Retirement Savings Plan Options for Optometrists

May 12, 2021
Discover the retirement savings plans that are available to you as a doctor of optometry.
Hand drawing an orange bar graph beneath the heading 'Retirement Plan' in a journal on a wooden desk.

It’s never too early or too late to start saving for retirement – so why not start saving now? Starting now can help you secure the financial future you’ve been working hard for. We know that choosing the best retirement plan for your personal circumstances isn’t always easy, so we’ve put together a list of some of the retirement savings plan options available to doctors of optometry.

Options for the OD working as an employee of a practice:

  • Employer-offered 401(k) plan – Participating in your employer’s 401(k) plan lets you choose your contribution amount, up to the federal maximum, with the freedom to change your contribution at any time. Contributions are deducted from your salary before income taxes, so taxes are deferred until you withdraw the money, typically when you're retired and often in a lower income tax bracket.
  • Traditional Individual Retiring Arrangement (IRA) – An IRA can be a good choice if your employer does not offer a retirement savings plan or you are concerned that a 401(k)’s contribution limits will not meet your savings goals. Contributions may lower your taxable income, and earnings grow tax-deferred until withdrawn, usually at retirement when you may be in a lower income tax bracket.
  • Roth IRA – With a Roth IRA you make contributions with money you’ve already paid taxes on. This allows your savings to grow tax-free, so you can make tax-free withdrawals in retirement provided the stipulated conditions are met

Options for the OD who is a practice owner with eligible employees:

  • Safe Harbor 401(k) – For 2021, Safe Harbor 401(k) plans offer a deferral of up to $19,500, regardless of employee participation levels, and $26,000 for those aged 50 years or older. Employers are required to contribute yearly but can bypass discrimination testing.
  • Traditional 401(K) – Offering flexibility and higher contribution limits, these plans require greater administration than a SIMPLE or Safe Harbor 401(k). A traditional 401(k) can incentivize long-term employment by adding allocation conditions and/or a vesting schedule to match contributions.
  • SIMPLE 401(K) – A SIMPLE 401(k) gives small practices an affordable way to offer retirement benefits to employees. Employee participation is not required, giving the owner more control over contribution amounts.
  • New Comparability 401(k) - A New Comparability 401(k) plan helps small practices maximize owner contributions up to the legal limit by allowing employers to allocate contribution rates to different employee groups.
  • Simplified Employee Pension (SEP IRA) – With flexible annual contributions, employer-funded SEP IRAs provide employers with a simpler way to make retirement contributions for themselves and their employees.
  • Cash Balance - While traditional defined benefit plans provide for a specific benefit at retirement, a cash balance plan provides the benefit at retirement in the form of an account balance.

Options for the OD working as an independent contractor or a practice owner with no qualifying employees:

  • Owners 401(k) plan – Owners 401(k) plans can be inexpensive to set up and provides you the flexibility to decide each year whether or not to contribute, as you are not limited by employee contribution restrictions as you would be by a traditional 401(k) plan.
  • Cash Balance - While traditional defined benefit plans provide for a specific benefit at retirement, a cash balance plan provides the benefit at retirement in the form of an account balance.

Choosing the best retirement savings plan option doesn’t have to be complicated. Complete this form to connect with AOAExcel’s endorsed retirement program specialists, Equitable, to receive a complimentary financial review and identify the best retirement savings plan option to meet your savings goals.

Please be advised that this article is not intended as legal or tax advice.  Accordingly, any tax information provided in this article is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.  The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.

Issuer:  Equitable Financial Life Insurance Company, NY, NY.

Equitable is the brand name of the retirement and protection subsidiaries of Equitable Holdings, Inc., including Equitable Financial Life Insurance Company (NY, NY); Equitable Financial Life Insurance Company of America, an AZ stock company with main administrative headquarters in Jersey City, NJ; and Equitable Distributors, LLC. Equitable Advisors is the brand name of Equitable Advisors, LLC (member FINRA, SIPC) (Equitable Financial Advisors in MI & TN). The obligations of Equitable Financial and Equitable America are backed solely by their claims-paying abilities.

GE-3588981(5/21)(Exp. 5/23)

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