Maximizing DeferralsAdding a family member to boost savings
A small dental practice, with a single dentist wanted to maximize savings. The group suffered from negative demographics meaning his employees were seniors.
Although the dentist’s wife wasn’t currently working, she was also a dentist so she was added to the practice with a small salary and would come in occasionally to do work. By adding her to the payroll the couple could maximize their deferrals. The additional contribution to the 401(k) was enough to get the owners to their desired contribution level as a family and keep the employee cost at 3% of pay. For a very modest FICA cost the family was able to save more.
This is a great example of how adding a spouse results in a couple maximizing their annual deferrals and saving as much as possible with a relatively low employee cost.