What retirement plans work best for clinic owners?
A retirement plan is a tax-advantaged savings vehicle governed by ERISA and IRC Sections 401, 408, and 412 that allows pre-tax contributions, tax-deferred growth, and reduces current taxable income.
Quick answer
The best retirement plans for clinic owners are Solo 401(k) and SEP-IRA for solo practices ($70,000 to $77,500 contribution limits for 2025), and 401(k) plus Cash Balance Plan combinations for partnerships, which can shelter $250,000 to $400,000+ per partner annually.
The detail
Plan selection depends on practice structure and income. For a solo practitioner with no employees, a Solo 401(k) allows up to $70,000 in 2025 contributions ($77,500 with catch-up at age 50+), combining elective deferral and employer profit sharing. A SEP-IRA is simpler and allows up to $70,000 but only as employer contribution. For practices with non-owner employees, a 401(k) plan with safe harbor or new comparability profit sharing can disproportionately allocate contributions to owners while satisfying nondiscrimination testing. The most powerful structure for high-income partnerships is a 401(k) plus Cash Balance Plan combination. Cash Balance Plans are defined benefit plans with age-based contributions that can shelter $200,000 to $300,000+ per partner depending on age, in addition to the $70,000 401(k) limit. Total: $250K to $400K+ per partner of pre-tax retirement contributions, equivalent to $90K to $160K in federal tax savings annually for high-bracket practices.
Solo 401(k) and SEP-IRA contribution limits are $70,000 for 2025 ($77,500 with age 50+ catch-up).
Source: IRS Publication 560
Cash Balance Plans can shelter $200,000 to $300,000+ per partner depending on age and plan design.
Source: IRS Cash Balance Plan FAQs
401(k) plus Cash Balance combinations require annual actuarial certification but allow $250K to $400K+ per partner.
Source: DOL ERISA
What this means for clinic owners
From Sorso
If you are a partner in a high-earning practice and only contributing to a solo 401(k) or SEP, you are leaving six figures of annual tax savings on the table. The Cash Balance Plan structure exists for exactly your situation and is one of the highest-ROI tax moves available to physicians.
Related questions
What tax deductions are available to medical practices?
Medical practices can deduct ordinary business expenses including staff wages, rent, equipment depreciation, supplies, malpractice insurance, CME, retirement plan contributions, and qualified business income (QBI) where eligible.
What is Section 179 for medical equipment?
Section 179 lets medical practices immediately expense up to $2.5M of qualifying equipment placed in service in the tax year (for tax years beginning after Dec 31, 2024, per OBBBA — Public Law 119-21, signed July 4, 2025; $2.56M for tax year 2026 per Rev. Proc. 2025-32), instead of depreciating it over multiple years.
What is the QBI deduction for healthcare?
The Section 199A Qualified Business Income (QBI) deduction allows a 20 percent deduction on qualified business income from pass-through entities, but it phases out for healthcare specified service trades or businesses (SSTB) above income thresholds ($403,500 MFJ for 2026 per IRS Rev. Proc. 2025-32).
How do I structure a practice for tax efficiency?
The most tax-efficient practice structure typically involves an S corporation or PLLC for the clinical practice, a separate LLC for real estate, an MSO for non-clinical services, and a defined benefit retirement plan, optimized to preserve QBI and balance payroll tax exposure.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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