By Chris Cristallo, CFP® | BEAM/BGA 401k
It is easy to get into the habit of reviewing vacation plans more often than your 401(k). But as summer slows things down a bit, it is actually a great time to revisit your retirement plan and make sure it is still working the way it should.
Here are three common mistakes we often see with retirement plans in medical practices and what to do if any of them sound familiar.
1. Sticking with a Basic Plan Design That No Longer Fits
Most practices start with a simple 401(k), often set up through a payroll provider or bundled into an early-stage HR package. That is totally fine at first. But as the practice grows, that kind of setup can start leaving money on the table, especially for owners.
If your plan only allows for salary deferrals and a basic match, you might be missing out on:
- More efficient profit-sharing options that boost owner contributions,
- Cash balance plans that can supercharge savings,
- Or ways to reduce costs for staff while increasing benefits for partners.
What to do:
Have a plan design specialist run a side-by-side comparison. Structures like new comparability profit sharing or cash balance layering can often get physicians $100k–$300k+ per year in total retirement savings, while still staying fair to employees.
2. Letting the Plan Go Unreviewed as the Practice Changes
Even a well-built plan can get outdated quickly. We regularly meet with doctors whose income has grown, who have brought on partners or new locations, or whose staff make-up has shifted, but the retirement plan hasn’t changed in years.
Red flags that your plan might be due for an update:
- Partners are not hitting the IRS contribution limits
- The plan fails compliance testing and refunds owner contributions
- Roth or after-tax features are missing
What to do:
Make a point to review the plan annually. A consultant can model updated scenarios based on your current business—so the plan continues to match your goals and tax situation.
3. Not Paying Attention to Fees or Investments
It is easy to let the retirement plan run in the background. But ignoring it for too long can lead to unnecessary fees or underperforming investments.
Common issues we see:
- Fund options with high expense ratios
- No clear documentation around investment decisions
- Recordkeeping fees that have not been benchmarked in years
What to do:
Set a reminder to do a full fiduciary review every 2–3 years:
- Compare fees against current market averages
- Review the investment menu for performance and pricing
- Make sure you have a documented oversight process
Working with a 3(38) fiduciary (like our team) can take this off your plate while reducing liability and keeping the plan compliant.
Bottom Line: Your Plan Should Evolve as Your Practice Does
You have built a strong business. Your retirement plan should reflect that same level of attention. A quick check-in can go a long way toward making sure your plan is keeping up with your success.
If you have not looked at your plan in a while, now is a good time. A few small adjustments could make a big difference for you, your partners, and your team.
We are here to help.
Reach out to us today to schedule a complimentary 401(k) plan review.
Together, let’s elevate the way we approach retirement programs.
Christopher A. Cristallo, MBA, CFP®
QUALIFIED RETIREMENT PLAN ADVISOR