Suggestions for a retirement plan for a medical practice

For a practice with 10 doctors, 8 nurses, 15 office staff. avg age/wage for doctors is 40/150-200k nurses 35/75k staff 35/35k.

Notes: Want everyone to be included. I was thinking a safe harbor 401(k), but I don't really understand the advantages of it. Can I get some advice?

I think you're on the right track with a Safe-harbor 401k. The problem most likely to occur with a redgular 401k is that it will become "top heavy" because there is a large disparity between the top-earning doctors and lower echelon employees. The doctors would likely max-out their contributions each year while the lower echelon contributes a small percentage of income. Soon, the plan would be deemed to be primarily for the benefit of the highly compensated employees because average account values would be disproportionate. Each year the plan will have to be "tested" for compliance and contributions of the high earners will be limtied to bring the plan back into proportion. This would add to the complexity and administrative costs of the plan.

The way around this is the "safe harbor". Unlike a traditional 401k with a match to participants, a safe harbor has a MANDATORY employer contribution of 2% or more to all ELIGIBLE employees. This means that you will match your employees regardless of their own contributions. In exchange for the safe harbor contributions, the high earner's contributions will not be limited and can be maximized.

Agreed. Because you will become a top heavy plan, your Doctors may not be happy with the level of participation allowed in the company plan. You may want to add a cross-testing feature to the plan (potentially expensive), or add a Non-qualified plan to the mix.

Agree with the above.

Decent article...Doesn't tell you all of the details, but helps you determine whether or not this is right for your practice:

http://www.investopedia.com/articles/retirement/09/automatic-401k-contributions.asp

Kenneth Besada
Associate Financial Planner
Mogul Wealth Management, Inc.
Ken.Besada@Gmail.com