Even though it is only August, it is a good time for freelance doctors to begin to get together a plan to save the maximum amount possible on their 2016 tax bill by starting and funding a defined benefit pension plan.
Because many locums . . .
- Are independent contractors
- Have high income from self-employment
- Have few to no employees
- Have few deductible expenses
- And pay a high rate of tax on their income. . .
they are in an excellent position to cut their taxes while accelerating their retirement savings by setting up a customized, high-contribution retirement plan.
Many locum tenens can make tax-deductible contributions in excess of $100,000, and thereby slice nearly $40,000 off their 2016 tax bill.
The most important date for locum tenens to keep in mind is December 31, 2016. This is the deadline by which a defined benefit plan has to be established in order for it to be able to receive tax-deductible contributions for tax year 2016. The plan does not need to be funded, however, until the individual’s filing deadline, including extensions.
It is a good idea to get a plan in place early, as many pension actuaries are very busy in the final months of the year. In our view, it is prudent for locums to get their plans established by October 1, 2016 to get ahead of the year-end rush.
Provide us a few pieces of information about your specific situation and we will generate a complimentary tax savings proposal for you within 48 hours.
At Locum Tenens Tax Strategy, we specialize in constructing customized retirement plan solutions designed to maximize a physician’s tax savings while rapidly building his/her retirement nest egg. Read more about defined benefit plans here.
Photo credit: 401(K) 2013 via Foter.com / CC BY-SA