Physicians can "catch up" on retirement funding

    /24-7PressRelease/ - KEEGO HARBOR, MI, February 17, 2007 - A group of Financial planners including Keith L. Mohn, CLU, CHFC (www.benefitsolutionsgroup.biz) have a goal to help doctors with financial planning so doctors can focus on patients yet retire comfortably.

"Two doctors with the same specialty, same income," says Mohn, "often have two different retirement incomes. Three reasons. First, is whether or not a devastating incident occurred--like a lawsuit or divorce. Second, poor investing -- an ill conceived limited partnership, medical center or real estate endeavor. Third is non-attention to taxes." Mohn and other financial professionals have addressed points one and two in their book Wealth Protection, M.D. Now they focus on reducing taxes.

Most physicians have traditional retirement plans (IRA, profit sharing, money purchase, 401(k)), but fail to take advantage of better nontraditional tax reduction strategies. Big mistake. Investing after tax earnings means paying on realized gains, interest and dividends. In states where half of earnings can go to taxes and twenty to fifty percent of investment gains are taken by the IRS, it's no wonder that even "high earning physicians" can't save enough for retirement.

Mohn and the book's co-authors say what to do to ensure sufficient retirement funds:
• Reduce income taxes
• Grow tax-deferred investments
• Make earnings accessible on a tax-free basis.

"Catching-up" is allowed
The IRS allows doctors to "catch-up" on retirement savings, even if the plan balance is low because of a lawsuit, divorce, poor investment decisions, or just a late start.

Physicians over 45 can make significant tax-deductible contributions. $75,000 to $100,000 for doctors under age 50; and over $400,000 for qualifying 60-year-olds. At these levels, a doctor can catch up fast.

Flexibility
Qualified plans require inclusion of employees in retirement plans. And that can hurt. But Non Qualified (NQ) plans are flexible -- some aimed at long-term retirement benefits and tax reduction for key employee(s); others aimed at non-compensation. The biggest benefit is that NQs need not be offered to employees, reducing costs. There are no penalties for withdrawals prior to 59 and few compliance requirements.

Popular NQ Plans
While there are many plans to consider, here are the most popular (www.benefitsolutionsgroup.biz.)

1. Compliant Split Dollar Plans
Most Fortune 1000 companies compensate key executives with some type of split dollar plan. Because of recent IRS changes, advisors mistakenly believe that these plans are "dead." Not true.

"Under the new rules," says Mohn, "it's more difficult for public companies to implement them. But, for private businesses, including medical PCs, these plans are timely, given the current low interest rates. Physicians can take advantage of low rates affecting taxes on the structure, and enjoy significant wealth accumulation without offering it to employees.

2. Asset Protection Plans
While the main goal of an NQ is asset protection, retirement tax benefits are substantial. Popular are plans that asset-protect a practice's accounts receivables (AR). AR is leveraged (in some cases sold). Tax benefits include tax deduction of the loan interest, plus creation of an NQ investment fund with loan proceeds for the benefit of participating physicians. AR can be "leveraged" to provide further retirement benefits for participating physicians, or to fund a buy-out for retirees. Here, it is crucial that both asset protection and tax issues be properly negotiated. There are significant pitfalls in 90% of the plans Mohn has reviewed. Physicians can visit www.benefitsolutionsgroup.biz.

3. Outside Vendor Plans
NQ plans involving outside vendors are rare--like one in which the vendor purchased AR (as above), plus provided consulting services and even business lending. Transactions must be independently evaluated by the physicians and are often extremely beneficial to the practice. The practice engages an outside firm to provide one of the above services, and as an incentive, the firm offers a NQ plan as well. These plans can be a double win -- getting services needed to run the practice, and achieving significant NQ retirement benefits.

Keith L. Mohn, CLU, CHFC is a financial consultant and lecturer and President of Benefits Solutions Group, LLC, in Keego Harbor, a full service financial consulting and planning firm specializing in high net worth individuals, business owners and medical professionals since 1983. Mohn is a member of The Wealth Protection Alliance. For more information, call 248-681-9320 or email [email protected]


Contact:

Adrienne Lenhoff Wise
248-366-0388
[email protected]

# # #