🔧 Today’s Micro-Business Tactic: Maximizing Tax-Advantaged Retirement Contributions as a Self-Employed Physician

As a self-employed physician, you have a strategic edge over your employed colleagues when it comes to building tax-advantaged retirement wealth. Without being tethered to an employer-sponsored plan, you get to decide how much to save, when to contribute, and how to structure your accounts for maximum tax benefit.

Let’s break down the top three retirement strategies and explore how you can use them to slash your taxes and accelerate wealth in 2024 and beyond.

1. Solo 401(k): The Ultimate Tax-Reduction Tool for Self-Employed Physicians

Think of the Solo 401(k) as the MVP for self-employed doctors. It’s designed specifically for one-participant businesses (or two, if your spouse also earns income from the business). You get to wear both hats: employer and employee, which allows you to contribute more and save more than most traditional plans.

2025 Contribution Limits:

• Employee Contribution: $23,500 (or $31,000 if you're 50 or older)

• Employer Contribution (Profit Sharing): Up to 25% of your net self-employment income (after expenses and half of self-employment tax)

• Total Contribution Cap: $70,000 (or $77,500 with catch-up)

Why It’s Powerful:

• ✅ Double-Dipping Contributions: Contribute as both employee and employer, which dramatically boosts the amount you can save annually.

• ✅ Tax-Deductible Contributions: Your pre-tax contributions reduce your taxable income now, and your investments grow tax-deferred.

• ✅ Roth Option: Some Solo 401(k) providers allow for Roth contributions, letting you pay tax now and enjoy tax-free withdrawals in retirement.

• ✅ Loan Feature: You can borrow up to $50,000 or 50% of your account balance (whichever is less), giving you a flexible emergency fund.

• ✅ Diverse Investment Options: Unlike employer-sponsored plans, you can invest in a broader range of assets including index funds, REITs, private equity, and even crypto, depending on the custodian.

If you're running your own micro-corporation and have no full-time W-2 employees other than yourself and a spouse, this is hands-down the most flexible and powerful retirement savings option. Plus, it pairs beautifully with tax strategies available through an S-Corp structure. Explore the S-Corp Advantage →

2. SEP-IRA: A Simple, High-Limit Option

If you're looking for a low-maintenance plan that still lets you save a substantial amount, the SEP-IRA (Simplified Employee Pension) is a solid contender. It’s particularly helpful for those earning side income from 1099 gigs or locum work and want a quick win at tax time.

2025 Contribution Limits:

• You can contribute up to 25% of your net earnings (after expenses and self-employment tax), with a cap of $70,000.

• No employee contributions are allowed—the employer (you) makes 100% of the contributions.

• No catch-up contributions for those over 50.

Why It’s Useful:

• ✅ Simple Setup: Most brokerage firms (like Fidelity, Schwab, and Vanguard) allow you to open a SEP-IRA with minimal paperwork.

• ✅ No IRS Filings Required: Unlike the Solo 401(k), there's no need to file an annual Form 5500 until the account exceeds $250,000.

• ✅ Perfect for Side-Income: If you're already maxing out a 401(k) at your W-2 job, a SEP-IRA funded by 1099 income is a great way to tuck away additional savings.

• ✅ Fully Tax-Deductible: Contributions reduce your taxable income, and investment growth is tax-deferred.

However, the SEP-IRA doesn't allow for Roth contributions or loans. It’s best for those who prioritize simplicity over control and who don’t have or want to hire employees. A good fallback option if a Solo 401(k) feels too complex.

3. Cash Balance Plan: Turbocharge Your Wealth

This is the big leagues. A Cash Balance Plan is a defined benefit pension plan that works well for high-earning self-employed physicians who want to catch up on retirement savings fast or aggressively reduce their tax burden.

2024 Contribution Range:

• Contributions start around $50,000 annually and can exceed $300,000+, depending on your age, income, and plan design.

• You can combine it with a Solo 401(k) for a total annual retirement contribution of $400,000+.

Why It’s a Game-Changer:

• ✅ Massive Tax Shelter: Contributions are entirely tax-deductible to your micro-corporation, reducing your business income and personal AGI.

• ✅ Accelerated Wealth Building: Perfect for physicians in their 40s, 50s, or early 60s who started saving late but have high earnings now.

• ✅ Predictable Retirement Income: Unlike 401(k)s or IRAs, a Cash Balance Plan provides a guaranteed, pension-style payout structure at retirement.

• ✅ Business-Friendly Setup: It increases your corporation’s professional benefits package, making it more attractive if you eventually hire employees.

These plans do require annual actuarial reviews, third-party administrators, and a deeper partnership with your CPA or financial advisor, but the upside is significant. For physicians pulling in $300K-$500K+, this can transform your retirement outlook and dramatically reduce your effective tax rate.

Read More: Maximizing Retirement Wealth: The Case for Solo 401(k) Cash Balance Plans

Estimated 2025 Limits (Unofficial)

Based on historical trends, here's what you can tentatively expect for next year:

• Solo 401(k): $71,500 (or $79,000 if age 50+)

• SEP-IRA: $71,500 (capped at 25% of eligible income)

Official IRS limits are usually released around October or November each year.

📅 Real-World Case: Dr. K’s Cash Balance Turnaround

Dr. K, a 53-year-old concierge internist in Arizona, came into our PEA coaching program with no retirement savings strategy, despite earning over $500K/year.

Together we:

• Implemented a Solo 401(k) and a Cash Balance Plan

• Reduced her federal tax liability by $137,000

• Mapped a 7-year retirement runway (down from 15+ years)

“I just didn’t know what was possible until I became a micro-business owner. This changed everything.”

💡 Lessons from the Field

This week, I coached a physician launching her micro-corporation for 1099 income. Her husband, who has a full-time job, will be the corporation’s bookkeeper.

I told them:

“Hiring your spouse isn’t just a tax strategy, it’s a retirement strategy. Now you both can open Solo 401(k)s under your micro-business. You’ve just doubled your household’s tax-advantaged savings potential.”

📥 Tool of the Week: Retirement Tax Strategy Resource Pack

These two guides will help you structure your micro-business to unlock maximum retirement savings while minimizing taxes.

🧾 The S-Corp Advantage →

📘 Ultimate List of Business Deductions →

🚀 Scale with Coaching

Want help crafting a retirement blueprint for your unique income structure?

🔹 Book a $500 Strategy Consultation →

🔹 Get 1:1 Business Coaching ($2,000 Package) →

🧠 Final Thoughts: Choose the Right Plan and Start Now

Solo 401(k)s, SEP-IRAs, and Cash Balance Plans aren’t just for “retirement someday.” They’re your most immediate weapons for reducing taxes, retaining income, and accelerating wealth.

As a self-employed physician, you are the CFO of your career. That means:

• Choose the right plan.

• Contribute aggressively.

• Maximize every deduction.

Your future self, and your tax bill, will thank you.