Nick Kallabat - Wealth Management

Nick Kallabat - Wealth Management I empower physicians to achieve financial freedom through tailored strategies

12/27/2023

"I have another partner involved in my practice" And the majority of the time there is no buy-sell insurance..

If something happens to either partner, what are their heirs going to do with part of a practice they can't run? What are you going to do having lost a vital partner's production?

🗝 So what is Buy-sell insurance?

In its simplest form, it is used for one partner to buy out the heirs of a deceased partner.

📌 What are the benefits?

The surviving partner retains full ownership of the practice and the heirs receive the value of the practice seamlessly.

🤔 Buy-sell insurance is a very simple concept and can be easy to implement, yet a large majority of practice/business owners don't have it.

12/23/2023

😲 "I didn't realize the true costs of my 401k plan"
Yes, when you start a 401k plan, fees are typically the most expensive. Here is a checklist to ensure your 401k is priced competitively...

1. Regular Price Checks: Every 1-3 years have your advisor compare the fees within your 401k plan with several major recordkeepers. Continue these comparisons regularly as you will be surprised what competing recordkeepers may offer.

2. Who Pays the Fees?: Fees can be paid by either the employer or the employee. Transferring these costs to employees can reduce business expenses. Do note, for new plans, this might mean forfeiting certain tax credits.

By regularly reviewing your plan's pricing and deciding who covers the fees, you can significantly reduce 401k costs.

12/02/2023

🤔 "I am looking to exit my practice, but my CPA is telling me a lot of the proceeds will go toward taxes"

💡 Well, what if we could reduce that number in half or delay the tax bill..

How? Estate Planning, Qualified Opportunity Zones, Installment Sales, Bonus Depreciation, the list goes on

One small strategy can be the publicly traded opportunity zone funds to defer taxes to 2026. When coupled with the proper estate planning and bonus depreciation for deductions, you may be able to walk away with much more than you think.

How do you know estate planning, QOZ's, installment sales, etc. are right for you? It depends on your situation!

11/17/2023

"I am putting all my extra cash towards student loans to get done with it"

Well, depending on your situation, a tax-deferred investment may be more beneficial...

📈 The Power of Tax-Deferred Investments 📈

Consider a vehicle like the SEP IRA. It allows savings of up to $66,000/year, all tax deductible. Depending on your tax bracket, this could translate to a whopping $24,420 (37%) in tax savings - and that's only from federal taxes! Add potential state income tax savings and the compounded growth from investing, and it’s a game-changer.

🤔 Making Wise Financial Decisions 🤔

If your student loan interest stands at 8%, why not put funds into an option offering a potential 37% tax credit?

Of course, whether a SEP IRA is right for you depends on your individual circumstances. The key takeaway? Avoid tunnel vision on student loans and embrace a broader financial perspective.

11/16/2023

"I lost money in my mutual funds, but still have taxes to pay on it, how is that possible?"
Mutual funds make trades and you are liable for any taxable gains they distribute, and yes you could be down on the year and still have to pay taxes.

The Core Issue: Realized vs. Unrealized Gains and Losses 💡

Mutual funds hold a series of investments and the fund manager makes trades on a regular basis. Often, a fund manager may sell a winning position while keeping some losing positions. This creates a realized gain on which you would be liable for paying taxes on ❌. You do not get the write off for the losing positions because they haven't been officially sold yet (unrealized).

Why Does This Matter? 🤔

At the end of the financial year, you could be in a situation where your mutual fund portfolio shows an overall loss (unrealized), yet you're liable for paying taxes on the gains (realized) the fund has secured.

Proactive Steps: 🚀

To mitigate this, review your portfolio prior to any record dates. If a significant portion of your investment is tied up in losing positions, you might need to reassess your strategy or consult a financial advisor for tailored advice 🧐.

11/03/2023

🦷 "I keep recycling associate dentists because they all leave after 1-2 years to open their own practice" 🦷

Well, you need to create a strategic retention plan. But how?

One strategy might involve structuring a financial incentive with a tailored vesting schedule. Imagine investing $25,000 per year for a dentist, with a vesting period that best suits your practice's vision—be it 5, 10, or 15 years.

👨‍⚕️ How Does This Benefit Both Parties? 👨‍⚕️

After 3 years, a nest egg of $75,000 has been accumulated for the associate. Should they choose to move on, they potentially walk away from a substantial unvested amount, creating a compelling reason to stay.

💵 Comparing Costs 💵

Yes, $25,000 annually might seem hefty, but weigh this against the perpetual cycle of recruiting, onboarding, and training new talent every year - not to mention the impact on practice continuity and patient relationships!

🔄 The Power of Retention 🔄

By valuing and investing in your associates, you're not merely retaining talent; you're building a committed, stable team, ensuring the consistent delivery of exceptional care to your patients.

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32600 Telegraph Road, Suite 200
Bingham Farms, MI
48025

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