Defined Benefit Plans for Dentists

If you're a dentist earning $500K+ and maxing out your 401(k) at $23,500, you're barely scratching the surface of what's available for tax-deductible retirement savings. A defined benefit plan can multiply your annual tax-deductible contribution by 6x to 12x or more — sheltering $150,000 to $300,000+ per year from taxes.

How a Defined Benefit Plan Works

Unlike a 401(k) where you contribute a fixed dollar amount, a defined benefit plan works backward: you define the retirement benefit you want to receive (a specific annual pension), and an actuary calculates the annual contribution required to fund that benefit. Because the contribution is based on age, income, and investment assumptions, older and higher-income professionals can contribute significantly more.

How Much Can a Dentist Contribute?

Contribution limits depend on your age and income. Here are typical ranges:

• Age 40–45: $100,000 – $150,000 per year
• Age 46–50: $150,000 – $200,000 per year
• Age 51–55: $200,000 – $250,000 per year
• Age 56–62: $250,000 – $350,000+ per year

Can You Stack It with a 401(k)?

Yes. You can operate a defined benefit plan alongside a 401(k) profit-sharing plan. This "combo plan" approach lets you contribute to both:

• 401(k): Up to $23,500 in employee deferrals (plus catch-up if age 50+), plus employer profit sharing
• Defined benefit plan: The actuarially calculated amount on top of 401(k) contributions

Read more in our comprehensive defined benefit plan guide for dentists and our overview of how defined benefit plans work.

Who Is the Ideal Candidate?

Defined benefit plans work best for dentists who:

1. Have consistent net income of $400K+ per year
2. Are age 40 or older (older professionals can contribute more)
3. Have few or no employees, or employees who are younger (minimizes required employer contributions for staff)
4. Want to aggressively shelter income from taxes while building retirement wealth
5. Plan to maintain the plan for at least 3–5 years

What About Employees?

If you have employees, the plan must cover eligible staff. However, employee contributions are typically much smaller (based on their lower salaries and younger ages), and the business deducts those contributions as well. The right entity structure can also help manage employee costs — for example, using a management company that sponsors the plan for owners only.

Defined Benefit Plans and Practice Sales

If you're planning to sell your practice in the next 5–10 years, a defined benefit plan can be a powerful tool for reducing your tax burden in the high-income years leading up to the sale while building a retirement nest egg.

Getting Started

At Crane Financial, we design defined benefit plans as part of a comprehensive retirement planning and tax strategy engagement. We work with third-party administrators and actuaries to design, implement, and maintain the plan.