 and over to set aside additional contributions.High contribution limits so you and your employees can set aside large amounts for retirement.In addition to helping your practice, your employees and yourself, it’s easy to establish a retirement plan, and there are additional reasons for doing so: Employee contributions (other than Roth contributions) are not taxed until distributed to the employee.Employer contributions are deductible from the employer’s income.Any Tax Advantages?Ī retirement plan has significant tax advantages: You can establish a plan even if you are self-employed. You will help secure your own retirement as well. Retirement plans may also help you attract and retain qualified employees, and they offer tax savings to your practice. As an employer, you have an important role in helping America’s workers save.īy starting a retirement savings plan, you will help your employees save for the future. So now is the time to look into retirement plan programs. Why Save?Įxperts estimate that Americans will need 70 to 90 percent of their preretirement income to maintain their current standard of living when they stop working. To help aid you in your decision, Doeren Mayhew’s dental CPAs and advisors have summarized the common retirement planning issues below. Keeping this in mind and the best interest of your staff, you need to weigh the pros and cons of making a long-term commitment to setting up an office retirement plan. More often than not, most employees of a dental office would rather see a check in their hand as opposed to money toward their retirement. Although this rule of thumb may make economic sense, there is always the intangible benefit of what you need to do to keep employees.
Does the tax saving exceed the cost of what is contributed to the employees? A good rule of thumb is if 65 percent or more of the contribution goes to the owner doctor it pays to have a plan. During this process many wonder if they should have a 401(k) or other retirement plan through their office. Today, it’s not uncommon for owner doctors to ponder the best ways to save for their retirement.
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