On this episode of the Cornerman Podcast Meagan Rutkowski and Ryan Walsh from Bull Moose are joined by Jerod Spaeth from Spaeth Barrett Group. Spaeth Barrett Group has two separate business lines - personal financial planning and business' benefit programs. Spaeth Financial Group was listed as one of the eight best 401k providers in the state of Wisconsin. Not only do they look at 401k programs, but Spaeth is also an expert in general benefits consulting and product placement for businesses and business owners.
What type of retirement plan would you start a dentist who owns their practice on?
Retaining employees is a big deal and high up on the list, especially in this environment where there might be a lot of competition for knowledgeable workers. When you get into buying a practice, and there's a debt load that might be out there and you're tempted to pay that back a little faster. Some of these plans you might want to consider, how does it impact that debt load? It's going to be up to what the priority of the dentist or business owner is. The first thing on that list is what we'll call a SEP IRA. That stands for simplified employee pension. I'm gonna bring this one up first because we see it less often, but it is an interesting concept - there's some flexibility to it. They typically worked well with closely held businesses or one-owner businesses with few employees. So if you're a dentist that is just starting, and they have one or two individuals, and maybe they're part-time, the dentist is doing a majority of the work and wants to increase their opportunity for retirement plans savings, SEP is pretty efficient. It's got a maximum contribution level of $58,000 a year or $25,000 of total compensation, whatever is less. Now the interesting thing is that we can get a bunch of dollars into a plan like that, but unfortunately, you're gonna have to give the same percentage of your employees' wage in that plan. So if you, the business owner, wants to dump in 25% of your compensation, 25% of each one of your employees' compensation has to go in that plan as well. This is all employer-based contribution. However, it's very simple to set up and administer. Like I said, for a new dentist just starting out with a low staff, but high income and wants to stock some serious dollars away, that offers a pretty compelling scenario. We see it rarely these days and it's really because of the employer-only contribution side of things. Most of our retirement plan providers want their employees to have some skin in the game to be able to make contributions and deferrals. So the SEP kind of takes a backseat, but it is available. If there's a family group of dentists it would work pretty well with that - brother-sister, father-son, father-daughter type of scenario.
Why should an individual work with a financial planner?
The big mistake was evident in 2020 when the market took a dive and people were panicking and either sold at the inopportune time, didn't invest at the right time or didn't take advantage of low-interest rates and refinance. An amalgamation of stuff happened last year where it's really important to have a trusted individual to talk to and yes, it's important to work with solid individuals, like us and yourselves as it relates to getting advice in a timely fashion. I think the real issue is that people are kind of in the middle of this. I don't care if they do it on their own, as long as they're informed and making these decisions. That's one side of the equation. Work with some trusted advisors and do it yourself, I'm sure you see the same, when you're going through, or looking at somebody that's done a TurboTax for the last couple of years, and they just didn't keep up on tax, there are certain things you can do on your own, as long as you're paying attention to them. And so I usually tell people, either go that direction, pay enough attention to it and do it on your own, or work with trusted individuals. The middle is the worst place you could be.
Disclaimer: Cash balance plans need to be set up in the fiscal year of the expected funding, but can be funded through the tax filing deadline of that fiscal year.
Find more information at http://www.bullmoosefinancial.com/ or call (414) 759-9629.
Connect with Jerod to learn more about his work and Spaeth Barrett Group here.
