The Structure of a Successful Practice

A well-balanced financial plan hinges on determining the business structure that best suits your practice. Selecting the most appropriate structure allows doctors to effectively protect their assets, maximize allowable income tax deductions and create the most effective retirement plans.

Are you interested in deducting long-term care, disability or life insurance premiums? Then perhaps a “C” corporation structure is your best option. These and other considerations are measured by the Chestnut team to help you make the optimum business structure determination.

Structuring a Well-Defined Retirement Plan

Within this foundation of sound practice structure, our in-house staff of Pension Services specialists work to craft your customized retirement plan. The Chestnut team is comprised of a meticulously assembled group of financial and pension professionals to help our clients with plan design and qualification issues, counting on legal counsel with extensive ERISA experience and actuarial resources well versed in large and small defined benefit plans. Their expertise enables doctors to take full advantage of the tax law changes enacted in 2001 and 2003 under The Economic Growth and Tax Relief and Reconciliation Act, commonly known as EGTRRA, as well as the Pension Protection Act of 2006.

These changes can dramatically increase doctors’ retirement savings opportunities and remove restrictions that previously reduced such accumulations contained within other qualified retirement plans. In our opinion, this important regulatory and policy shift has resulted in an unprecedented opportunity for doctors to boost pre-tax deductions to a qualified retirement plan—and Chestnut is poised to assist you in this regard.

How? The Chestnut team has the expertise to show qualifying doctors how to contribute up to $200,000 or more per year of tax-deductible net practice earnings to IRS-approved retirement plans. This translates into the ability to contribute tax-deductible dollars to build more than $2 million in pension plan assets over a 10-year period.

Expertise On Call

Chestnut pension specialists are committed to ensuring that defined benefit plan presentations offer results that adhere to the rules of the Internal Revenue Code. On the defined contribution side, Integrated, New Compatibility and Traditional Plan designs are all explored to deliver the most appropriate recommendation for each individual client.

The Chestnut team can strategically help doctors optimize practice structure and discover opportunities the tax code offers to take control of your retirement by sponsoring a retirement plan through your practice, including convenient access to fidelity bond and fiduciary liability plans for ERISA-based qualified plans.

*Fidelity bonds and fiduciary liability plans are offered through Colonial Surety Company, a carrier duly licensed to underwrite the products offered. Chestnut is not licensed to provide these services directly. While Chestnut has reviewed the coverage provided through Colonial Surety, no representations are made by Chestnut or it’s affiliates regarding the appropriateness or terms of coverage provided. You must rely on the terms of coverage disclosed, including any exclusion or limitations disclosed by Colonial Surety.

The Economics of Successful Practice Transitions

A professional practice is often a doctor’s most valuable asset. And while transitioning a practice is a certainty for most dentists and physicians, not all transitions will be successful. Waiting until near retirement to begin the process can be a costly mistake, resulting in $1,000,000 or more in lost income. Transitioning a practice without understanding why, when and how to integrate a transition plan with all of the vital components of your practice structure can result in unnecessary taxes and other inefficiencies.

Receiving Economic Value from Professional Practice Equity

Chestnut recommends beginning the process between the ages of 45 and 55, allowing a doctor to capitalize on incremental income available from the sale of fractional interests over 10–20 years of his or her professional career.

We have found this approach results in a more gradual transition with less risk and drives greater income, enhancing a doctor’s ability reach financial independence sooner.

Fractional Sale Practice Transition—A Winning Process

The income difference between waiting to transition a practice at retirement and beginning the transition process in your mid-40s can be significant. Consider the following example of a fractional sale practice transition compared to a traditional full sale transition.