Below are the most common questions dental practice owners ask about 401(k) plans, covering plan types, costs, fiduciary responsibility, self-directed brokerage accounts, SECURE Act 2.0, plan setup timelines, and more. The answers are general education based on IRS and ERISA rules in effect as of 2026, not individual advice. For questions specific to your practice, start a conversation with our team.
By A.J. Stevenson, Financial Advisor and Partner at Virtus Financial Partners. Last reviewed June 2026.
A 401(k) allows both you and your employees to contribute, with optional profit-sharing for extra deductions. It generally requires annual nondiscrimination testing, unless it's designed as a safe harbor plan, plus a Form 5500-series filing each year. A SEP-IRA is simpler and low-admin. You contribute the same percentage of compensation for yourself and every eligible employee, capped at 25% of compensation (for an S-corp owner that's your W-2 wages), so if you put in 20% for yourself you put in 20% for everyone eligible. Once you add your first employee, the SEP becomes unfeasible. A Solo 401(k) works great for a practice with no employees other than the owner and an optional spouse, but once you hire your first eligible employee, you need a full 401(k). For most dental practices with a team, a 401(k) is usually the strongest fit. It's more flexible and offers stronger tax planning, though it takes more administration than a SEP or Solo 401(k).
A safe harbor plan is a specific 401(k) plan design that automatically satisfies the ADP and ACP nondiscrimination tests, so those annual tests don't have to be run. In a normal 401(k), you have to test annually to make sure the plan doesn't favor highly compensated employees (like you, the owner). If testing fails, you might have to refund contributions to high earners, which is disruptive and can be costly to correct. Safe harbor avoids this by requiring employer contributions (usually 3-4% non-elective or matching) to eligible employees. Because the required contribution is guaranteed and fully vested, the plan automatically passes the ADP and ACP tests. For most growing dental practices, a safe harbor plan is often the right move. You contribute consistently and your team gets a guaranteed safe harbor contribution, in exchange for committing to that required employer contribution each year.
For how to choose among plan types, see which plan type fits your dental practice.
A profit-sharing plan lets you make a discretionary employer contribution each year (for yourself and your team). You decide each year how much to contribute, up to a deduction limit of 25% of total eligible payroll, and each person's allocation is also subject to the annual IRS additions limit. In the simplest design everyone who's eligible gets the same percentage, but other methods, such as cross-tested or new-comparability allocations, can weight more toward the owner, subject to IRS nondiscrimination and gateway testing, so suitability depends on your census and goals. There are no required contributions, so you only contribute when profits support it. Best for dental practices with variable income or that want flexibility. Often combined with a guaranteed safe harbor base contribution (3-4%) PLUS a discretionary profit-sharing component on top when profits are good. This is a powerful tool to get you to the max $72,000 for 2026, as adjusted annually by the IRS, under age 50 and to increase your tax savings as the contributions are tax deductible.
A well-run 401(k) creates tax deductions in two places, and many dental practice owners only count one of them. First, the plan's administrative costs the practice pays, including recordkeeper and TPA fees, are deductible business expenses. Second, the contributions are tax-advantaged too. Employer contributions such as safe harbor, match, and profit-sharing are deductible business expenses, and the owner's own pre-tax salary deferrals reduce taxable income. If your plan isn't designed to make the most of profit-sharing allocations for the owner, you may be leaving deductions on the table. Depending on your income and plan design, your contributions and plan costs together can become one of your larger annual tax deductions. Consult your tax advisor for your situation.
All-in costs for an unbundled plan include recordkeeper fees, investment expense ratios, TPA compliance fees, and advisory fees. Here's how it can look:
It helps to separate who pays what. The practice pays the recordkeeper and TPA fees, which are deductible business expenses, and for a typical dental practice (8 employees, $500k AUM) those run roughly $3,500-$5,100/year based on the ranges above. The advisory fee, fund expense ratios, and any per-participant fees are asset-based and come out of participant balances. For an owner with sufficient income, the tax savings from proper plan design usually offset much or all of the plan's cost, and often produce a net tax savings overall. The exact result depends on your income, plan design, and staff census.
For the full breakdown, see what a dental practice 401(k) actually costs.
Some recordkeepers charge a deconversion or termination fee, and we identify any such fee before you decide. There's typically no cost to change advisors. Asset transfer can take 2-8 weeks. We handle the process from start to finish as your coordinator between all of the parties, so all you have to do is review and sign where necessary.
Savings vary by plan, but in the dental practice plans Virtus has reviewed through June 2026, we frequently find ways to reduce fees and improve plan design, through lower recordkeeper fees, lower-cost investment funds, and better plan design. The plan design improvements, which unlock additional tax-deferred contributions for the owner, are often worth more than the fee reductions alone.
When the tax savings from proper plan design offset or exceed the plan's total fees, the net economic impact of running the plan can be highly favorable. For example, a single-doctor practice with an owner W-2 of $360,000, a spouse on payroll at $35,000, and 8 eligible staff averaging $50,000 could deduct about $116,550 in combined contributions for the owner and the team in a single year. After covering the staff contributions and the plan's out-of-pocket admin costs, a plan designed like this nets the practice roughly $19,300 in tax savings at a 37% marginal rate. The question worth asking is how much the plan saves you in taxes, not just what it costs to run. Results vary based on income, plan design, and tax situation. Consult your tax advisor.
Hypothetical illustration for educational purposes only. This example does not reflect any actual client, and the figures are not actual results or a guarantee. It assumes a 37% marginal tax rate and the specific contributions shown. Your results will differ.
A fiduciary is someone who is legally required to act in someone else's interest, not their own. Here's why it matters for your dental practice plan. A fiduciary advisor is required to act in your best interest on an ongoing basis and to disclose or avoid conflicts of interest, including fees. They must monitor investments and make reasonable investment decisions. They're personally liable if they breach that duty. You get legal protection, because if something goes wrong and they violated their fiduciary duty, you have recourse. Many advisors aren't fiduciaries. They're held to Regulation Best Interest (Reg BI), which applies recommendation by recommendation, while an RIA owes an ongoing fiduciary duty. These are different standards, and the distinction matters for how your plan is monitored over time. A fiduciary is legally held to a higher, continuous standard. Your plan can be structured with 3(21) or 3(38) fiduciary coverage on investments. Under a 3(38) arrangement, full discretionary authority over plan investments sits with the fiduciary, not you as the plan sponsor. Under a 3(21) arrangement, we provide investment recommendations and share fiduciary responsibility with you as the plan sponsor, while you retain final decision-making authority.
A 3(21) fiduciary provides investment recommendations, but the plan sponsor (you) makes the final decision and retains liability. A 3(38) fiduciary has full discretionary authority to select, monitor, and replace investments, and assumes the legal liability for those decisions. Your plan can be structured with either 3(21) or 3(38) fiduciary coverage, depending on your situation and our recommendation for the optimal approach.
Yes. Virtus Financial Partners is an SEC-registered investment advisor (RIA) operating under a fiduciary duty to its clients. Your plan can also benefit from ERISA 3(38) fiduciary oversight of plan investments, meaning someone with full discretionary authority, not just advisory input, is responsible for investment decisions. This is a higher, ongoing legal standard than the recommendation-based best-interest standard (Reg BI) used by broker-dealers.
Form 5500 is the annual IRS, DOL, and PBGC report for employee benefit plans, including 401(k) plans. Virtually every ERISA-covered 401(k) plan files a Form 5500-series return every year, regardless of size. Plan size only decides which form and whether an audit is required. A practice with fewer than 100 participants with account balances generally files the shorter Form 5500-SF, an owner-only plan files Form 5500-EZ, and an independent plan audit is generally required only once a plan reaches 100 participants with account balances at the beginning of the plan year. Depending on your plan structure, the recordkeeper or TPA prepares the filing, and the plan sponsor signs it. We coordinate and monitor the process to make sure nothing falls through the cracks.
ERISA and IRS rules require several annual notices to plan participants, including the safe harbor notice (if applicable), the qualified default investment alternative (QDIA) notice, the 404(a)(5) fee disclosure, and the summary annual report. The recordkeeper or TPA we work with generates and distributes these notices automatically on the required schedule (the specific arrangement depends on your plan's service providers). You don't have to track compliance deadlines, draft notices, or worry about missed distribution windows. This is one of the key operational advantages of working with a modern recordkeeper built for small businesses.
At minimum, annually. ERISA requires plan fiduciaries to monitor plan fees and investments on an ongoing basis. A comprehensive audit every 1-2 years, covering fees, investments, and plan design, is considered best practice. If your plan hasn't been reviewed in two or more years, a review may surface opportunities to reduce fees or improve plan design.
You'll need your most recent plan statement (quarterly or annual from your recordkeeper), your 408(b)(2) fee disclosure (the one your service providers give you as plan sponsor), your plan document (if available), and basic practice info, number of employees, approximate annual revenue, and owner income range. Your recordkeeper can provide most of these documents on request.
A self-directed brokerage account (SDBA) is a side account within your 401(k) that gives you access to individual stocks, ETFs, and other investments beyond your plan's standard fund lineup. You might want an SDBA if you have investment knowledge and preferences, you want to pick individual stocks or specific ETFs, your plan contributions are large enough to make it meaningful, or you want to coordinate your 401(k) strategy with your personal investments. You probably don't need one if you prefer a fully managed, hands-off approach, you're not interested in picking individual investments, or you want simplicity. An SDBA is a feature for owner-dentists with investment interest and capital. Where an SDBA really earns its place is coordination. Because we also manage your personal investments, we can treat the SDBA and your outside accounts as one portfolio. That means we set your overall asset allocation across every account and handle asset location, placing tax-inefficient holdings inside the 401(k)/SDBA where they grow tax-deferred while keeping tax-efficient holdings in your taxable accounts. That kind of coordination is hard to get when your 401(k) and your personal portfolio are run by different people who never talk. It's not for everyone, and that's okay. We'll help you think through whether it makes sense for you.
More on this in what an SDBA is and how it fits your plan.
Yes, through a self-directed brokerage account (SDBA). An SDBA allows the practice owner to invest in individual stocks, ETFs, bonds, and other securities through Schwab's Personal Choice Retirement Account (PCRA), while employees stay in a professionally managed fund menu. This gives owners investment flexibility with the same tax advantages as a standard 401(k) contribution.
Through the Schwab Personal Choice Retirement Account (PCRA), you can invest in individual stocks, ETFs, mutual funds, bonds, and options (if enabled). The brokerage window holds securities only, so it doesn't offer collectibles, life insurance contracts, or direct real estate (real estate funds and REITs are available). Separately, holding property you use personally or investing in your own business through the plan would be a prohibited transaction.
Schwab does not charge an additional fee for the PCRA brokerage account. Standard Schwab trading commissions apply (currently $0 for online equity trades). However, your recordkeeper or TPA may charge a per-participant SDBA administration fee, typically $100-$200 per participant per year. We disclose the fees for every party to the plan upfront, so you can see the full cost before deciding. The primary cost is the advisory fee you pay your financial professional to manage the assets inside the window.
When participants use an SDBA, they are making their own investment selections within that account. This may limit plan fiduciaries' liability for investment losses that result from the participant's own choices, provided the plan satisfies ERISA Section 404(c) requirements (which include offering a broad range of investment alternatives and giving participants sufficient information). Offering an SDBA does not make you responsible for vetting the specific investments a participant chooses inside the brokerage window, because those are self-directed and sit outside the plan's designated lineup. It also does not eliminate your fiduciary duties entirely. You still need to prudently select and monitor the SDBA provider, apply that same prudent selection and monitoring to the plan's core investment lineup, and confirm the plan document properly authorizes the SDBA feature. We help you structure the SDBA and document your selection and monitoring process.
SECURE Act 2.0 is legislation signed in December 2022 that changed retirement planning rules. Three parts matter most for dental practices. First, tax credits for new plans. If your practice doesn't currently have a retirement plan, SECURE Act 2.0 provides a startup credit equal to a percentage of your qualified startup costs (100% for practices with 50 or fewer employees, 50% for 51-100), capped at the greater of $500 or $250 per non-highly-compensated eligible employee, up to $5,000 per year for three years (up to $15,000 total). A separate credit can also apply to employer contributions. Because it's a credit, it reduces your tax bill dollar for dollar, which is more valuable than a deduction. Consult your tax advisor for your practice's eligibility. Second, automatic enrollment for new plans. Most 401(k) plans first established on or after December 29, 2022 must include automatic enrollment, effective for plan years beginning after December 31, 2024. Practices that normally employ 10 or fewer people, and businesses less than three years old, are exempt. Where it applies, the recordkeeper handles auto-enrollment, eligibility tracking, opt-out notices, and payroll integration automatically. Third, higher catch-up contributions. SECURE 2.0 added a higher catch-up limit for participants ages 60 to 63, and for tax years beginning after December 31, 2026 (generally 2027), it requires higher earners to make their catch-up contributions on a Roth basis. A higher earner here generally means someone who earned more than $145,000 from the employer the prior year, a threshold the IRS indexes over time. The standard age-50 catch-up continues and is updated annually by the IRS. If you don't have a plan yet, SECURE 2.0 can reduce the net cost of starting one, depending on your eligibility. If you already have a plan, you're capturing the higher contribution limits.
From initial conversation to go-live is typically two to three months.
The timeline is manageable. The biggest variable is how quickly you provide documentation. If you're organized and responsive, we're closer to 8-10 weeks. If there's back-and-forth, it can stretch to 12-14.
No. We handle the whole transfer for you.
What we do.
What you do.
We handle the heavy lifting. The whole transfer takes 4-8 weeks from start to finish, depending on how responsive your current recordkeeper is.
360° payroll integration is a two-way automated connection between your payroll system and your 401(k) recordkeeper. Data flows in both directions. Payroll data (wages, contributions, census changes) goes to the recordkeeper automatically, and employee election changes (contribution rate updates, new enrollments, loan repayments) flow back to your payroll system automatically. Without integration, someone at your practice has to manually update contribution data in both systems every pay period. That means duplicate data entry, risk of errors, and potential compliance issues if contributions are late or incorrect. A 180° integration only sends data one way (payroll to recordkeeper). A 360° integration handles both directions automatically. Where your payroll provider supports it, we set up 360° integration on every plan we manage. For a dental practice owner who's already managing patients, staff, and operations, this takes most of the contribution-processing work off your plate.
More on this in how recordkeeper and payroll integration works.
Yes, if your plan document permits them, and most do. You can generally borrow the lesser of $50,000 or 50% of your vested balance (the $50,000 limit is reduced by any loan balance you had in the prior 12 months, and a $10,000 minimum may apply). Exact limits depend on your plan. You generally pay it back within 5 years. A loan used to buy your primary residence can be repaid over a longer period your plan sets, often up to 15 years, though that term is a plan choice rather than a fixed legal limit. Interest on the loan is paid back to your own account. Keep in mind a loan also means the borrowed funds are out of the market, repayments are made with after-tax dollars, and an unpaid balance after you separate can be treated as a taxable distribution with possible penalties. The recordkeeper administers the loan process, and repayments are deducted through payroll automatically with 360° integration.
When an employee leaves, they typically have four options. They can leave their balance in the plan (if above the plan minimum), roll it over to their new employer's plan, roll it into a personal IRA, or take a cash distribution (which triggers taxes and potential penalties if under age 59 1/2). The recordkeeper handles the distribution paperwork. As the plan sponsor, you don't have to manage this process, your role is simply to confirm the employee's termination date with the recordkeeper.
It depends on the transaction. If you sell to another dentist, they might assume your plan or you'd wind it down. If you sell to a DSO, the DSO typically has their own plan. If you retire, you can wind down the plan and employees roll their balances to IRAs. The key is to plan this early with your advisor and accountant. Your 401(k) is an asset, and how you handle it affects your sale process and taxes. We help with this.
With 360° payroll integration, new eligible employees are automatically enrolled based on your plan's eligibility rules (typically after a specified waiting period). The recordkeeper sends the enrollment packet, handles the investment election, and payroll deductions begin automatically. If your plan has auto-enrollment (required for most new plans, effective for plan years beginning after December 31, 2024, with limited exemptions), new employees are enrolled at the default contribution rate unless they opt out. You don't need to manually track eligibility dates or send enrollment forms.
Yes. Plan design changes are common and expected as your practice grows. You can adjust contribution formulas, add or remove profit-sharing, change vesting schedules (for future contributions), add an SDBA, or switch between safe harbor designs. Most changes take effect at the start of the next plan year, and some mid-year amendments are possible within IRS limits (mid-year safe harbor changes are restricted). We review your plan design annually and recommend adjustments when your practice circumstances change.
We don't set up your plan and then disappear. Ongoing management includes quarterly investment reviews and an annual plan design review to confirm you're making the most of contributions and tax benefits, compliance monitoring and coordination with your TPA, employee education sessions, payroll integration support, and coordination when life events happen (new hires, terminations, plan loans, hardship distributions, practice transitions). You have a direct point of contact, not a 1-800 number.
This is one of the most common complaints we hear from dental practice owners. If your advisor is unresponsive, it may be worth reviewing whether your plan is getting the ongoing attention it needs. You're not locked in. Switching advisors is typically at no cost and doesn't disrupt your employees' accounts. Start with a complimentary plan audit to see where your plan stands, and we'll show you what proactive management looks like.
Dental practices have specific economics, staffing patterns, and tax planning opportunities that differ from other small businesses. A general 401(k) advisor may not understand the interplay between practice revenue, associate compensation structures, and how those factors affect plan design and contribution strategy. We work with dental practices daily, which means we've seen the common patterns, the typical mistakes, and the design strategies that work best for practices at different stages of growth.
Start with a complimentary plan audit. We'll review your current plan's fees, investments, and design, then show you what we'd change and identify potential savings. Savings vary by plan and are not guaranteed. If you don't have a plan yet, we'll walk you through your options and help you understand the costs, tax benefits, and timeline for getting started. Either way, the first conversation is complimentary.
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