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    Am I too early (or too late) to implement my retirement plan?

    It's time to get an expert on opinion on how to save for your retirement.

    For those wise enough to spend time preparing for current income tax liabilities combined with planning for retirement, it is almost never too early or late to do so. Some will wait until December and others will begin as soon as possible to start the process.

    Finding the right person with the background to guide the dentist will produce results that the practitioner may not have known existed. The type of retirement plan where legal discrimination is available for the purpose of affording the owner and key personnel large benefits is a reality. These plans are accepted by the IRS when the proper paper work is filed for the approval process.

    What happens if you have procrastinated and a dental CPA has to let you know that taxes will be due in a large amount? With the entire year to prepare and without anything happening to affect a good result, is it too late near the end of December to get things processed and approved?

    Related article: Where is your retirement income going to come from?

    What you may not know is that there are only two types of retirement plans: the defined benefit and defined contribution. However, formal documents can be drafted to have the weight of the contributions shifted to the desired personnel.

    When can the plan(s) be implemented, and what must be included in them?

    A retirement plan that can defer an incredible amount of income—and is appropriate for a dental practice with few people and in which the owner is older than other employees—is a defined benefit plan. One form of a defined benefit plan is known as a cash balance plan.

    It takes a good advisor, typically a dental CPA, who knows what language needs to be included in the plan document and can articulate with the actuary so the plan will be effective in the current year if adopted by the dental practice late in the year.

    Read more: 6 consultants you need to engage to plan your retirement

    The actuary will prepare the retirement plan documents with input from the dental CPA. The dental CPA can explain what needs to be inserted, so the plan deductions assist the key people disproportionately from the other employees. Information needs to be processed quickly and it is not recommended to wait until the end of the year to do so, but it can be done.

    With this kind of retirement plan, the dental practice can get a tax deduction in the preceding year when the actual cash payment to the plan is in the succeeding year. This is known as “accruing,” the contribution. The money is due to be deposited into the retirement plan when the tax return is due, including extensions of time to file the tax return.

    Up next: More ideas that could help you plan for retirement

    Bruce Bryen, CPA, CVA
    Bruce Bryen is a certified public accountant with over 40 years of experience and is a part of RKG Tax & Business Services LLP, an ...

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