Choose a dental practice retirement plan by comparing who must be covered, what the employer must contribute, and who will perform the recurring work. A SEP, SIMPLE IRA, and 401(k) create different commitments. The easiest account to open is not necessarily the easiest benefit for your practice to maintain.
Start with a staff census and written proposals from qualified retirement-plan professionals, coordinated with your CPA and benefits counsel as needed. This is a US employer-planning comparison, not individual investment advice or a recommendation about how much you personally should save. Verify the rules and limits for the actual plan year before adoption.
Start with the workforce, not the owner's desired contribution
Prepare a census showing owners, employees, hire dates, ages, compensation history, hours and service history, and expected staffing changes. Use an appropriate secure channel; an initial comparison does not need patient information or employees' account credentials.
Include part-time staff, recent departures, related practices, family employees, and any leased-worker arrangements for the adviser to review. Do not decide eligibility solely from job titles or the current payroll roster. Ask the adviser which employers and service periods must be considered together.
State the business objective clearly. Is the practice introducing a basic employee benefit, supporting employee payroll savings, retaining flexibility in employer funding, or evaluating a more customized contribution design? Rank those aims before comparing provider fees.
Keep this decision separate from practice succession planning. Selling the practice and sponsoring a retirement benefit are different projects, even when they belong in the same owner's long-term plan.
Understand the three starting structures
SEP: employer funding with an eligibility review
A SEP uses individual retirement accounts funded through employer contributions. Annual employer contributions are optional, but contributions made for a year must include eligible participants. Eligibility can depend on age, service in three of the previous five years, and a current-year compensation threshold; a plan may be less restrictive. Contributions are immediately vested, and employers generally do not file Form 5500 for a SEP. IRS SEP plan guidance
Most SEPs, including the IRS model, allocate the same percentage of compensation to participants. The self-employed owner's calculation needs separate care. IRS SEP contribution FAQs
For proposal review, ask for the employer cost across the entire eligible census. “We can choose whether to contribute” is useful flexibility, but it does not mean an owner can fund only their own account whenever they wish.
SIMPLE IRA: employee deferrals plus an employer obligation
A SIMPLE IRA permits employee salary deferrals and requires an annual employer matching or nonelective contribution. It generally serves eligible employers with no more than 100 employees and restricts other employer plans. Participation ordinarily follows prior and expected compensation tests, not a full-time-only rule. Contributions are immediately vested; employers generally have no annual filing requirement, but employee notices and contribution administration remain. IRS SIMPLE IRA guidance
Ask the provider to specify the exact eligibility test and funding formula, including any applicable enhanced-contribution rules. A matching formula and a contribution for all eligible employees can produce different costs when participation changes. Do not compare them using the same assumed dollar total.
401(k): design choices with continuing administration
A traditional 401(k) permits employee deferrals and can include employer contributions, with annual nondiscrimination testing. A qualifying safe-harbor design can avoid certain tests by meeting its requirements, including employer funding. Vesting and notices depend on the design; employee elective deferrals are fully vested. IRS 401(k) overview
Ask for separate traditional and safe-harbor proposals if both are plausible. Have the adviser explain participation rules, applicable part-time service treatment, permitted exclusions, and testing exposure for your actual census. A provider's “safe harbor” label does not eliminate every compliance task.
Automatic enrollment can be required for newer 401(k) plans, subject to exceptions. Confirm whether your proposed plan is affected instead of treating the feature as automatically optional. IRS Publication 560
Compare the commitments in the proposals
Use this as a question sheet, not a substitute for the governing documents:
| Decision | SEP proposal | SIMPLE IRA proposal | 401(k) proposal |
|---|---|---|---|
| Workforce coverage | Who meets the adopted eligibility rules? | Who meets the compensation tests? | Which service, entry-date, and exclusion rules apply? |
| Employer funding | What does the chosen allocation cost for everyone eligible? | What does the required formula cost at different participation levels? | Which contributions are discretionary or required by the selected design? |
| Payroll work | What compensation data supports the allocation? | Who implements and checks employee elections? | Who checks elections, enrollment settings, limits, and corrections? |
| Annual work | Who checks eligibility and contribution completion? | Who handles notices and funding reconciliation? | Who handles testing, notices, required filings, and provider review? |
Request itemized fees for setup, recordkeeping, administration, investment-related services, payroll integration, amendments, corrections, and termination. Ask which charges the practice pays and which reduce participant accounts. Compare the same service scope rather than one provider's headline fee with another's complete cost.
Model one staffing change before signing
Consider this hypothetical proposal exercise, not a recommended plan or contribution level. Assume the adviser has approved a proportional employer allocation for the example, with $180,000 of eligible owner compensation and $320,000 of eligible staff compensation. All amounts are within the applicable limits, and the owner is not using a self-employed compensation calculation.
At an illustrative 4% allocation, the employer cost is $7,200 for the owner and $12,800 for staff, or $20,000 total. If another $60,000 of compensation becomes eligible, the same formula adds $2,400. Provider fees are separate.
This is why a quote based only on the owner's account is incomplete. Ask each adviser to rerun their proposal for a new hire becoming eligible, lower collections, and higher employee participation. Do not apply this simplified allocation to a matching or customized 401(k) formula.
Add the reviewed funding amounts and dates to the cash-flow forecast. A plan should be evaluated against the practice's payment obligations, not just an expected tax deduction.
Assign the work that remains after outsourcing
For ERISA-covered plans, DOL explains that hiring providers does not remove all fiduciary responsibilities. Provider selection and monitoring, timely employee-contribution deposits, and required reporting still need accountable owners; Form 5500 requirements vary by plan. DOL fiduciary-responsibility guidance
As a practical handoff, name a preparer and reviewer for census updates, payroll elections, funding checks, notices, annual testing or filings where required, and correction requests. Ask the provider to put the applicable deadlines on a calendar for the actual plan. Do not assume that sending a payroll file proves the money reached participant accounts.
Before launch, walk through a new hire, an election change, a payroll correction, and a departure using sample data. Confirm who notices an error and who authorizes the response. Then align the employee handbook with the approved benefit description while directing employees to the controlling plan documents.
Finish with the chosen design, reviewed census, total employer funding estimate, complete fee schedule, implementation dates, and assigned responsibilities. The decision is ready when the owner understands both the benefit being offered and the recurring work needed to maintain it.
