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News & Press: Annual Conference Speaker Spotlights

Benefit Planning 101

Wednesday, February 5, 2020   (0 Comments)
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Written for AAOE by David Mandell, JD, MBA, Partner at OJM Group

Learn more by attending David Mandell's AAOE 2020 Annual Conference Session, "Benefit Planning 101: What You Must Know about Retirement Plans to Maximize Tax Benefits and Stay out of Trouble".

Qualified and Non-Qualified Plans:

Why AAOE Practices Should Consider Both

In our work with more than 1,000 physicians and medical practices across the country, we have observed that the Number 1 financial goal for nearly all physicians is to achieve a financially secure retirement. Many physicians attempt to reach this goal using just one of the tools at their disposal – a qualified retirement plan (QRP) – while many are completely unaware of another tool they could be using– a non-qualified plan (Non-Q Plan). 

Qualified Plan Basics

The designation QRP means that the plan meets the definition of a retirement plan under U.S. Department of Labor and Internal Revenue Service rules created under the Employee Retirement and Income Security Act (ERISA).  A QRP may be in the form of a defined benefit plan, profit sharing plan, money purchase plan, 401(k), or 403(b).  Properly structured plans offer a variety of benefits:  You can fully deduct contributions to a traditional QRP, funds within the QRP grow tax-deferred, and (if non-owner employees participate) the funds within a QRP enjoy superior asset protection.  QRPs also present a host of disadvantages that physicians and practice administrators should understand:

  • Mandated maximum annual contributions for defined contribution plans
  • Mandatory participation by employees
  • Potential liability for management of employee funds in the plan
  • Controlled group and affiliated service group restrictions
  • Penalties for withdrawal prior to age 59½

Despite these and other disadvantages, nearly all U.S. physicians participate in traditional QRPs.  The tax deduction and the tax-free growth are valuable incentives.  If using a QRP, there are several key success factors for a practice to implement in order to maximize the value of the QRP.  While a full description is beyond the scope of this short blog, they range from benchmarking costs and advantageous funding formulae to often under-utilized defined benefit plans.

Non-Qualified Plan Basics

Non-Q plans can be valuable retirement tools for many physicians and medical practices.  Because these plans are not subject to QRP rules, Non-Q Plans do not have to be offered to any employees.  Further, even among the physician-owners, there is total flexibility. For example, one doctor can contribute a maximum amount, the next partner could contribute much less, and a third physician could opt out completely.

The main drawback to Non-Q Plans is that contributions are never tax deductible. However, they can be structured for tax-free growth and tax-free access in retirement, like a Roth IRA. 

In fact, a Non-Q Plan can be an ideal long-term tax hedge against a QRP.  Beyond these general ground rules, there is tremendous flexibility and variation with Non-Q Plan designs.  Consider that they have the following attributes:

    • No limitations on contributions as with QRPs
    • Can be implemented in addition to any QRP, such as a 401k or profit-sharing plan
    • Owners/partners can vary in how much or whether they participate
    • Employee participation is not required
    • No tax deduction on contributions, but funds can grow tax-free and be accessed tax-free upon withdrawal
    • Top asset protection in many states


To learn more about benefit plan options for orthopaedic practices, visit OJM Group in Booth #816 at the AAOE Annual Meeting in Austin and plan to attend David Mandell's session:

Benefit Planning 101: What You Must Know About Retirement Plans to Maximize Tax Benefits; Monday, May 4, 8:30 - 9:30 AM

In the meantime, text AAOE20 to 555-888 to receive special offers for AAOE members or click here request or download free copies of our books.

© Guardian Publishing


About the Speaker

David B. Mandell, JD, MBA is an attorney and partner in the nationally-known financial consulting firm OJM Group. Mandell is an author of more than ten books, including Wealth Protection Planning for Orthopaedic Surgeons and Sports Medicine Specialists. Mandell has spoken at numerous regional and national conferences, including the AAOE; and has also appeared as an authority on television, including Fox and Bloomberg TV. Mandell holds a bachelor's degree, with honors, from Harvard University.  His law degree is from the UCLA School of Law, and he also earned an MBA from UCLA’S Anderson School of Management.

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