Case Study: Maximizing Retirement Savings for a Solo Anesthesiologist in Northwest Arkansas

Client Profile:

• Name: Dr. Emily Harris
• Profession: Anesthesiologist
• Location: Northwest Arkansas
• Age: 42
• Annual Income: $450,000
• Retirement Goal: Maximize tax-advantaged retirement savings while maintaining flexibility for future contributions and investments.

Background: Dr. Emily Harris is a successful anesthesiologist who has been practicing independently in Northwest Arkansas for over a decade. With her substantial income, Dr. Harris has been contributing to a traditional IRA but has realized that she is not maximizing her retirement savings potential. She wanted a retirement plan that would allow her to contribute more than what traditional IRAs permit while also offering her the flexibility to adjust contributions based on her fluctuating income.

Challenges:

1. Limited Contribution Cap: The contribution limits on traditional IRAs were not sufficient for Dr. Harris to meet her retirement goals.
2. Tax Efficiency: Dr. Harris wanted to reduce her taxable income as much as possible.
3. Investment Control: As a savvy investor, she desired more control over her retirement funds, including the ability to invest in a diverse range of assets.
4. Future Flexibility: Dr. Harris wanted a plan that allowed for varying contributions year to year, depending on her financial situation.

Solution: After consulting with Ethos Capital, Dr. Harris decided to establish a Solo 401(k) plan. This retirement plan is specifically designed for self-employed individuals and small business owners with no employees, making it an ideal fit for her.

Key Features of the Solo 401(k):

1. High Contribution Limits: In 2024, Dr. Harris could contribute up to $66,000 ($73,500 if over 50) as both the employee and employer. This significantly exceeds the limits of a traditional IRA.
2. Tax Deduction: Contributions to the Solo 401(k) are tax-deductible, reducing Dr. Harris's taxable income.
3. Investment Flexibility: The Solo 401(k) allows Dr. Harris to invest in a wide range of assets, including stocks, bonds, mutual funds, real estate, and more.
4. Loan Option: The plan includes a loan provision, allowing Dr. Harris to borrow up to 50% of her account balance, not exceeding $50,000, for emergencies or opportunities without tax penalties.
5. Catch-Up Contributions: Being over 50, Dr. Harris could take advantage of catch-up contributions, adding an extra $7,500 to her account annually.

Results: In the first year, Dr. Harris maximized her Solo 401(k) contributions, contributing $66,000, which significantly reduced her taxable income. This move not only advanced her retirement goals but also offered immediate tax savings. With her robust income and strategic contributions, Dr. Harris is on track to accumulate over $2 million in retirement savings by age 60, assuming a conservative annual growth rate of 6%.

The flexibility of the Solo 401(k) also allowed Dr. Harris to adjust her contributions during a year when she decided to take more time off for personal reasons, without the pressure of a fixed contribution requirement.

Conclusion: The Solo 401(k) has proven to be an excellent retirement vehicle for Dr. Emily Harris, offering her the high contribution limits, tax advantages, investment control, and flexibility she needs. By aligning her retirement strategy with her professional success, Dr. Harris is well-positioned for a comfortable retirement, free from financial concerns.

Ethos Capital's Role: At Ethos Capital, we specialize in creating tailored retirement solutions for high-income professionals like Dr. Harris. Our approach focuses on maximizing tax efficiency, providing investment flexibility, and ensuring long-term financial security.

If you're a solo practitioner or self-employed professional looking to optimize your retirement savings, let’s discuss how a Solo 401(k) can work for you. Connect with your solo 401K guide here: Solo 401K Virtual Call Scheduler #Solo401kSuccess #PhysicianRetirement #AnesthesiologistWealth#RetirementPlanning#TaxEfficientInvesting#WealthManagement#FinancialFreedom#SelfEmployedSuccess#HighIncomeStrategy#NorthwestArkansas#SmartInvesting#FutureProofFinance#EthosCapital#SecureYourFuture#PhysicianFinance Debbie Northington