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Welcome to Dental Unscripted, a podcast brand that meets doctors wherever they are at in their professional journey. We talk about starting a practice, buying a practice, and running a practice. We cover a lot of ground on this channel!

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The 401(k) Conversation Most Dental Practice Owners Are Completely Missing

We recently sat down with Caitlin Bryan from Cain Watters & Associates, a CPA firm that’s been working with dental practices for over 40 years, to talk 401(k) plans on Dental Unscripted. We figured we’d share the highlights here because, honestly, most dentists we work with have never been walked through this the right way.

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Why This Is Actually About Your Tax Bill,  Not Just a Staff Benefit

The framing most dentists hear is “offer a 401(k) so your team feels taken care of.” That’s true, but it’s burying the real story.

Every dollar you pull out of your practice is subject to income tax. A 401(k) lets you redirect money you’d otherwise hand to the IRS into your own retirement bucket,  and into your staff’s. As Caitlin put it: “We’re basically taking the money that we would be giving to Uncle Sam and giving it to our employees instead.”

Kane Waters finds that nearly 10 out of 10 times, the employer match cost is fully covered by the tax savings the plan generates. That math usually surprises people.

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How Much Can You Actually Put Away?

Here’s where it gets interesting for owners specifically. There are two contribution buckets:

            
• Salary deferral: $24,500 in 2026, this is the standard employee contribution
            
• Employer contribution (profit sharing): this is the lever that unlocks the big numbers

Stack both together and the 2026 limits look like this:

                                                                                                                                                                                                                                                                                                                                                                                   

Age Range	Max Annual Contribution
Under 50	$72,000
50 and older	$80,000
Ages 60–63 (IRS catch-up window)	$83,250

In a well-structured plan, Caitlin says owners are typically capturing at least 80% of those total contributions for themselves. That’s a meaningful retirement bucket that compounds tax-deferred for decades.

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The 3% Safe Harbor Rule, Your Shortcut to Full Contribution Access

To max out your own salary deferral without risking it getting kicked back to you, most plans elect what’s called the 3% safe harbor contribution. Here’s how it works: you give every eligible employee 3% of their salary, no conditions. In return, the IRS lets you skip the annual nondiscrimination testing that could otherwise force a refund of your contributions.

Since most practice staff earn considerably less than the owner, that 3% outlay is smaller than people expect. **Do the quick math: if your front desk earns $45k, you’re talking $1,350 per year per person to keep your full contribution access.**

You can also set eligibility requirements, up to 1 year of service, age 21+, and 1,000+ hours worked. Part-timers who don’t meet those thresholds don’t enter the plan at all.

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Traditional vs. Roth: The Answer for High Earners Is Usually Straightforward

High-income practice owners almost always benefit more from traditional (pre-tax) contributions over Roth. The logic: your tax bracket now is almost certainly higher than it will be in retirement. Taking the deduction today, when you’re in the 37% bracket, beats paying Roth taxes at a rate you’ll likely never see again.

That said, Caitlin makes one important point worth remembering: if you pocket the tax savings and upgrade your lifestyle with them, you’ve negated the whole advantage. The move is to redirect those saved tax dollars into another investment vehicle, not absorb them into overhead.

Bonus strategy: even if you make too much to contribute directly to a Roth IRA, you can fund a traditional IRA and then convert it. It’s called a backdoor Roth, and the window to fund for 2025 is still open until April 15, 2026.

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Gusto and ADP Won’t Optimize This for You

Payroll platforms make 401(k) setup look easy, and for a solo W-2 employee, it probably is. But for a dental practice owner trying to maximize contributions while minimizing staff costs, the cookie-cutter template approach leaves real money behind.

Those platforms apply one plan design to everyone. They’re not running proposals to figure out how to get the maximum into your bucket. They’re also not always transparent about how they’re compensated, often through revenue sharing on the mutual funds selected for your plan. Always push for flat-fee administration rather than percentage-of-assets pricing. As your balance grows, that percentage becomes a significant drag for the exact same administrative work.

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One More Thing: The Practice Sale Is Not Your Retirement Plan

Mike made this point at the end of the episode and it stuck with us. We’re currently working a buyer rep deal in Wyoming where the seller has a number she needs to hit, and her practice isn’t worth it. She’s been sitting on market because the sale of her practice is her retirement plan. That’s a fragile position to be in.

Practice ownership builds real wealth. But the sale is a cherry on top, not the foundation. Twenty years of tax-deferred compounding inside a well-run 401(k) is the foundation.

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This post is pulled from the Dental Unscripted podcast. Mike Dinsio and Paula Quinn host the show through NEXT LEVEL CONSULANTS, covering practice startups, acquisitions, staffing, and the business side of ownership. Cain Watters & Associates provided the 401(k) expertise for this episode.