Retirement Planning for Dentists

Practice Debt = Delayed Savings

Dental school debt ($250K+ avg) plus practice acquisition loans ($500K-$1M) means you didn't start serious retirement savings until your late 30s or 40s.

Variable Income, Fixed Limits

Your income swings with the practice. Good years: $400K+. But SEP IRA still caps you at $69K. In big years, you can't save more. In slow years, you're locked into contributions.

Practice Sale = Tax Bomb

Planning to sell your practice for $1M+? That's a huge taxable event. Add 401(k)/IRA withdrawals taxed at 32%+, and you're giving a third of your retirement to the IRS.

📊 Example: Dr. Mike, Age 45, Practice Owner Earning $350,000/year

*Projections based on 6.7% non-guaranteed growth rate. Results vary by individual situation.

The difference? $43,000 more per year in spendable retirement income.

No Contribution Limits

Fund $80K, $120K, or more annually. Make up for lost time and match your income potential.

0% Floor Protection

When markets crash, your cash value never goes negative. Protect what you've worked so hard to build.

Tax-Free Retirement Income

Policy loans aren't taxed. Withdraw $150K/year and keep $150K—not $102K after taxes.

Flexible Contributions

Practice income varies year-to-year. IUL lets you contribute more in good years, less in slow years—no penalties.

✅ The SEP IRA Advantage: Immediate Tax Savings

Let's be fair—SEP IRAs do offer a real benefit. As a practice owner, every dollar you contribute is tax-deductible. That means if you're in the 32% tax bracket and contribute $60,000, you save $19,200 in taxes that year.

This immediate tax savings feels great. It reduces your taxable income and puts more money back in your pocket today. So why would a successful dentist choose IUL instead?

The real question is: Would you rather pay taxes on the seed... or the harvest?

📊 The Math That Changes Everything

And here's the kicker: This assumes tax rates stay the same. If rates go up (and with national debt at $34+ trillion, many experts expect they will), your SEP harvest gets taxed at even higher rates. With IUL, you've already locked in tax-free status—no matter what Congress does.

Should I max out my SEP IRA before starting an IUL?

Not necessarily. SEP IRA contributions reduce taxable income now, but every dollar is taxed in retirement. IUL contributions aren't deductible, but distributions are tax-free. Depending on your tax bracket now vs. retirement, IUL may deliver better after-tax results—especially if you expect to stay in a high bracket.

I'm planning to sell my practice in 10 years. Does that change things?

Yes—this is actually ideal for IUL. Your practice sale will create a large taxable event. Having tax-free income from IUL in retirement means you won't compound that tax burden with taxable 401(k)/SEP distributions. The tax diversification can save you hundreds of thousands.

Can I use the cash value to expand my practice?

Yes. IUL cash value can be accessed via tax-free policy loans at any time for any reason—practice equipment, expansion, emergencies, or even buying another practice. This gives you flexibility that SEP IRAs and 401(k)s don't (those penalize early withdrawals).

What if my income varies significantly year to year?

This is where IUL shines. You can adjust premium payments within the policy limits. Had a great year? Fund aggressively. Slow year? Scale back. You maintain flexibility without the rigid percentage-of-income requirements of SEP IRAs.

I have partners—can they do this too?

Absolutely. Each partner can have their own individual IUL policy. There are also strategies where the practice can fund policies as a key-person or buy-sell arrangement. We can design a strategy that works for your specific partnership structure.