Effective Strategies for Selling Your Dental Practice

For dentists, transitioning out of a practice is one of the biggest financial and emotional decisions of their careers. On our latest episode of Beyond Bitewings, we sat down with Steve Hipson, a seasoned dental practice broker. As the owner of the North Texas franchise of DDSmatch.com, Steve specializes in helping dentists successfully plan and execute practice transitions, and here is a synopsis of that conversation.

Start Preparing 3-5 Years in Advance

One of Steve’s key pieces of advice is to start planning 3 to 5 years before you plan to sell. While it may seem early, this timeline allows for strategic preparation that can significantly impact the value of your practice. Many dentists wait until they’ve started slowing down production, often due to burnout, injury, or lifestyle changes. But if production starts to decline, so does the value of the practice.

To avoid this, dentists need to get ahead of the curve and be proactive about maintaining production levels. This approach not only supports a higher valuation but also allows sellers to be more intentional about when and how they transition out of their practice.

Understand How Your Practice is Valued

When it comes to valuing a dental practice, dentists want to get fair market value assessments to get a clear, objective valuation based on revenue, production, and other key financial metrics. This removes the guesswork and sets clear expectations for both sellers and buyers.

Many dentists are also curious about EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), especially when dealing with DSOs (Dental Service Organizations). While EBITDA plays a major role in offers from DSOs, doctor-to-doctor sales prioritize different factors, like compatibility between the buyer and seller, the buyer’s clinical skills, and the location of the practice.

Selling to a Private Buyer vs. a DSO

One of the most critical decisions a dentist makes when selling a practice is whether to sell to another dentist or to a DSO. Both have pros and cons, and Steve’s advice is to remain open to both options.

Here’s a quick breakdown of the differences:

Private Buyer (Doctor-to-Doctor)DSO (Dental Service Organization)
Focus on compatibility and clinical fitFocus on EBITDA and financial metrics
Buyer often plans to run the practice themselvesDSO manages the practice while hiring providers
Less emphasis on cost-cuttingDSOs may streamline operations and increase efficiencies
Simpler, relationship-driven processCan result in higher offers but often involves stricter requirements

DSOs are a great option for dentists who want to remain part of the practice after the sale. Many dentists like this approach because it allows them to continue practicing while offloading management responsibilities like HR, compliance, and vendor negotiations. On the flip side, doctor-to-doctor sales are often simpler and more personal, with a focus on matching buyer and seller personalities, skills, and values.

Confidentiality is Key

One of the top concerns for dentists planning to sell their practice is maintaining confidentiality. Dentists fear that if their staff or patients find out they’re planning to sell, it could cause panic, employee turnover, or disruptions in patient care. Look for partners that prioritize maintaining confidentiality in every transition. All communications and negotiations should be handled discreetly, and announcements should only made when the sale is complete and both parties are ready.

The Importance of Hiring the Right Team

Transitioning a dental practice isn’t a solo endeavor; it requires a team of experienced professionals, including:

  • Brokers to manage the sale process and negotiations
  • CPAs to ensure the financials are in order
  • Attorneys to handle the legal side of the transaction
  • Lenders to assist buyers with financing

DDS Match refers to their approach as a “trusted transition process”, where his team works with the seller, buyer, and support professionals from start to finish. They focuses on creating smooth transitions where both the buyer and seller walk away satisfied.

How to Get Started

If you’re thinking about selling your practice or just want to explore your options, start early. If you’d like to connect with Steve Hipson for more information, you can reach him at s.hipson@ddsmatch.com or visit ddsmatch.com to learn more about his process for buying and selling dental practices.

Exploring Locum Tenens for Dentists

If you’re a dentist looking for more flexibility, less overhead stress, and maybe even a chance to see the country (or just play more golf), the idea of becoming a locum tenens dentist might be right up your alley. In the latest episode of Beyond Bitewings, we sat down with Shelby and Sarah from Barton Associates, the fourth-largest staffing agency in the U.S., to discuss the ins and outs of locum tenens for dental professionals.

Whether you’re a recent dental school graduate looking for experience, a mid-career dentist seeking variety, or a “kind-of-retired” dentist who wants to stay in the game on a part-time basis, locum tenens offers a unique way to practice on your terms. Here’s a look at what locum tenens is, who it’s best for, and how Barton Associates makes the whole process simple.

What is a Locum Tenens Dentist?

The term “locum tenens” is Latin for “to hold one’s place.” Essentially, locum tenens dentists step in to temporarily fill a spot at a dental practice, often when the regular dentist is out on leave, dealing with an emergency, or when a practice is short-staffed.

But locum tenens isn’t just for practices in a bind — it’s also a great option for dentists looking for a change of pace. You get to work on a schedule that fits your life while still earning an income. Plus, you can avoid many of the headaches that come with running a practice, like insurance paperwork and managing staff.

According to Shelby and Sarah from Barton Associates, there’s been a huge rise in dentists choosing this path, especially since COVID-19 brought on a wave of burnout. Locum tenens allows dentists to keep practicing their craft while cutting out a lot of the stress that full-time practice ownership can bring.

Who is Locum Tenens For?

The beauty of locum tenens is that it works for dentists at all stages of their careers. Here are a few groups who can benefit most:

1. Recent Dental School Graduates

Finding the “perfect” first job right out of school can be tough. Locum tenens gives new grads a chance to test the waters. You can work at different types of practices — private offices, DSOs, and community health clinics — and see which setting suits you best.

Why It’s a Win:

  • Experience multiple practice settings without long-term commitments.
  • Boost your resume and credentials while figuring out what kind of practice you want.
  • Save time on job hunting — Barton Associates handles it for you.

2. Semi-Retired Dentists (A.K.A. “Not Ready to Call It Quits”)

If you’re a dentist who’s technically retired but still loves the craft, locum tenens could be your perfect “part-time retirement plan.” Many retired dentists aren’t ready to fully walk away but aren’t interested in the grind of owning or running a practice. Locum tenens lets you work when and where you want, without all the admin headaches.

Why It’s a Win:

  • Stay in the game while working on your terms (not your office manager’s).
  • Travel to new places for short assignments (and, yes, travel expenses are paid for).
  • Some dentists even bring their pets, kids, and yes — even horses (yes, this actually happened) on assignments.

3. Full-Time Dentists Seeking Flexibility or Burnout Relief

If you’re feeling overwhelmed by the business side of running a practice, locum tenens might be the breath of fresh air you need. It’s a chance to keep your clinical skills sharp without managing patient files, handling insurance paperwork, or leading a team of employees.

Why It’s a Win:

  • Focus on patient care without managing the “business” of dentistry.
  • Enjoy a more flexible schedule — work a few weeks on, then take a few weeks off.
  • You can travel or stay close to home, depending on your preferences.

How Does It Work?

Curious about what the process looks like to become a locum tenens dentist? Here’s a simplified breakdown:

  1. Reach Out to Barton Associates: You’ll chat with a recruiter like Shelby or Sarah, who will learn about your career goals, where you’d like to work, and what type of assignments you’re looking for.
  2. Credentialing and Licensing: This is the “paperwork phase” where you provide your licenses, credentials, and other documents. Luckily, Barton has a whole team that handles this for you, saving you from those endless phone calls and email threads with licensing boards.
  3. Find the Right Fit: Once everything is ready, Barton will connect you with open assignments that match your preferences — whether it’s a week-long gig in New Mexico or a 3-month stay at a DSO in California.
  4. Start Working: You’ll travel (if necessary), get set up at the office, and get to work. Travel costs and accommodations are often included.
  5. Get Paid: Barton pays you directly as an independent contractor. No awkward conversations with the dental office about payment.

Why Locum Tenens Could Be Better Than a Part-Time Associate Position

If you’ve considered picking up a part-time associate position at a local practice, you might think, “Why not just do that?” But as the podcast revealed, there are some big differences.

  • Flexibility: Part-time associate roles often come with set schedules, while locum tenens offers more control over when and where you work.
  • Fewer Complications: Some practices are hesitant to hire an associate who owns a practice of their own. Locum tenens eliminates that hesitation.
  • Variety: Locum tenens dentists get to work in different practice settings — DSOs, community health clinics, private practices, and more.

Final Thoughts

If you’re a dentist craving freedom, flexibility, or just a chance to do what you love without the headaches of running a practice, locum tenens might be exactly what you need. Whether you’re looking for adventure, retirement balance, or a chance to sample different types of practice settings, locum tenens offers the chance to customize your dental career.

With support from Barton Associates, the process is simpler than you might think. And who knows — you could be golfing in a new state every weekend while getting paid to practice dentistry during the week.

Want to learn more? Check out the full Beyond Bitewings podcast episode and if locum tenens sounds like a good fit for you, reach out to Barton Associates to learn more.

How Potential 2025 Tax Changes Could Impact Your Dental Practice and Personal Finances

With Trump’s proposed 2025 tax law changes on the horizon, it’s crucial for dental practice owners and their families to stay informed about how these updates might shape their financial strategies. While we can’t know if the proposals discussed during the campaign will pan out in the end, it is still important to understand what they are and how they can impact your dental practice and personal financial planning. 

Below, we’ve summarized some of the the proposals, focusing first on business-related changes and then on those that could affect your personal finances.

Potential Tax Changes Impacting Dental Practices 

1. Restoring TCJA Business Tax Provisions

  • What It Is: A proposal to reinstate business-friendly provisions from the Tax Cuts and Jobs Act (TCJA), such as 100% bonus depreciation, research and development expensing, and interest deduction limitations.
  • Government Impact: This is expected to increase gross national product (GNP) by 0.5% and add 119,000 jobs but reduce tax revenue by $643 billion over 10 years.
  • What It Means for You: These changes would allow your dental practice to benefit from significant deductions on investments like new equipment or technology. This could free up cash flow for reinvestment in your business.

2. Encouraging Domestic Production

  • What It Is: A deduction of 28.5% for domestic production activities, effectively reducing corporate tax rates on qualifying activities to 15%.
  • Government Impact: Expected to increase GNP by 0.2% and add 38,000 jobs, but it could reduce tax revenue by $361.4 billion over 10 years.
  • What It Means for You: Dental practices that rely on domestically manufactured supplies or equipment could see lower costs and additional tax savings, making it easier to invest in your practice.

3. Extending the Opportunity Zone (OZ) Program

  • What It Is: Extending the OZ program, which provides tax benefits for investments in underserved communities.
  • Government Impact: Stimulates community development by encouraging housing, infrastructure, and business growth in underserved areas.
  • What It Means for You: If you’re considering opening a new location in an underserved area, the OZ program could offer tax deferrals or exemptions, making expansion more financially viable.

Potential Tax Changes Impacting Individuals

1. Permanent Gift and Estate Tax Exemptions

  • What It Is: Maintaining the current lifetime gift and estate tax exemption of $13.99 million per spouse.
  • Government Impact: Expected to reduce tax revenue by $205.6 billion over 10 years with minimal economic effects.
  • What It Means for You: This simplifies estate planning and makes it easier for high-net-worth families to pass on wealth to future generations.

2. No Tax on Tips

  • What It Is: A proposal to exempt tips from income taxes, though employment taxes would still apply.
  • Government Impact: This would have a negligible effect on GNP but would reduce tax revenue by $118 billion over 10 years.
  • What It Means for Your Practice: While it won’t directly impact dentists, exempting tips from taxes could benefit service industry employees, potentially easing wage pressures.

3. Exempting Overtime Pay from Federal Income Tax

  • What It Is: A proposal to exempt overtime pay from federal income taxes.
  • Government Impact: Expected to increase GNP by 0.3%, create 405,000 jobs, and reduce tax revenue by $747.6 billion over 10 years.
  • What It Means for You: If your practice employs hourly staff, this could make overtime work more appealing, helping you retain staff and cover busy periods more effectively.

4. Federal Income Tax Exemption for Social Security Benefits

  • What It Is: Eliminating federal income taxes on Social Security benefits.
  • Government Impact: Projected to increase GNP by 0.1%, add 55,000 jobs, and reduce tax revenue by $1.2 trillion over 10 years.
  • What It Means for You: Retirees, particularly those in higher tax brackets, could see significant savings, making this a boost for retirement planning.

Looking Ahead

These potential changes highlight the importance of staying proactive with your financial and tax strategies. While some updates offer new opportunities for growth and savings, others may introduce challenges that require careful planning.

By working closely with us, you can position your dental practice and personal finances to accommodate these changes successfully. Reach out to our team today to discuss how these proposals might impact your future.

Cash Flow & Equity: Real Estate Investment Tips for Dental Professionals

In the latest episode of Beyond Bitewings, Ash sits down with Paul Montelongo, founder of Montelongo Capital, to explore investment strategies tailored to dental professionals and business owners. With more than 11 years of experience in multi-family real estate, Paul shares how cash-flowing assets like apartments, self-storage facilities, and even oil and gas ventures can provide equity growth and tax advantages.

What Makes Real Estate Investments Ideal?

Paul highlights the three pillars of his investment philosophy:

  1. Cash Flow: His firm prioritizes assets that generate consistent monthly income exceeding operating costs, ensuring stable returns for investors.
  2. Equity Growth: By strategically improving properties, they appreciate and maximize value over the asset’s life cycle.
  3. Tax Benefits: Real estate investments can offset tax liabilities, a major advantage for high-earning professionals like dentists and physicians.

Montelongo Capital acts as an owner-operator, handling daily management tasks, so investors—many of whom are busy professionals—can participate passively and focus on their own businesses.

Multifamily Syndicates: A Gateway to Passive Income

Multifamily syndicates, where investors can participate as limited partners or even general partners, enjoy passive income with minimal involvement, while investors gain additional tax advantages. Most properties operate on a five-year plan, but some can sell as quickly as 33 months.

Why Invest Now?

As the market adjusts, potential investors have a unique opportunity in 2024. Montelongo Capital is acquiring properties 20-25% below market value, presenting strong potential for equity growth. For example, their current project in Corpus Christi, Texas, projects a 20% annual return, combining a 7% preferred rate of return with additional profits from property appreciation.

A ‘Done-for-You’ Investment Model

The ‘done-for-you’ model is where an outside team manages everything from acquisition and operations to quarterly distributions, making it easy for investors to grow their wealth without the day-to-day burden. This can be particularly appealing to dentists and other busy professionals who want to invest in real estate yet don’t have time to manage the process. 

For dental professionals and business owners considering diversifying their investments, this episode of Beyond Bitewings offers valuable insights into the benefits of real estate intestment. To learn more, visit Montelongo Capital and explore how strategic investments can secure your financial future.

Understanding Changes in Digital Asset Reporting for Dental Practices

With the rise of cryptocurrencies and other digital assets, the IRS has been expanding its focus on ensuring proper tax compliance in this evolving space. Significant changes to digital asset reporting will affect businesses, including dental practices. These changes primarily center around reporting obligations and the expiration of safe harbor provisions. 

What is the Digital Asset Reporting Rule?

Digital asset reporting refers to the requirement that businesses and individuals disclose their holdings and transactions involving cryptocurrencies or other digital assets. This mandate was first introduced as part of the Infrastructure Investment and Jobs Act (IIJA) signed into law in 2021. The law requires brokers to report cryptocurrency transactions to the IRS and provide information to the account holder, similar to how traditional financial institutions report stock or bond sales.

The IRS expanded its definition of brokers to include entities facilitating cryptocurrency exchanges and transactions, meaning that dental practices may now have more stringent reporting obligations if they handle digital assets.

What Does the Expiration of the Safe Harbor Mean?

Since the IIJA passed, a transitional safe harbor has been in place to provide taxpayers some flexibility in adjusting to the new reporting rules. Under this safe harbor, taxpayers were not penalized for underreporting or failing to report certain digital assets if they made a good faith effort to comply.

However, this safe harbor expires on January 1, 2025. This means that starting in 2025, dental practices and other businesses that deal with digital assets will be fully accountable for meeting the reporting requirements. Failure to comply could lead to penalties, audits, or other tax-related consequences.

Key Changes and What to Expect 

Several changes in the IRS’s approach to digital asset reporting will take effect in 2025, which dental practice owners should be aware of:

  1. Broader Reporting Requirements: Businesses will need to report all cryptocurrency transactions to the IRS, including those made on behalf of patients or as part of payment for services. This also applies to indirect exchanges and sales through third-party platforms.
  2. New Reporting Forms: The IRS will require businesses to use new reporting forms, such as the Form 1099-DA, which will document transactions related to digital assets, similar to the traditional Form 1099-B for securities.
  3. Penalties for Non-Compliance: Once the safe harbor ends, failure to comply with the new digital asset reporting requirements can result in significant penalties. Businesses may face audits or fines for underreporting or failing to report cryptocurrency transactions.
  4. Clarification on Digital Asset Definitions: The IRS has expanded the definition of “digital assets” to include not only cryptocurrencies but also NFTs and other digital tokens. Practices that accept any form of these digital assets will need to ensure proper documentation and reporting.

What Dental Practices Should Do to Prepare

With the expiration of the safe harbor fast approaching, dental practices should take the following steps to ensure they remain compliant with IRS rules:

  • Review Existing Digital Asset Policies: Practices that accept cryptocurrency or other digital assets as payment should assess their current practices for recording and reporting these transactions.
  • Consult with E&A: Given the complexities surrounding digital asset taxation, consulting with tax professionals who understands the specific requirements for digital assets is crucial. 
  • Upgrade Financial Tracking Systems: If your practice deals with digital assets, make sure your accounting and payment systems are equipped to properly track these transactions for IRS reporting.
  • Educate Staff: Ensure that your practice managers and financial staff are up to speed on the new reporting obligations. Having clear processes for handling cryptocurrency payments and other digital assets will be critical for compliance in 2025 and beyond.

As the IRS continues to increase its focus on digital assets, it is vital for dental practices to stay proactive and compliant. With the expiration of the safe harbor, proper reporting is no longer optional, and penalties for failing to meet IRS standards can be significant. Now is the time to review your practice’s digital asset policies and ensure you are prepared for the changes that will come into effect in 2025.

For more detailed guidance, dental practice owners should reach out to us to help them navigate these updates and avoid costly mistakes.

2025 Tax Changes for Dentists and Their Employees

The IRS has announced adjustments for 2025 that will impact deductions, credits, and thresholds. Staying on top of these changes can help maximize tax benefits for you and your employees. Here’s a roundup of the key updates:

Increased Standard Deduction for 2025

The standard deduction—helpful for those who skip itemizing—has increased for the 2025 tax year:

  • Single Filers: $15,000 (up $400 from 2024).
  • Married Couples Filing Jointly: $30,000 (up $800).
  • Heads of Household: $22,500 (up $600).

This deduction can be a valuable benefit to employees who don’t itemize, potentially lowering their taxable income and boosting their take-home pay.

Adjusted Marginal Tax Brackets

While the top tax rate remains 37%, income thresholds have shifted, impacting where different income levels fall. Here are the adjusted brackets:

  • 35% for income over $250,525 (single) or $501,050 (married).
  • 32% for income over $197,300 (single) or $394,600 (married).
  • 22% for income over $48,475 (single) or $96,950 (married).

Knowing where you or your employees stand within these brackets can help with planning deductions and contributions throughout the year.

Alternative Minimum Tax (AMT) Thresholds

The AMT exemption has also increased to $88,100 for individuals and $137,000 for couples, with phase-outs starting at $626,350 and $1,252,700 respectively. This is particularly relevant for high earners who may be subject to AMT.

Enhanced Earned Income Tax Credit (EITC)

The maximum EITC for families with three or more children is now $8,046 for 2025. This could be valuable information for your employees who qualify for this credit, as it can significantly boost their income at tax time.

Fringe Benefits & Health Flexible Spending Adjustments

  • Qualified Transportation and Parking Benefits: Monthly limits rise to $325.
  • Health Flexible Spending Arrangement (FSA): Contribution cap increases to $3,300, with a carryover limit of $660.

These changes allow dental practice owners to offer even more valuable pre-tax benefits, reducing taxable income for employees while supporting healthcare expenses.

Medical Savings Account (MSA) Limits

For 2025, minimum deductibles and out-of-pocket expenses for MSAs have increased slightly. For self-only plans, the deductible is at least $2,850, with a $5,700 out-of-pocket max. Family plans must have a minimum deductible of $5,700, with a maximum out-of-pocket of $10,500.

If you have any questions about how these changes may impact you or your specific situation, reach out to us to schedule a conversation. 

What Dentists Need to Know About New BOI Reporting Requirements

The new Beneficial Ownership Information (BOI) filing requirements are now in effect, and the deadlines are fast approaching. Don’t risk compliance headaches or costly penalties – including a $591 daily fine and possible criminal charges – let us handle this for you.

For most dental practices, BOI filing isn’t complicated but ensuring accuracy and protecting your sensitive business information is essential. Don’t outsource filing to a shady third-party vendor, as many are turning out to be. If you’d like to tackle it yourself, FinCEN’s website offers a straightforward filing option. 

Filing Deadlines for Existing Entities:

  • BOI report due by December 31, 2024
  • Contact us by December 2, 2024, for assistance

For those looking to take this off their plate entirely, our team at Edwards & Associates has the expertise to manage it seamlessly and securely. We’ll guide you through every step, making sure your filing is complete, compliant, and worry-free.

Contact us today and let us handle this so you can focus on what you do best — caring for your patients.

BOI Reporting FAQ

The process for BOI filing can be straightforward for small dental practices. Here are six critical questions to guide you through whether and how to file:

1. Does My Practice Need to File?

Most dental practices will need to file, especially if structured as corporations, LLCs, or partnerships registered with a state. There are 23 types of exempt companies, but most small, privately owned dental practices do not qualify for these exemptions.

2. Who Qualifies as a Beneficial Owner?

A ‘beneficial owner’ includes individuals who:

  • Exercise substantial control over the business, or
  • Own or control at least 25% of the company’s equity interests.

For dental practices, this typically means the practice owners themselves. Exceptions exist, including minor children, employees without ownership stakes, and certain creditors.

3. Who Is Considered a Company Applicant?

A company applicant is anyone who files the registration paperwork for your entity or directs that filing. In most cases, this will include the practice owner, or anyone designated to handle legal filings.

4. What Information Will I Need to Gather?

When preparing your BOI report, you’ll need the following details:

  • For the Company: Legal name, DBA names, primary U.S. business address, jurisdiction of formation, and tax identification number.
  • For Each Beneficial Owner and Applicant: Full legal name, birthdate, residential or business address, and a valid ID number (e.g., passport or driver’s license).

5. What Is a FinCEN Identifier, and Should You Consider It?

A FinCEN Identifier is an optional unique number that you or your company can request, simplifying the reporting process by allowing you to file your BOI without disclosing sensitive personal details like a Social Security Number. If privacy is a concern, this may be worth considering.

6. How Do I File My BOI Report?

The BOI report can be filed electronically here on FinCEN’s website. Before starting, make sure you have all necessary information ready to avoid delays or errors.

2025 Brings Modest Social Security Cost-of-Living Adjustment

The Social Security Administration (SSA) recently announced a 2.5% cost-of-living adjustment (COLA) for 2025, set to begin in January. While this increase may seem modest, it’s designed to help beneficiaries keep pace with inflation, which has a significant impact on day-to-day expenses like groceries, housing, and utilities. For dental practice owners and administrators who work closely with senior patients, understanding these adjustments can provide helpful context when advising patients and their families. And if you have seniors in your life, this is a great article to share with them to help explain the upcoming changes.

What the 2025 COLA Increase Means for Social Security Benefits

With the 2.5% COLA adjustment, the average monthly benefit for retired workers is projected to rise from $1,927 to approximately $1,976, translating to an extra $50 per month. Those with longer work histories or who delayed retirement to maximize their benefits could see larger increases.

This year’s adjustment is lower than recent years, particularly compared to the heightened increases when inflation was at its peak. Although the lower COLA may suggest that inflation is moderating, many seniors may find that expenses in essential areas, such as healthcare and housing, continue to rise faster than the COLA.

Considering Medicare Premiums in Your Net Benefit Increase

It’s crucial to remember that Medicare Part B premiums are also anticipated to increase in 2025. Since Medicare premiums are deducted directly from Social Security benefits, this can reduce the net increase that seniors will actually see. 

Preparing for Financial Stability with the 2025 COLA

This year’s Social Security increase offers some relief, but it’s essential to remember that expenses continue to fluctuate. Dental practice administrators may want to communicate these changes to patients and families who could benefit from additional financial planning, especially as they look toward managing both dental and healthcare costs in retirement.

For more information on the 2025 Social Security COLA, visit the official announcement from the Social Security Administration.

Retirement Contribution Limits for 2025

The IRS recently released Notice 2024-80, detailing retirement plan contribution limit changes for 2025. These updates offer dental practice owners, administrators, and employees an opportunity to increase retirement savings. 

Increased 401(k) Contribution Limits

For 2025, the IRS raised annual contribution limits for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan:

  • Employee Contribution Limit: Increased from $23,000 in 2024 to $23,500 for 2025.
  • Catch-Up Contribution (Ages 50+): Remains at $7,500.
  • Secure 2.0 Catch-Up Contribution (Ages 60-63): $11,250 for employees nearing retirement.

Dental practice employees aged 50 and older can now contribute up to $31,000 to their retirement accounts, allowing them to grow their savings more robustly as they approach retirement.

IRA Contribution Limits Remain Steady

For those using traditional or Roth IRAs, the annual contribution limit remains unchanged at $7,000 in 2025, with a $1,000 catch-up for those 50 and older. Although there is no increase here, IRAs continue to be a valuable addition to retirement planning strategies, particularly for dentists and practice employees looking to diversify retirement savings.

Roth IRA Income Limits

The IRS also adjusted income thresholds for Roth IRA contributions, providing opportunities for higher-income earners to still participate, albeit with limits:

  • Single and Head of Household Filers: Phase-out range is $150,000 – $165,000.
  • Married Filing Jointly: Phase-out range is $236,000 – $246,000.

These limits mean that practice owners and employees within these income ranges may have reduced Roth IRA contribution options, while those exceeding these thresholds are ineligible.

SEP and SIMPLE IRA Limit Increases for 2025

For dental practice owners utilizing Simplified Employee Pension (SEP) IRAs or Savings Incentive Match Plan for Employees (SIMPLE) IRAs, there are new limits for 2025:

  • SEP IRAs: Increased to $70,000 from $69,000 in 2024.
  • SIMPLE IRAs: Employee contribution limit raised to $16,500, with the $3,500 catch-up remaining unchanged.

These adjustments make SEP and SIMPLE IRAs even more attractive for dental practices, particularly for smaller practices that want flexible and tax-efficient retirement options.

Higher Limits for Defined Benefit Plans

Defined benefit plans, typically more common in larger practices or for practice owners aiming for high retirement contributions, also saw an increase to $280,000 from $275,000 in 2024. They can provide substantial savings potential, enabling dental practice owners to make large contributions that help secure their retirement and enjoy tax advantages.

HSA Contribution Limits Updated

While not a retirement plan, Health Savings Accounts (HSAs) are an essential part of long-term financial planning, especially when considering future healthcare costs:

  • Individual Contribution Limit: Increased to $4,300.
  • Family Contribution Limit: Increased to $8,550.
  • Catch-Up Contribution (Ages 55+): Remains at $1,000.

HSAs can complement a retirement plan by covering qualified medical expenses in retirement, allowing practice owners and employees to plan more effectively for future healthcare needs.

Strategic Considerations for Dental Practice Owners

These retirement plan updates provide a prime opportunity for dental practices to enhance their employee benefits and retirement strategies. Here are a few ways to leverage these changes:

  1. Encourage Increased Contributions: Educate employees on the benefits of maximizing their retirement contributions, especially with the new limits in place.
  2. Evaluate Plan Offerings: If your practice doesn’t currently offer a retirement plan, consider setting up a SIMPLE or SEP IRA, which provides higher contribution limits and tax benefits.
  3. Take Advantage of Catch-Up Contributions: For those over 50, the ability to make catch-up contributions is a valuable tool to accelerate retirement savings.
  4. Consider Employer Contributions: Adding employer contributions or matching can enhance employee satisfaction and loyalty, helping retain valuable team members.

Planning for a Financially Secure Future

With the updated IRS retirement plan limits for 2025, dental practice owners and their employees have an opportunity to boost their savings and ensure a financially secure future. To make the most of these changes, reach out to us for individual planning. Proper planning can help you maximize tax benefits, increase retirement readiness, and support your team’s financial health.

If you have questions about how these changes could impact your practice’s retirement planning, reach out to us for guidance. We’re here to help you understand the new limits and implement strategies to make the most of them.

Understanding the Business Side of Dentistry with Dental Student Sarina Arzani

In the latest episode of Beyond Bitewings, Sarina Arzani, a third-year dental student from A&M College of Dentistry, joined the discussion to provide valuable insights for fellow dental students and young dentists. The focus of the episode was on the challenges new graduates face when transitioning from school to the business world of dentistry and how to effectively prepare for that transition.

The Gap Between Dentistry and Business Knowledge

Sarina highlighted a common concern among dental students: while they are equipped with extensive knowledge and skills related to dentistry, they often feel lost when it comes to the business side of running a practice. Many students, especially those nearing graduation, realize they lack the tools to navigate the financial, operational, and management aspects required for success after dental school. Sarina shared how her peers are searching for jobs but don’t know what to prioritize or where to start when evaluating potential employers or thinking about opening their own practices.

The Importance of Building a Strong Team

A key takeaway from the discussion was the importance of building a strong support team early on. Sarina emphasized that starting this process during the D3 or D4 year is crucial for feeling confident and prepared when entering the real world of dentistry. Whether it’s financial advisors, practice management experts, or networking with fellow dentists and vendors, surrounding yourself with a knowledgeable team can make all the difference. Sarina noted that dentists who are successful in both clinical practice and business consistently credit their support teams for much of their success.

Dealing With Information Overload 

Sarina also touched on the overwhelming amount of information available to dental students as they approach graduation. From job offers to setting up a practice, knowing what advice to follow can be challenging. One strategy discussed was how building relationships with experienced professionals can help filter the most relevant and valuable advice. Having a network of trusted experts can simplify the decision-making process and reduce the confusion that often comes with entering the business side of dentistry.

Making Connections Early

Networking emerged as a key theme in the conversation. Sarina encouraged students to start making connections early, whether through conventions like the Southwest Dental Show where the podcast was recorded or via social media, where many dentists and professionals share valuable insights. By building these relationships and learning from others’ experiences, dental students can better understand the type of practice they want to create and the best way to achieve their goals.

Leveraging Social Media in Dentistry

Interestingly, Sarina, who is considered a social media influencer, spoke about the power of social media in dentistry. She described how platforms like Instagram and YouTube offer an excellent opportunity for networking, learning, and even marketing future dental practices. For those looking to stand out in today’s competitive environment, leveraging social media is becoming increasingly important, especially for reaching younger patients and staying connected with peers in the industry.

Support from Edwards & Associates PC

As a final note, Ash reminded listeners that they offer free contract reviews for new dental graduates entering their first associateships. With decades of experience in dental-specific accounting and financial services, the firm provides invaluable support for dentists at all stages of their careers. Whether it’s reviewing employment agreements, offering business advice, or helping with long-term financial planning, they are dedicated to supporting the dental community.

Understanding What you Can (and Can’t) Write-Off for Your Dental Practice

On a recent episode of Beyond Bitewings, we tackled some of the most common—and occasionally amusing—questions we receive from dental practice owners. The main focus is on a hot topic: vehicle write-offs. Let’s break down the conversation and explore what you need to know before deciding to write off that new ride.

Can I Deduct My New Car Purchase?

One of the most frequently asked questions we get from dental practice owners is whether they can write off a newly purchased vehicle. The answer, as with many things in tax law, is “it depends.”

  • Business Use Matters: For a vehicle to qualify for a deduction, it must be used primarily for business purposes—at least 50% of the time. This usage ratio is crucial. If your dental practice requires you to travel between multiple locations or regularly transport supplies, you might be in luck. However, if your business use is less than 50%, you may only be able to deduct a portion of the expenses, such as through the mileage rate.
  • Vehicle Type Counts: The type of vehicle also influences how much you can deduct. Heavier vehicles, those weighing more than 6,000 pounds, may qualify for more significant deductions under the Section 179 rule, but again, their primary use must be business-related. Your typical compact car used mainly for commuting? Not so much.
  • Beware the Sales Pitch: One of the most significant points raised was a caution against taking tax advice from your car salesperson. While they may claim that you can write off your new car purchase, the reality is more nuanced. Factors such as income limitations, vehicle weight, and business use percentage all play a role in what can actually be deducted. In other words, don’t let a good sales pitch lead you to believe you’ll get a tax break that doesn’t really apply to your situation.

The Changing Landscape of Business Travel

Another interesting takeaway from the episode is how the traditional use of vehicles for business purposes has shifted. Gone are the days when dental practice owners would need to drive to the bank, post office, or even Continuing Education (CE) events. With everything now accessible online or delivered to your doorstep, justifying business mileage for these activities is much harder.

What About the EV Credit?

In recent years, many dental professionals have shown interest in electric vehicles, partly due to the potential for a federal tax credit. However, Lorraine Kent, tax manager at Edwards & Associates, points out that high-income earners—like most dentists—often don’t qualify for the electric vehicle (EV) credit due to income limitations. So, before you sign on the dotted line for that new Tesla, be sure to consult with your tax advisor to see if you’re eligible for the credit.

Gifts and Incentives: Tread Carefully

In another part of the discussion, the team addressed the issue of gifts. Say you want to reward your top-performing associate with a nice gift—perhaps a Rolex. You might think this is a great way to show appreciation, but the IRS has different ideas. Business gifts are generally limited to $25 per person per year. Anything above that has to be reported as wages, which means it’s subject to payroll taxes. So, while a luxury watch might seem like a generous gift, it could complicate your tax situation significantly.

The Bottom Line

Vehicle write-offs and other deductions can be valuable, but only if they’re handled correctly. As a dental practice owner, it’s crucial to have a trusted advisor who can guide you through these complex issues and help you make the best decisions for your practice. If you have questions or need help understanding what’s deductible and what’s not, don’t hesitate to reach out to the team at Edwards & Associates. We are here to help you navigate the financial intricacies of your dental practice with clarity and confidence.

For more information on tax strategies tailored to dental practices, check out other pages on our website and listen to the full podcast episode on Beyond Bitewings. Stay tuned for more insightful discussions on managing the business side of dentistry!