Physician Recovers $74,000 After Correcting Retirement Plan and Deduction Errors
My old CPA set up a SIMPLE IRA for my medical practice when I should have been in a defined benefit plan. The contribution limits are dramatically different -- a SIMPLE IRA caps around $16,000 plus catch-up, while a defined benefit plan can allow contributions of $200,000 or more depending on age and income. That single error cost me a fortune in tax deductions over the years.
AE Tax Advisors corrected the retirement plan, setting up a defined benefit plan going forward. They also went back and identified other missed deductions: continuing medical education expenses, medical society and specialty board dues, journal subscriptions, and malpractice tail coverage premiums. None of these were being deducted.
The malpractice tail coverage was especially frustrating. When I changed employers two years ago, I paid a five-figure tail coverage premium to cover claims from my prior position. My CPA did not deduct it. AE Tax caught it and included it in the amended returns.
They amended three years of returns, capturing the missed deductions and the difference between what I could have contributed to a defined benefit plan versus what I actually put into the SIMPLE IRA. Total recovery: $74,000.
The depth of AE Tax's knowledge compared to my old CPA is night and day. They understood physician compensation structures, locum tenens income treatment, and the specific deductions available to medical professionals. My old CPA treated me like any other small business owner and missed industry-specific opportunities.
If you are a physician and your CPA has you in a SIMPLE IRA or SEP-IRA, talk to AE Tax Advisors about whether a defined benefit plan makes more sense. The contribution limits can save you hundreds of thousands over your career.