By Peter Polovsky
Retirement planning should begin on day one of your career, whether you are a practice owner or an employed optometrist. You may assume that you don’t have the financial ability to provide retirement planning options for both yourself, as well as your staff. But if you are a member of the American Optometric Association (AOA), you have access to a time-tested 48-year-old retirement planning program from AOA partner AXA Equitable.
Retirement Planning for Any Budget
A barrier to small business owners, like practice owners, in providing retirement planning for themselves and their staffs are the fixed dollar fees that many retirement planning programs charge. The AOA’s Members Retirement Program does away with that barrier by offering just a $25 per-participant entry fee into the program, and then just charges individual participants based on the amount of money they have invested. So, the practice owner just pays $25 per employee to enter his practice into the program, along with minor management fees, and after enrollment, each employee is responsible for paying their own plan fees, and those fees are never more than about 1 percent, and go down as the employee invests more money into their fund. As the employee adds money to their plan, the rate they are charged at could go down as low as .55 percent.
Tax Benefits for Practice Owners
Practices that set up retirement planning programs for their employees, which they also deposit matching funds into, are eligible for tax deductions. Let’s say you are a practice with five employees and a payroll of $100,000, and you are making a 3 percent matching contribution for each employee. The matching of the employee’s contributions by that small amount would result in about $3,000 annually in deducted corporate taxes. On an individual level, if the practice owner is 50 or over, they would be taxed on less personal income in this scenario because of the money they are matching into their employees’ retirement funds. Let’s say the practice owner contributes $24,000 altogether to their employees’ retirement funds. That’s $24,000 less that will be classified by the IRS as personal income, and, therefore, $24,000 less that they will personally be taxed on.
Turn-Key Retirement Planning Solution
Once the practice owner signs up themselves and their employees for the Members Retirement Program, and pays the one-time $25-per-employee fee, the program requires very little regular oversight from the practice owner. The monthly fee each participating employee pays, based on how much money they have invested, is automatically deducted from their account.
Employees each have an encrypted, password-protected log-in to the Members Retirement Program web site, which includes an educational platform. They can watch tutorials on how best to optimize their plan, and can even plug in their own savings and salary numbers into a retirement calculator on the site that will tell them how much they need to save before they can retire, their investment risk tolerance, and provides different investment models that would work for their unique situation. There are even live customer service reps available to talk one-on-one with practice employees.
These online tools, along with the customer service, keeps participants in the plan educated and engaged without requiring the practice owner to act as a retirement program administrator.
Recruitment & Retention Tool
Employees have a wide choice of practices where they can work. Being able, as a small business, to offer them a retirement planning program on par with those offered by much larger companies, is a great way to recruit and retain high-performing employees. When employees see that you are invested in their long-term financial well-being, they go the extra mile for you, investing more in your practice and in serving your patients.