Locum Tenens: Here’s Your Best Tax Move

Many locum tenens physicians earning high income from self-employment have a tremendous tax-saving opportunity available to them – and most know nothing about it.

Defined Benefit: A Powerful Saving Plan

Self-employed professionals are eligible to make very large annual, tax-deductible contributions to an IRS-approved qualified retirement plan called a defined benefit (DB) plan. In many cases, they can contribute $100,000 or more annually to a defined benefit plan—and save $40,000+ in taxes every year. At the same time, they are be rapidly building a substantial retirement nest egg.

Or, said another way, doctors who are eligible for a defined benefit plan but do not move to establish one before the December 31 deadline may needlessly be paying tens of thousands of dollars more in 2017 taxes than they need to.

save on taxes, retirement plan tax savings

Is It Too Good To Be True? No.

When we first start going into the details of defined benefit plans with people who are good candidates for them (individuals who have high income from self-employment), we often run into some skepticism. How, they ask, can it possibly be legal to make a $100,000+ tax-deductible contribution to a retirement plan and save $40,000 or more in taxes annually? And why haven’t I heard about this plan before?

Well, it is possible and it is legal, and locum tenens with high income from self-employment would be wise to familiarize themselves with the potent tax advantages that DB plans offer. In fact, people that are good candidates for DB plans but that are not currently contributing to one are usually paying tens of thousands of dollars more in taxes each year that they need to.

It is true there is not that much information out there about DB plans. Perhaps the main reason is that DB plans are not suitable for 98% of the population. For writers covering financial topics, it is far easier to generate greater interest with an article on a topic such as a 401(k), which is relevant to a broad swath of the population. Why write on a topic as esoteric and specialized (and boring sounding) as a defined benefit plan?

Defined benefit plans have been around for decades, however, and are IRS-approved. In many ways they are like an Individual 401(k) Plan on steroids. They are perhaps the most powerful financial tool for high-earning self-employed individuals looking to both save on taxes and to rapidly build a large retirement account. If you are self-employed and face a large tax bill each year, we recommend that you find out if you are one of the lucky 2% of the population that can take advantage of a DB plan. You can find out if you qualify here: Is A Defined Benefit Plan Right for You?

There are a couple of things about DB plans you should know at the outset. First, because each DB plan is created specifically for a certain person’s circumstances, it costs money to set up and to administer. Also, DB plans are a bit more of a commitment than 401(k)s or SEP-IRAs, both of which do not require annual contributions. The drawbacks of DB plans, however, pale in comparison to the significant tax savings they can enable.

Will A DB Plan Work For You?

Is a defined benefit plan right for you? We only need a few pieces of information about your situation to generate a complimentary tax-savings proposal for you. There is no cost to you for this service and no obligation whatsoever. If you do find that a DB plan works for your situation, you will have to move quickly if you want to save on your 2017 tax bill. Plans must be established by December 31 of the year for which contributions are made. However, it takes time to create the plan documents, and pension administrators are incredibly busy in the last couple of months of the year. Thus, it is best to begin the process of establishing your plan no later than November 1st.

Use our Tax Savings Analysis Tool online or contact me directly at: 619-435-1701 or thoms@orioncapitalmgmt.com.

We will ask you for just the few pieces of information listed below and get back to you in 48 hours with a preliminary proposal that will outline how much in tax you could save each year by establishing and contributing to a defined benefit plan.

Business Entity Type (e.g. S-Corp, sole prop., LLC)
Owner’s Annual Income
Date Business Started
Owner’s Age
Number of Employees

You work hard for what you earn and you owe it to yourself to find out if you could be save more of what you earn and investing more of it in your future.




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Peter C. Thoms, CFA

About the author

Peter Thoms founded Orion Capital Management LLC in April 2002. Peter has an extensive background in crafting investment solutions for high-income clients in a wide variety of circumstances. He has a passion for helping clients to protect their hard-earned income and does do by structuring customized retirement and investment strategies to minimize clients' tax burden while accelerating their retirement savings.