The clock has struck 2025, and while some are still stumbling through their New Year’s resolutions, this is your chance to make a resolution you’ll actually keep—taking your retirement plan to the next level. Think of it as a financial wellness checkup for your practice. Ask yourself: Are you squeezing every last tax-saving dollar out of your 401(k)? Could a cash balance plan be your secret ingredient for retiring with confidence? If not, it’s time to roll up your sleeves, dust off that census data, and run the numbers. Trust us, your future self (and the IRS deduction line) will thank you.
Census Data: The Foundation of Strategic Planning
Your census data is the backbone of an optimized retirement plan. Accurate and up-to-date information about your employees—including age, compensation, and tenure—allows your advisor to:
- Maximize contributions while maintaining compliance with IRS nondiscrimination rules.
- Identify opportunities to allocate profit-sharing contributions that benefit owners and key employees.
- Plan for smooth administration by tracking new hires and eligibility timelines.
Submitting this information early in the year gives you the flexibility to evaluate options, run calculations, and make adjustments without the stress of looming deadlines.
Updated 2025 Contribution Limits for 401(k) Plans
The IRS has increased 401(k) contribution limits for 2025, creating even more opportunities for tax-deferred savings:
- Employee elective deferrals: $23,500 (up from $23,000 in 2024).
- Catch-up contributions: $7,500 for participants aged 50 and older.
- Enhanced catch-up contributions for ages 60–63: $11,250, providing even more savings opportunities for those approaching retirement.
- Total contributions, including profit-sharing: $73,500 for those under 50, $81,000 for those aged 50–59, and $84,750 for those aged 60–63.
By running profit-sharing illustrations now, you can ensure practice owners and highly compensated employees (HCEs) maximize these limits while staying compliant with nondiscrimination rules.
Unlock Advanced Savings with a Cash Balance Plan
If you’re already contributing the maximum to your 401(k), adding a cash balance plan can significantly enhance your retirement strategy. These plans allow for much higher tax-deferred contributions tailored to high-income earners. For example:
- A 50-year-old practice owner may contribute over $200,000 annually to a cash balance plan.
- Contributions are determined actuarially, based on factors like age, income, and desired retirement goals.
- Early planning ensures that your practice can meet funding requirements and integrate the plan with your existing 401(k) seamlessly.
Combining a cash balance plan with a profit-sharing component allows your practice to maximize retirement savings while providing meaningful tax advantages.
Take Advantage of SECURE 2.0 Updates
The SECURE 2.0 Act introduces several provisions in 2025 that directly impact your retirement plans:
- Expanded catch-up contributions: Participants aged 60–63 can contribute an additional $11,250, significantly increasing their savings potential.
- Automatic enrollment: New plans must automatically enroll employees at a minimum of 3%, with annual increases up to 10–15%.
- Roth catch-up contributions: Employees earning over $150,000 must make catch-up contributions to Roth accounts.
Incorporating these updates into your plan design ensures compliance with new regulations and helps you take full advantage of the expanded savings opportunities.
Why Early Action Matters
Effective retirement planning is about more than just meeting deadlines—it’s about taking proactive steps to maximize opportunities. By acting now, your practice can:
- Maximize savings: Take advantage of higher contribution limits and enhanced tax-deferred savings.
- Eliminate stress: Avoid the last-minute scramble to finalize contributions or make plan adjustments.
- Customize your strategy: Early planning allows for tailored solutions that meet your practice’s unique needs.
Partner with BEAM/BGA 401(k) to Maximize Your Savings
At BEAM/BGA 401(k), we specialize in helping medical groups design and optimize retirement plans. Whether you’re exploring profit-sharing opportunities, adding a cash balance plan, or updating your plan for SECURE 2.0 compliance, our team has the expertise to guide you every step of the way.
Contact us today to review your census data, run illustrations, and create a tailored retirement strategy that works for you.
If you’d like any specific updates or additional insights for 2025, let me know!
Together, let’s elevate the way we approach retirement programs.
Christopher A. Cristallo, MBA, CFP®
Qualified Retirement Plan Advisor