You may already have a retirement plan in place for your practice and you may already be working with an advisor that you trust to advise you on what is best for your practice. Even
if this is so, it is always good to be aware of your choices. As your practice evolves and grows you may want to see how you can grow and evolve with it.
DEFINED BENEFIT PLANS: The medical professional is to receive a predetermined pension benefit at retirement and pretax dollars are contributed by the employer during the duration of employment. This is a tax-efficent way to build retirement funds. Investment strategy is primarily and typically determined by the physician-partners of the practice.
DEFINED CONTRIBUTION PLAN: (401k or profit sharing) Employer, employee or both can contribute pretax dollars to fund the plan’s investments.
SELF-DIRECTED BROKERAGE ACCOUNTS: This retirement choice gives the most freedom to physicians and employees of a medical practice. It is much more versatile than
a professionally managed portfolio, but with this freedom also comes obstacles, and therefore consulting with a financial professional can be beneficial.
With the Employment Retirement Income Security Act (ERISA) all fiduciaries are all
responsible for participants investment decisions and a medical group can be held accountable if an investment decision is made that is not agreeable to all participants. In the case of a 401(k) or profit-sharing Plan all participants are responsible for monitoring so “irresponsible” investment decisions can be caught.
