A Powerful Tax Cutting and Retirement Savings Strategy for Locum Tenens

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1 A Powerful Tax Cutting and Retirement Savings Strategy for Locum Tenens Putting a Defined Benefit Pension Plan to Work for You 1

2 Locum Tenens Have a Powerful Tax and Retirement Savings Opportunity Locum Tenens physicians may be able to: Save tens of thousands in taxes every year, and Rapidly build a large retirement nest egg How? 2

3 Locum Tenens are Uniquely Positioned Locum Tenens are in prime position to take advantage of the tax-saving and nest egg-building advantages of Defined Benefit Plans Why? Because Locum Tenens usually: Are independent contractors with no employees Earn high taxable income Have minimal expenses to offset taxable income Are in demand, and can rely on steady work to fund their plan contributions 3

4 What is a Defined Benefit Plan? Qualified retirement plan approved by the IRS By far the highest available tax-deductible contributions of any retirement plan (see page 6) May allow you to cut your tax bill by tens of thousands of dollars every year Excellent tool to rapidly build a large retirement nest egg Largest tax savings opportunity along with the most rapid retirement nest egg growth potential. 4

5 Defined Benefit Plans in the News Defined Benefit Plans: The Overlooked Retirement Vehicle For Successful Entrepreneurs Defined benefit plans continue to make sense for...successful small business owners and entrepreneurs. For such individuals, pension plans are an ideal retirement vehicle, offering a wide range of benefits that will help them keep a larger share of their wealth... Forbes, January 2014 How Entrepreneurs Can Get Big Tax Breaks For Retirement Savings A 52-year-old entrepreneur netting $300,000 could use a one-person defined-benefit pension plan combined with a solo 401(k) to shelter a total of $169,800 from current income taxes Forbes, March 2013 Turn Self-Employment Income Into A Pension By Dec. 31 To Beat The Fiscal Cliff If you re self-employed, have had a good year, and want to sock away a lot for retirement, take a lead from a tax pro who advises high net worth clients, and set up a defined benefit plan by yearend. Forbes Online, December 2012 A Pension Plan for the Self-Employed Solo pension plans are a great option for entrepreneurs, doctors, and real estate agents who want to slash their taxes and turbo charge retirement savings. Kiplinger s Retirement Report, August

6 Comparison of Retirement Plans Defined Benefit (DB) Plans May Allow You to Contribute Significantly More Earned Income Than Other Retirement Plans Hypothetical Example: Maximum annual contribution limits in 2015 for a locum tenens MD age 52, earning $265,000 W-2 income annually, retiring in 10 years 6

7 Is a DB Plan Right For You? Defined Benefit Plans are best for high income professionals who are: Self-employed or have up to 5 employees Age 40 or older Willing to contribute $50,000 or more annually Interested in the best tax-advantaged methods to save for retirement 7

8 Defined Benefit Plans Work With Your Solo 401(k) A DB Plan can be combined with a Solo 401(k) plan to offer: Still more tax savings More flexibility on contribution amounts See Case Study on page 11 8

9 The Deadline is Approaching! If you would like to maximize your tax savings for 2015, your plan must be established by December 31, 2015 You have until your tax filing date to fund the plan Don t delay! Begin the process now. 9

10 Case Studies 10

11 Locum Tenens Anesthesiologist, Form 1099 Income Dr. Charles, Age 52 Wants Maximum Tax Deduction Annual earnings: $450,000 Maximum DB + 401(k) contribution for 2015: $222,100 Contribution to DB Plan: $182,200 Contribution to 401(k): $39,900 Annual tax savings: $84,300 Combined marginal tax rate of 38% DB Accumulation at age 62: $2.54 Million 10 years, 5-7% rate of return Annual DB Benefit: $210,000 11

12 Married Locum Tenens, Self-Employed W-2 Income Paul, Age 60; Mary, Age 58 5 years from retirement W-2 Income: $530,000 ($265,000 each) Total annual DB contribution: $426,000 $208,000 towards Paul s retirement $218,000 towards Mary s retirement Annual combined income tax savings: $161,800 Accumulation at retirement: Paul: $1.18 Million Mary: $1.24 Million 12

13 Locum Tenens Radiologist, W-2 Income Fluctuates Kumar, Age 48, Radiologist 2015 W-2 earnings: $185,000 Maximum DB contribution for 2015: $136, (k) contribution for 2015: $29,100 Total deduction in 2015: $165, tax savings: $62,900 Combined marginal tax rate of 38% DB Accumulation at age 62: $2.24 Million 14 years, 5-7% rate of return Annual DB Benefit: $185,000 13

14 Professor with Locum Tenens Side Income Walter, Age 60, Professor In addition to university salary, Walter has self-employment income from locum tenens work at a local hospital Annual self-employment earnings: $100,000* DB contribution for 2015: $80,000 Annual tax savings: $30,400 Combined marginal tax rate of 38% DB Accumulation at age 65: $457,400 5 years, 5-7% rate of return * High 3-year average, after payment of self-employment taxes 14

15 Who is Orion? Peter C. Thoms, CFA, founded Orion in Orion is a fee-only Registered Investment Advisor. We are an independent fiduciary committed to implementing the most effective retirement plans for our clients. We provide a comprehensive and cost-effective solution for Locum Tenens seeking to reduce their tax bill and jump-start retirement savings. Contact us at info@orionportfolios.com Or visit us at Orion Portfolios 15

16 Spend Two Minutes & See How Much You Can Save We only need a few pieces of information to generate a preliminary tax savings proposal to best fit you. You may be able to cut your tax bill by tens of thousands of dollars every year the plan is in place. Visit us at Orion Portfolios or download our White Paper for more information Fill out our Tax Savings Analysis to see how much you could save Or call us at and we can walk you through it Begin now and you can save more for your future and cut your taxes 16