Profit Sharing Demystified: How Optometry Practice Owners Can Maximize Their 401(k) with Matt Ruttenberg
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What is the main topic discussed in this episode?
Everybody, welcome back to the Optometry Money Podcast. We're helping ODs all over the country make better and better decisions around their money, their careers, and their practices. I am your host, Yvonne Mindren, Certified Financial Planner Practitioner and owner of Optometry Wealth Advisors. an independent financial planning firm just for optometrists nationwide. And thank you so much for listening. Really appreciate your time and your attention today. And on this episode, I welcome back to the podcast, Matt Ruttenberg with Life Inc. Retirement Services. Matt is a qualified retirement plan ninja and magician for optometry practices. And we dive into the Profit sharing for 401k plans in the practice.
And we talk about what in the world profit sharing is, the different ways that you can calculate profit sharing contributions depending on your goal, whether it's to provide a broad benefit for all employees, whether it's to skew that contribution as a tax planning lever for the owner. Whatever it is, we talk about ways to optimize that profit sharing calculation for that goal. We talk about how your 401k match factors into the cost and the math for the profit sharing. And then lastly, how a cash balance plan fits and integrates together with that profit sharing contribution. I think you're going to get a lot out of this episode. I will put all of Matt's contact information and our prior episodes in the show notes, which you can find by just scrolling down in whichever app you're using.
Or you can find that at our website, optometrywealth.com at the education hub over there. If you have any questions at all, reach out to me at podcast at optometrywealth.com. And if you'd like to. And if you're thinking about these things and you're curious about what it's like to work with a financial planning firm that specializes in optometry and optometry practice owners, reach out. I'll put a link in the show notes store website. You can schedule a no commitment, no pressure introductory call. We can talk about what's on your mind financially and how we help ODs all over the country navigate those same decisions and more.
What is profit sharing in a 401(k) and why does it matter for optometry practice owners?
And without further ado, here is my episode with Matt Ruttenberg. Welcome back to the Autonomous Remedy Podcast. I am your host, Yvonne Mindren, and I am excited to be joined once again by Matt Ruttenberg with Life Inc. Retirement Services. Matt, thanks for coming back on.
Yeah, Yvonne, thank you so much for having me on. Always a pleasure speaking with you.
Yeah, we're at least, what, three or four times already. So are you, I think you're officially a friend of the podcast. Is that kind of how it works?
Yeah, I got my official button a couple weeks ago, so I appreciate it.
There you go. Yeah, there we go. Well, I'm excited to chat about what I think is a really important planning lever for practice owners, especially as they get out of the cold start or recent purchase phase. They're seeing cash flow improve in the practice, and they're wondering, okay, what can we do to not only save for our own financial independence and retirement, but also plan proactively for taxes, and that is profit sharing in 401 plans. And I see, I tend to see there's a pretty good size gap of education when it comes to profit sharing in 401 plans in terms of what it is and how it works and how it's all calculated. And very often for me, I know you've described it, Matt, as these retirement plans as sort of this upside down cake with different layers.
Most people are familiar with the employee contribution amounts in 401k plans and the amount that each person, including the owners, can put in as an employee in there, which is $23,500 if you're under 50. There's an additional bump if you're over 50. But there's not always a good understanding of that next layer of the cake, which is profit sharing. And describe for the listener, what is profit sharing in a 401k plan?
Yeah, great, great question. Very in-depth, lots of variables, lots of wheels turning. But let's go back to that upside down three-tiered wedding cake that you brought up.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:04–2:08
2
What is profit sharing in a 401(k) and why does it matter for optometry practice owners?
2:08–18:32
3
How does the 'three-tier wedding cake' framework explain 401(k) contribution layers?
18:32–33:19
4
What is Pro Rata profit sharing and why can it be costly for owners?
33:19–40:35