Just a Little Bit More: A MEDIQUS Client Case Study

Ronald J. Paprocki, JD, CFP®

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How a medical specialist significantly decreased his tax burden and increased his retirement savings.

A reporter once asked John D. Rockefeller–at the time the world’s richest man–“How much money is enough?” 

His famous reply? “Just a little bit more.”

Maybe you feel the same way.

You may not be a Rockefeller, but as a doctor, you are a high earner. 

Yet, you still feel uneasy! Each month you wish you had “just a little bit more” to set aside for retirement, to leave to your kids and grandkids, or to give to a favorite charity.  

Maybe you look at your tax bill and think “Good grief! No wonder I can’t save as much as I’d like! If only I had ‘just a little bit more.”

If that’s you, you’ll appreciate this real-life story of how our team at MEDIQUS Asset Advisors helped one physician move from getting “slammed by taxes” to seeing more of his wealth preserved and invested wisely.

The clients

Dr. Thompson* was a medical specialist with a very successful solo practice. He was married and his wife, Beth, was actively involved in the day-to-day operation of the practice. The couple had three young children.

In 2015, Dr. Thompson’s father–also a physician–told him in so many words:

“I’m really proud of you. You and Beth work so hard in your practice and you’re doing so well! Yet, from everything you’ve told me, it sounds like you’re not getting to reap all the financial rewards you deserve. I wish you’d talk to Ron Paprocki at MEDIQUS. A few years ago, he showed me some smart ways to cut my taxes and save more for retirement. Why don’t you give him a call and see what he has to say?”

That’s exactly what the younger Dr. Thompson did.

What we discovered


As we do with all our clients, we began our consultation with the Thompsons by doing a lot of listening. We asked questions like:

  • What are your bedrock values? 
  • Tell us about your interests and dreams. 
  • What specific goals do you have?
  • How would you like to use your financial resources in the future? 

We always start here because we believe the answers to these fundamental, big-picture questions should drive any financial planning we do. 

Next, we walked the Thompsons through the proven process we follow with our clients. (They already knew some of this from talking with the elder Dr. Thompson.) 

 After framing the Thompsons’ financial future based on their fundamental values and goals, rather than strictly on dollars and cents, they were eager to start the next steps. That’s when we began to gather detailed information about the Thompsons’ assets, investments, advisors, etc.

From there, we did some serious number-crunching. We ran various “what if?” scenarios and looked at different financial alternatives. 

After putting all our findings and recommendations together, we sat down with the Thompsons again and reported our findings.  

“Here are the areas where you are healthy financially…and here are the areas that need prompt attention. Here’s why we say those things. Here’s what we believe will happen if you stay on your current path. Here are the possible benefits if you make certain changes. Here are the possible risks related to those changes. Finally, here are the changes we recommend.”

In brief, our comprehensive financial analysis revealed these issues:

  1. The Thompsons weren’t utilizing tax-efficient investments. Their investments involved transactions that generated large taxable dividends and capital gains** annually, meaning…
  2. The Thompsons were getting hammered by the tax code! That, in turn, meant…
  3. The Thompsons weren’t able to save nearly as much as they wanted!

Our research and conversation were illuminating for them. At last, they were able to answer the question, “With such a high income, why aren’t we in better fiscal shape?”

We had identified the problem. Now it was time to solve it!

How we helped

We began by implementing a new investment strategy, one that would make sense for all the Thompsons’ assets–those in his name, the ones in Beth’s name, as well as their combined assets. 

Primarily, this consisted of introducing a couple of qualified retirement plans in Dr. Thompson’s solo practice. 

This one change allowed the Thompsons to start putting roughly $250,000 a year into a savings program on a tax-deferred basis. 

We also helped the Thompsons’ tax situation through tax loss harvesting. Tax loss harvesting is a process where investments that are currently worth less than they were purchased for are sold at a loss. Proceeds from such sales are typically invested according to the strategy in place for the account so you are always on track. The realized losses can then be applied against gains from selling other securities, or they can be rolled over to future years.***

No longer were the Thompsons paying huge taxes on their earnings, then turning around and making investments that resulted in them paying even more capital gains taxes annually.

What happened as a result

The impact of our work together over the last seven years has been transformative. As a result, the Thompsons have been able to:

  • Optimize their investment strategies.
  • Achieve substantial tax savings with tax-deferred retirement plans
  • Save much more money for retirement annually
  • Establish a clear path towards financial independence
  • Facilitate their goal of wanting to help their children through college and the transition to adulthood.
  • Focus less on the “money side of their practice” and more on the
    “patient side.”
  • Feel more confident overall about the future.

What does the future look like?

In recent months, we have begun focusing on estate planning with the Thompsons. We want to pave the way for a smooth transfer of assets–whenever that time comes.

Meanwhile, Dr. Thompson intends to work for at least another decade, and his practice remains solo for now. He has acknowledged that he will likely be approached by larger entities seeking to acquire his practice.

Should that happen, MEDIQUS stands ready to assist the Thompsons in navigating such a transition. We can offer perspective on legal and lifestyle considerations.****

We’d love to serve you too. 

What about you?

If you’re thinking “I wish I had just a little bit more”…or if, like the Thompsons, you’re tired of getting hammered by the tax man and wish you could find a way to increase the amount you are saving for retirement, reach out to our team at MEDIQUS. 

Simply click here, fill out the short form, and we’ll be in touch right away. Or call 800-883-8555 and speak to an advisor.

Currently, we serve more than 400 individuals and some 80 nonprofit organizations–mostly in the medical field. We have clients in 40+ states and four countries. 

 

Curious about Engaging with MEDIQUS?

It’s not complicated…just three steps:

  1. Introduction: You schedule an initial meeting so we can learn about your financial goals and explain the MEDIQUS philosophy and process. If we’re a fit, we’ll gather all your pertinent financial information.
  2. Investigation: We do a careful study of your current situation. In light of your goals, we prepare a comprehensive analysis of your financial strengths and weaknesses. We then present your best options and make our recommendations.
  3. Implementation: Based on your decisions, we work with your other advisors (attorneys, CPAs, etc.) to implement the strategies best able to get the results you seek.

 

*This story is for illustrative purposes only. Personally identifying information, such as the client’s name, has been altered. This case study is not a guarantee or indicator of future results, and results will differ substantially.

**A capital gain distribution is a payment by a mutual fund or exchange-traded fund of some of the proceeds from sales that occurred within the fund throughout the year. These distributions are taxable, unless held in a tax-deferred account, and in addition to dividend/interest payments that a fund makes during the year as well.

*** Effective June 21, 2005, Internal Revenue Service regulations require that certain types of written advice include a disclaimer. To the extent the preceding message contains written advice relating to a Federal tax issue, the written advice is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer, for the purposes of avoiding Federal tax penalties, and was not written to support the promotion or marketing of the transaction or matters discussed herein. 

MEDIQUS Asset Advisors, Inc. does not provide tax, legal or accounting advice. The information contained in this report is for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction or regarding any questions you may have with respect to this communication.

****While members of our team are educated as attorneys, MEDIQUS Asset Advisors, Inc. does not provide legal advice. You should consult your own legal advisors before engaging in any transaction or regarding any legal questions you may have.

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