Physician Bonus

Physicians are disproportionately exposed to high taxation and qualified plan limits, causing a large retirement income gap that requires them to search out alternate ways to save for retirement. One of the attractions of qualified plans is the tax-advantaged savings they allow. An evaluation of the alternate savings strategies reveals four points at which taxes can impede upon savings.

Four Points of Taxation:

  1. Upon Earning - income taxes
  2. During Growth - capital gains on investments
  3. Upon Withdrawal - at time of distribution
  4. Upon Death - transfer, inheritance and estate taxes.

Taxation points applicable to common savings options:

  • Annuities: 1, 3 & 4
  • Brokerage Account:  1, 2, 3 & 4
  • Municipal Bonds: 1, 3 & 4

 

That’s why we’ve created the Physician’s Institutional Life Legacy (PILL) Program.

It is a nonqualified plan that uses institutional insurance as a funding vehicle to allow tax-deferred supplemental retirement income.

  • Taxation Points for PILL Program:  1

 

 

How the PILL Program Works

  • Healthcare organization sponsors the Plan to purchase a Life Insurance Policy owned by employee.
  • Guaranteed Issue may be available.
  • Contributions and eligibility are discretionary.
  • Physicians recognize Healthcare organization’s contributions as current income. (Healthcare organization can gross-up the bonus amount to offset tax liability.)
  • Physicians can contribute to the plan.
  • Contributions grow tax deferred and can be withdrawn tax free through surrenders and loans.
 

Benefits for Physicians

  • Not subject to IRC 409A or 457.
  • Tax deductible contributions.
  • Simple administration.
  • Discretionary eligibility.
  • No contribution limits.
  • Limited Golden Handcuffs through restrictive agreements and contribution timing.
 

Benefits for Healthcare Organization

  • Not subject to IRC 409A or 457.
  • Tax deductible contributions.
  • Simple administration.
  • Discretionary eligibility.
  • No contribution limits.
  • Limited Golden Handcuffs through restrictive agreements and contribution timing.