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, â€śWhy 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.

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.

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 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!

Noncompete Agreements Get Reprieve

Following the Federal Trade Commission’s (FTC) noncompete agreement ban has been quite a ride. In our last article on this issue, we discussed how dueling rulings were leading to confusion. Some of that confusion was cleared up yesterday, August 20, 2024, when U.S. District Judge in Dallas, Ada Brown, blocked the FTC’s proposed ban.

This ruling comes after the U.S. Chamber of Commerce and Ryan LLC challenged the FTC’s authority to enforce such a broad prohibition. Judge Brown stated that the FTC lacked the necessary evidence to justify a sweeping ban on noncompetes, deeming the rule as arbitrary and capricious. The ruling is seen as a victory for businesses that argue noncompetes are essential for protecting trade secrets and maintaining competitive balance. The FTC, which had aimed to implement the rule by September 4, is now considering an appeal, emphasizing that the decision does not prevent them from addressing noncompete issues on a case-by-case basis.

For dental practices, this ruling highlights the ongoing debate over noncompete agreements and their role in the workforce. As the situation evolves, it is crucial for dental practice managers to stay informed and consult with experts to understand how this might impact their hiring and employment practices. While the immediate threat of a blanket ban has been halted, the legal landscape surrounding noncompetes remains complex and could see further changes depending on future appeals or legislative actions.

In the meantime, dental practices should review their existing noncompete agreements to ensure they are fair, reasonable, and compliant with current laws, and consider the potential impacts on employee retention and competition in the industry.

Boost Employee Benefits with Student Loan Matching Contributions

When it is hard to find employees, dental practices that can bring something to the table that attracts – and retains – good team members will win the war for talent. Here’s something to consider: expand your retirement savings plan to match employee student loan payments. 

Based on the guidance provided in IRS Notice 2024-63, dental practices can help employees grow their retirement savings, even if those employees are currently prioritizing paying off student loans. This option applies to retirement plans years beginning after December 31, 2023, so you can implement it right away too. Here’s a closer look at what this means for dental practice employers and their teams: 

  • New Matching Opportunities: Employers can now match qualifying student loan payments, allowing employees to benefit from retirement savings growth while managing their educational debt. This is a strategic move, especially for dental practices looking to retain younger staff who may be burdened by student loans.
  • Certification Process: Employees will need to certify that their student loan payments qualify for these matching contributions. This ensures that the benefits are accurately distributed and that employees receive the retirement contributions they deserve.
  • Flexible Plan Integration: The IRS guidance offers flexibility in how dental practices can integrate these matching contributions into their existing retirement plans. Employers can adopt procedures that fit within their unique plan structures, making the transition smoother.
  • Nondiscrimination Testing Adjustments: To accommodate this new benefit, the IRS has provided special relief from certain nondiscrimination tests for 401(k) plans. This helps ensure that offering student loan matching contributions won’t lead to compliance challenges.

Why This Matters for Dental Practices

By implementing this new option, dental practices can strengthen their employee benefits package, particularly appealing to staff members who are managing student debt. This can improve employee satisfaction and retention, contributing to a more stable and committed workforce.

What Next?

Dental practice owners should consider how this new guidance could enhance their retirement plan offerings. If you’re interested in exploring how to implement these changes in your practice – even if you aren’t currently a client – don’t hesitate to reach out for expert advice tailored to your specific needs. We can help ensure your plan is compliant and optimized for both your practice and employees.

Solving Common Dental Practice Challenges with Virtual Assistants

In a recent Beyond Bitewings episode, Beth Lachance, the founder and CEO of Global Medical Virtual Assistants, joined the discussion to share insights on how virtual assistants are transforming the operations of dental practices and highlighted the growing trend of remote staffing as a solution for the administrative challenges faced by dental professionals. Her company specializes in providing virtual assistants who manage tasks like front desk operations, insurance verifications, and revenue cycle management, which are crucial yet time-consuming for practice owners.

Beth emphasized that many dental practices struggle with the demands of running a business while trying to focus on patient care, a topic we cover frequently on Beyond Bitewings. The administrative burden often falls on front desk staff, leading to inefficiencies and potential burnout. Virtual assistants offer a way to offload these tasks, allowing in-house teams to focus on patient care and improving the overall efficiency of the practice.

One of the key points Beth made was the cost-effectiveness of using virtual assistants – who can cost significantly less than employing full-time, in-house staff – without sacrificing quality. These virtual assistants are often dedicated exclusively to the practice they are assigned to, ensuring consistent and personalized service.

Moreover, virtual assistants can help practices scale more effectively by managing the administrative workload, thereby freeing up resources for growth. This is particularly important in the post-COVID era, where staffing challenges and rising operational costs have made it difficult for many practices to maintain profitability.

Beth also addressed concerns about the personal touch in patient care, assuring listeners that her virtual assistants are highly trained professionals who can seamlessly integrate into the practice’s workflow, just like any other remote employee. 

The episode provides valuable insights into how dental practices can leverage virtual assistants to streamline operations, reduce costs, and improve patient care. For dental professionals looking to optimize their practice management, exploring virtual assistance could be a game-changer. If you are interested in learning more, you can download Beth’s book, Best Tasks to Delegate to a Medical Virtual Assistant, on their website.

Understanding the New IRS Rules for Retirement Account Withdrawals

The IRS has made important changes to how you must withdraw money from your retirement accounts. Knowing these new rules is important for good tax and financial planning. Here’s a simple overview of what’s changed and what it means for you.

Key Changes in the Rules

  • Raising the Age for Withdrawals: In the past, you had to start taking money out of your retirement accounts at age 70½. This was later moved to age 72, and now, starting in 2023, it’s been moved to age 73. In 2033, this age will increase to 75. These changes give you more time to grow your savings before you have to start taking money out.
  • Changes for Inherited Retirement Accounts: Before, if you inherited a retirement account, you could spread the withdrawals over your lifetime. Now, if you inherit an account, you might have to empty it within 10 years. This rule applies to accounts inherited after December 31, 2019.
  • Who Is Affected by the 10-Year Rule?: The 10-year rule mostly applies to people who aren’t considered “eligible beneficiaries.” Eligible beneficiaries include spouses, minor children, disabled or chronically ill individuals, and those close in age to the person who passed away. If you’re an eligible beneficiary, you can still spread the withdrawals over your lifetime. If not, you’ll need to withdraw all the money within 10 years.
  • Annual Withdrawals: If the original account owner had already started taking money out, the person inheriting the account will usually need to continue taking money out each year. This prevents you from letting the money grow for 10 years and then taking it all out at once.

What Should You Do?

  • Update Your Beneficiaries: Make sure your retirement accounts list the right people to inherit your money according to your wishes.
  • Consider Roth IRA Conversions: Converting traditional IRAs to Roth IRAs might help your heirs save on taxes. Roth IRAs don’t require withdrawals during your lifetime, and your heirs can withdraw the money tax-free.
  • Plan for Taxes: The new rules can make taxes more complicated. Planning ahead can help you avoid paying too much.
  • Think About Using Trusts: Setting up trusts can give you more control over how your money is distributed to your heirs.

These changes bring new opportunities and challenges, so careful planning is important. For advice tailored to your situation, contact us. We specialize in helping people like you navigate these rules and make the most of your retirement savings.

FTC’s Non-Compete Ban: Dueling Court Rulings

Keeping up with the Federal Trade Commission’s (FTC) rule banning most non-compete agreements is nearly a full-time job. We initially wrote about it here, then published an update here, and now we have even more information to share. 

Overview of Original Non-Compete Ban Ruling (April 23, 2024)

On April 23, 2024, the FTC announced a final rule that prohibits employers from entering into non-compete agreements with workers, including senior executives, after the rule’s effective date of September 4, 2024. The rule also renders existing non-competes unenforceable for most workers, with exceptions for senior executives and agreements made as part of a bona fide sale of a business. The FTC’s decision was driven by findings that non-compete clauses suppress wages, stifle innovation, and hinder new business creation. The FTC estimates that the ban will lead to a 2.7% annual increase in new business formation, higher worker earnings by an average of $524 per year, and significant reductions in healthcare costs.

Ruling 1: Northern District of Texas Ruling (July 3, 2024)

U.S. District Court Judge Ada Brown in the Northern District of Texas granted a preliminary injunction against the FTC’s non-compete ban, preventing the FTC from enforcing the rule against the plaintiffs (Ryan LLC and several trade associations, including the U.S. Chamber of Commerce.) The court found that the plaintiffs were likely to succeed in arguing that the FTC lacks statutory authority to issue the rule and that the rule is arbitrary and capricious. However, this injunction is limited to the named plaintiffs and is not a nationwide injunction. 

Ruling 2: Eastern District of Pennsylvania Ruling (July 23, 2024)

In contrast to the Texas ruling, Judge Kelley Brisbon Hodge of the U.S. District Court for the Eastern District of Pennsylvania upheld the FTC’s authority to issue the non-compete ban. In this case, the court found that the FTC does have the authority to issue such a rule and ruled against the plaintiff, ATS Tree Services LLC. 

What is Next?

These conflicting rulings create uncertainty about the future of the FTC’s non-compete ban. The Texas court has indicated it will issue a final order on the merits by August 30, 2024, just days before the FTC’s rule is scheduled to go into effect on September 4, 2024.  Regardless of what the Texas court does at the end of the month, it is likely that these cases will continue through the appeals process, eventually leading to a resolution at a higher court level.

For dental practices, this situation creates uncertainty. We will continue to monitor these developments closely and provide updates on any further movement or rulings.

Legislation to Expand Tax Breaks Voted Down by U.S. Senate

A significant piece of tax legislation was rejected by the US Senate last week even though it passed overwhelmingly by the US House in January 2024. This decision can impact both families and businesses, so we wanted to break down what it means for each. 

What Was in the Bill?

  • Child Tax Credit Expansion: The bill sought to increase the amount of the child tax credit and potentially expand eligibility to families that did not qualify before. 
  • Business Tax Breaks: The bill proposed to restore tax deductions and credits, including for equipment, interest costs, and research and development activities. These were not new breaks, but ones that had lapsed. 

Impact on Dental Practices and Families

  • For Families: The proposed child tax credit expansion will not go into effect. Those that currently qualify can still take advantage of the credit, but it will not be expanded to cover more families. 
  • For Dental Practices: For those that anticipated more easily writing off 100% of the cost of new equipment in the first year, that is now off the table. You will need to continue operating under the existing tax framework. 

Optimize Your Tax Situation

While this may not have been the outcome some had hoped for, there are still plenty of ways to take advantage of existing laws. There are myriad other tax credits and deductions for which both families and businesses may still qualify. We encourage all of our clients to take advantage of early tax planning so we can determine which ones will help lower your overall tax liabilities and optimize your tax strategy for this year and the future as well. 

Proactive tax planning is one of the keys to financial success, regardless of legislative changes. Reach out to us with questions or to schedule a consultation.