Alternative Retirement Plans for Dental Practices

When it comes to retirement plans many dentists and orthodontists may not be aware of all the available options. There are numerous alternative retirement plans for dental practitioners which are neither costly nor complicated.

A good retirement plan covers your retirement needs and also provides you with valuable tax savings. It should also help you in retaining a competent workforce.

To choose a good retirement plan, you must be aware of your options irrespective of their popularity. Traditional 401(k) and IRA accounts are well known. Hence, we will focus our discussion on other alternate retirement plans for dental practices.


Savings Incentive Match Plan for Employees (SIMPLE) IRA is a suitable option for a small dental practice. The plan is affordable to set up and maintain.

Use the forms provided by the IRS, set up the account, and notify your employees. The plan requires you to match up to 3 percent of an employee’s salary dollar-for-dollar, or you can make a 2 percent non-elective contribution to each eligible employee.

The SIMPLE IRA requires minimal administrative costs, and no annual IRS reporting is required. Your contribution to IRA is eligible for deduction as business expenses. However, the contribution needs to be made compulsorily even when the business has faced a bad year in terms of finances.

The amount an employee can contribute to SIMPLE IRA should not exceed $13500 for the years 2020 and 2021. If permitted by the SIMPLE IRA plan, a member who is 50 years of age and above can also make a catch-up contribution. The catch-up contribution limit is $ 3000 for the years 2015-2021.


A Simplified Employee Pension IRA is a good alternative for solo practitioners or dentists with few employees. In SEP IRA, only the employer can contribute for themselves and their employees.

Contribution to the SEP IRA account is tax-deductible, and the earnings are tax-free. The plan is easy to set up and maintain. Also, there are no requirements for annual filing with IRS.

The plan is extremely flexible as you can decide how much you want to contribute each year. However, the contribution percentage has to be the same for everyone, including the employer.

3) Roth 401(k)

These accounts have a tax treatment similar to Roth IRAs. The contribution to this account is made with after-tax money. Therefore, they grow tax-free, and the withdrawals are also exempt from taxes in most cases.

The contribution limit for Roth 401(k) is $19500 for the years 2020 and 2021. The catch-up contribution for participants over the age of 50 years is $6500.

4) Solo 401(k)

If you are a solo dental practitioner without any employees, a Solo 401(k) can be helpful. A Solo 401(k) can provide you the same contribution and tax saving as a traditional 401(K) account without maintaining a 401(k) account for your employees.

The plan can also cover a spouse if they are the only employee. With Solo 401(k), you get the benefits of a big plan without the cost and effort of plan administration and compliance.

5) Safe Harbor 401(k)

A safe harbor is a good option for a dentist with few employees as you can avoid the administration and compliance expense of a traditional 401(k) plan.

The employer matches 100 percent of the first 3 percent of an employee’s contribution and 50 percent of the next 2 percent. The maximum contribution limit to the plan is $19500 in the year 2020 and 2021, subject to cost of living adjustments.

These are a few of the many alternate retirement planning for dentists and orthodontists. Choosing the right one can benefit you with tax-saving and provide you with coverage for your retirement needs. The plan should also benefit your employees and hence choosing the right plan becomes quintessential.

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