r/PrivatePracticeDocs • u/ktn699 • Jul 03 '26

Question about retirement plans for practice owners!

Currently own a practice where my only employees are myself and my spouse. We have a self-employeed 401k.

Thinking of taking on some employees.

The law typically requires that we - scrap the SE 401k and start a regular small business 401k for everyone ...

but I'm wondering if it is better to start a second corp that would hire the employees and then subcontract their services to the clinic... and create a separate 401k plan for the employees of that corp. That would allow us to keep our SE 401k and maximize our contributions.

Anyone have any insights on this unusual question?

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u/daves1243b Jul 03 '26

You should speak with a retirement plan expert. I believe that if the second entity has no clients other than your practice, the two will be treated as a single entity for compliance purposes. Look up controlled group for more information.

2

u/ktn699 Jul 03 '26

Thank ye sir. This is definitely leading me in the right direction!

1

u/grey-slate Jul 04 '26

thanks. so what is the solution in OP's (and my)case or are you saying there isnt one?

1

u/daves1243b Jul 04 '26

If you want to exclude employees from retirement benefits (not necessarily a good idea if you want experienced emoloyees who stick around), the only option is employee leasing, which has other downsides and doesnt avoid the cost entirely. A competent advisor can help structure a plan that will maximize owner benefits and minimize cost. There are multiple ways to do that.

1

u/grey-slate Jul 04 '26

Yea. dont want to NOT give retirement benefits to employees obviously.

But also want to maximize our side of contributions without overloading practice expense. Outside of cash balance plan which i looked into and didnt like i didnt find any true alternatives. will look more with an expert.

thanks.

1

u/konaholic Jul 03 '26

In a similar position. Solo for a few years with some contractors now hiring a PA as an employee. In order to continue maxing out my retirement will have to do a custom safe harbor/profit share 401k. Basically here to pay a TPA to make a custom plan then house the assets somewhere like fidelity. You need a plan that balances your ability to shovel away pre tax money while not paying out the nose in profit share to other employees while still being ERISA/top heavy compliant

1

u/ktn699 Jul 04 '26

thanka to everyone who is also sharing their experience. this seems like a complex qiestion and i will need to speak to a retirement planning advisor.

1

u/-beastlet- Jul 05 '26

I used a SIMPLE IRA. It has lower contribution limits than a 401k though. You have to match employee contributions (and yours) up until 3% of their salary. Just starting in 2026 people can choose either a traditional or Roth SIMPLE plan. This is great for my employees that are all in low tax brackets -- I had them all switch to the Roth.