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FINANCIAL

tribution must be the same percentage of pay for
every employee.
• Annual contributions may be quite generous,
capped at 25% of an employee's pay or $54,000,
whichever is less.
• Contributions made to employees' accounts are tax-
deductible for your practice.

Savings incentive match plan for em- and older) of earned income in an individual retirement account
ployees (SIMPLE IRA) (IRA) or Roth IRA. Some things to keep in mind:
• With an IRA, you contribute pre-tax dollars and pay tax when
The SIMPLE IRA is designed for businesses with
100 employees or less. These are some highlights: you withdraw the funds in retirement. You can set up an IRA to
• To be eligible for a SIMPLE IRA, your practice must payroll deduct your pre-tax earnings.
• With a Roth IRA, you contribute after-tax dollars, and you
not offer any other retirement plan. withdraw funds tax-free in retirement. The IRS imposes some
• Employees may choose to contribute a percentage income restrictions on Roth IRA usage; consult a wealth advi-
sor for details.
of pay to their accounts, similar to a standard em-
ployer 401(k); your practice must contribute to all While running your own medical practice already involves a
employees' accounts. lengthy to-do list, saving for your future and helping employees do
• Employee contributions are capped at $12,500 per the same should be a priority. Luckily, with the plan options avail-
year ($15,500 per year for those ages 50 and older). able, you can get started with a minimum of effort and expense.
• Your practice must either match employees' contributions by con- More good news: as with many activities the U.S. government
tributing up to 3% of their pay OR must contribute 2% of em- wishes to encourage, the IRS offers small business owners an incen-
ployee pay to every eligible employee account, regardless of tive to set up retirement plans for employees. As long as you con-
whether the employee contributed. tribute to the retirement of at least one employee who is not highly
• Your company contributions are tax deductible. compensated, tax credits are available for establishing and maintain-
ing a new retirement plan.
Cash balance plan
A cash balance plan added to your practice’s existing 401(k) plan To ask questions or learn more about any of these options, contact
me at 210.321.7258 or gcastillo@swbc.com.
provides a way to increase retirement savings while reducing taxes.
Here’s how it works: Gil Castillo, CRPC, Wealth Advisor, SWBC Wealth Man-
• Pre-tax cash balance plan contributions are layered on top of ex- agement.

isting 401(k) contributions, allowing you to double or triple pre-
tax contributions.
• Your practice sets specific contribution amounts by employee po-
sition or group.
• Accounts are portable, and employees can roll over their accounts
to an individual retirement account (IRA) or other qualified plan
if they wish.
• Plan assets are protected from bankruptcy and lawsuits.

Options for your own retirement
When considering only your own retirement, think about a tra-

ditional or Roth IRA. Like most Americans, self-employed individ-
uals are able to save up to $5,500 per year ($6,500 for those ages 50

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