Is Your Plan Running On All Cylinders? Just as your patients need regular check ups to maintain good health, so does your retirement plan. Take a few minutes to assess the following aspects of your plan. Be certain it is providing maximum benefit and tax shelter. 401(k) Plans Do you have a 401(k) plan? A 401(k) can streamline employee cost, provide higher funding levels for those age 50 and up, and make available the new Roth feature. You can easily add a 401(k) provision to your current pension/profit sharing plan. Does your 401(k) plan use the Safe Harbor feature? The safe harbor guarantees doctors can fund the maximum deferral. This is helpful since generally employees do not make high contributions from their pay, which prevents the doctors from maximizing their deferrals; however, with a safe harbor plan discrimination testing is not a problem. Have you adopted a Roth 401(k)? Introduced in 2006, the Roth 401(k) allows tax-free withdrawals on all future earnings. How do you handle participant direction of investment? Most 401(k)s allow employees to choose how their funds are invested. Do your employees understand their choices? Are they receiving information to help make their choice? Profit Sharing and Pension Plans Can new comparability (cross-testing) help your plan? Generally, profit sharing allocations must not discriminate in terms of contributions or benefits. However, testing on the basis of benefits often provides a much higher profit sharing rate for the doctors when they are somewhat older than their staff on average. Usually, the larger the group, the easier it is to pass testing on a benefits basis, resulting in a reduced cost for staff. Across the board staff cost reductions enable clients to target the savings to provide other employee benefits such as health insurance, staff raises, and bonuses. Have you considered a defined benefit plan? If you’d like to fund beyond the current limits, consider a defined benefit plan perhaps combined with a 401(k). Generally, defined benefit contributions can be as high as needed to fund an annual retirement benefit of $185,000 as of 2008. However, a careful review is needed to determine your specific limitations and related staff cost. *Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/Dealer, Member FINRA/SIPC and a Federally Registered Investment Advisor. NFP Securities, Inc. is not affiliated with Clayton L. Scroggins Associates, Inc. or Scroggins Financial Services, LLC. NFP Securities, Inc. does not provide legal or tax advice. Tax services are provided through Clayton L. Scroggins Associates, Inc. Clients must consult with their own legal and tax advisors. Any federal tax advice given is not intended or written to be used, and cannot be used by you or any other person, for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Code. Representatives of Scroggins Financial Services are licensed to conduct Securities business in the following States: GA, IL, IN, KY, OH.