| A leading radiology group in Southern California was enjoying profitability. The doctors in the radiology practice were on the cutting-edge of their field practicing all aspects of their specialty including all modalities of imaging, interventional radiology and the latest biopsies and testing.
The partners wanted to save on taxes and defer more money into their retirement plans. They were contributing about $40,000 annually but wanted to do more. Their retirement plan consultant was unable to offer any solutions so the group decided to go on the hunt for solutions.
Things started coming together over lunch in 2003. One of the physicians active on the retirement committee attended the annual Pension Seminar hosted by Kravitz. After hearing the speech on Cash Balance Pension Plans, he insisted on having lunch with the speakers, Dan and Lou Kravitz, that very day. They discussed the merits of a Cash Balance Plan for a medical group and how it could dramatically boost the physician's savings.
The group then asked Kravitz to overhaul its pension program. Kravitz designed a Cash Balance Plan that would allow shareholder-doctors to have up to $100,000 or more contributed into their pension plan. This plan was combined with the plan they had in place at the time. While not all physicians are in the plan, those that are have seen their contributions in the Cash Balance Plan and the 401(k) Profit Sharing plan boosted by over 100%.
Illustration of Retirment Plan Options for 2007
|
|
Compensation
(IRS limit) |
401(k)
Plan |
Profit
Sharing Plan |
Cash Balance
Plan |
Total Max
Contribution |
9 Doctors
(50-60) |
$225,000 |
$20,500 |
$12,000 |
$0 to
$175,000 |
$207,500 |
12 Doctors
(40-49) |
$225,000 |
$15,500 |
$12,000 |
$0 to
$125,000 |
$152,500 |
5 Doctors
(30-39) |
$220,000 |
$15,500 |
$12,000 |
$0 to
$76,000 |
$103,500 |
4 Doctors
(30-60) |
$220,000 |
$15,500 |
$12,000 |
$0 |
$27,500 |
| Subtotal |
$6,705,000 |
|
$4,325,000 |
|
|
| 50 Employees |
|
7.5% of pay |
$500 each |
|
| 50-60 |
$2,000,000 |
their discretion |
$150,000 |
$25,000 |
$175,000 |
| Total |
$8,705,000 |
|
$4,500,000 |
|
|
Percent to Doctors: 96%
|
