Retirement Plans for Doctors and Dentists: Which One Is Right for Your Practice?
- Aug 25
- 2 min read
Updated: Aug 27
As a doctor or dentist, you work hard to build a thriving practice while caring for your patients. But planning for your own financial future is just as important. One of the best ways to lower your tax bill while building long-term wealth is by opening a retirement plan through your practice. At ISTAXPro, we provide accurate bookkeeping and tax return preparation for doctors and dentists, ensuring your retirement plan contributions are tracked correctly while aligning with your practice’s cash flow and tax strategy.
Why Retirement Plans Matter for Doctors and Dentists
●Reduce taxable income while saving for the future
●Help attract and retain staff with benefits
●Build a structured savings plan for retirement
●Maximize tax efficiency during high-income years
Common Retirement Plan Options for Practices
1. SEP IRA (Simplified Employee Pension)
● Easy to set up and maintain
● Employer contributions only, up to 25% of compensation, with a maximum contribution limit ($69,000 for 2025)
●Flexible contributions (you can decide each year whether to contribute)
Best for: Solo practitioners or small practices wanting flexibility without complex administration.
2. Solo 401(k)
● Designed for practices with no full-time employees other than the owner and spouse
●Allows for employee deferrals up to $24,500 (or $31,500 if age 50+) plus employer contributions up to 25% of compensation
●Higher contribution potential compared to SEP IRA for many high-earning doctors
Best for: Solo practices seeking to maximize contributions and tax savings.
3. SIMPLE IRA
●Allows both employer and employee contributions
●Employee deferral limit of $17,000 for 2025 (plus catch-up if 50+)
●Employer must match up to 3% of employee compensation or provide a 2% nonelective contribution
Best for: Small practices with a few employees seeking a low-cost plan with employee participation.
4. Cash Balance Plan
●A type of defined benefit plan allowing much higher contributions, often exceeding $100,000 annually depending on income and age
● Contributions are tax-deductible to the practice
● Requires actuarial calculations and ongoing plan administration
Best for: High-earning doctors and dentists seeking to maximize pre-tax retirement savings and reduce taxable income significantly.
Key Considerations When Choosing a Plan
● Your practice’s cash flow and profitability
●Whether you have employees and your goals for providing benefits
● Your desired level of annual contributions
● Administrative costs and plan complexity
●Alignment with your long-term retirement and tax strategy
Why Clean Bookkeeping Matters
Accurate, organized books ensure:
●Retirement plan contributions are tracked correctly
●Contributions are recorded for accurate tax filings
●Your practice’s cash flow can support your chosen plan
●You avoid missed deductions and compliance issues
How ISTAXPro Supports Your Retirement Plan Strategy
At ISTAXPro, we help doctors and dentists:
●Maintain clean, accurate books using QuickBooks
●Track retirement plan contributions accurately
● Align retirement contributions with your tax planning strategy
●Prepare compliant tax returns that reflect your practice’s benefits and contributions
Plan for Your Future While Lowering Your Taxes
Opening the right retirement plan through your practice can help you save on taxes, invest in your future, and maintain financial health for your practice.
Contact ISTAXPro today to ensure your books and tax filings are prepared accurately, so you can confidently
build your retirement savings while focusing on patient care.
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