Ophthalmology Business

JUL 2013

Ophthalmology Business is focused on business topics relevant to the entrepreneurial ophthalmologist. It offers editorial, opinion, and practical tips for physicians running an ophthalmic practice. It is a companion publication of EyeWorld.

Issue link: http://digital.ophthalmologybusiness.org/i/138484

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Eye on your money: Insightful answers in your interest by W. Ben Utley, CFP Question I'm a 45-year-old eye surgeon and I own my practice. This year I got nailed with a huge tax bill despite the fact that I maxed out my 401k and bought new equipment last year. I took home about $500,000 last year pre-tax. I have 10 employees who earn about $40,000 on average, and I'm carrying all of them in my profit sharing plan too. In your last column, you said that a defined benefit pension plan might save me taxes. I know there's no free lunch out there, and I've heard these plans are kind of risky. Is it true? If so, what are the risks? Or are they actually a decent deal? these plans," he said. Defined benefit plans, particularly the new breed of plans known as "cash balance plans," are often a slam dunk for high earning professionals, particularly those who already Answer Looking at the headlines these days, you might begin to believe that "pension" is actually a four-letter word. Recent data from the Pew Center on the States showed that the country's 100 largest pension plans are facing a combined shortfall of almost $1 trillion. That means employees in these plans are going to get a nasty surprise when they hit retirement age: way less money than promised. But when I spoke with a few of the nation's top "pension geeks" (that's what they call themselves), I got an entirely different impression, especially about pension plans for small business owners. "It's kind of a shame," said Michael D. Hughes, an employee retirement benefits attorney and pension guru based in St. Petersburg, Fla. "I think a lot of people are missing the boat by overlooking 12 Ophthalmology Business • July 2013 max out their 401(k) and profit sharing plan contributions like you do. The Employee Retirement Income Security Act (ERISA) calls these "hybrid" plans, said Dan Kravitz, author of Beyond the 401k, and president of his own cash balance plan design firm in

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