Very wealthy doctor

          I have a medical practice as a client maintaining a 401(k) plan. One of the doctors owns 100% of the practice. Another doctor, age 33 and not an owner just an employee, is also participating in the plan. This 2nd doctor has a W-2 in excess of 3.3 million dollars. He also maintains an LLC which does medical consulting (totally separate from the original medical practice) that generates about $100,000 @ year. He would like to shelter more money than he is currently doing.

Question: Is there anyway that he can shift some of his earnings from the original practice, where he is an employee, to the LLC that he owns 100%? 

If it is "totally separate" - how could he shift earnings? Based purely on the limited information provided, I'd say no. But maybe there is more detailed information on the facts and circumstances that might change this - for example, if he could have some of the patients come to him in his LLC, without creating an Affiliated Services Group. 

I didn't think that he could. The two organizations are totally separate. How about some kind of loan from the original PA to the LLC? Would that make any sense at all?

That's a question for a CPA. If his LLC is taxed as unincorporated, then his compensation for plan purposes is earned income. If he's taxed as an S-corp or a corp, then it is, for all practical purposes, W-2 or some other allowable definition. If his LLC gets an influx of cash via a loan from a bank, etc., can any of that be used to raise his "salary" from the LLC? Beats me - again, question for a CPA.

3 hours ago, rblum50 said:

He would like to shelter more money than he is currently doing.

Perhaps he should ask an actuary about a defined benefit plan.

1 hour ago, david rigby said:

defined benefit plan

That was my first thought. Being young, his DB 415 max contribution won't be huge but will be better than a DC. If he has already established a three-year compensation history with his LLC around that $100,000 figure (ignoring SE adjustments for simplicity), then he could probably do $75,000+/- to a DB.

However, without an increase in LLC "compensation" to increase his 415 average compensation he would hit 100% FAE 415 limit in 4-5 years - but maybe out on his own by then or a co-owner in his current employer with possible CB there. A lot can happen in 5 years and in the meantime he has saved $300k-$400k on a tax deferred basis, more than $20k (approx) DC annual available on $100k SE net income.

Also, at that age and income, I'd look to maximize Roth in any way I could.

Since the 2nd doctor is an employee and not an owner in the medical practice, he could setup a cash balance for his medical consulting.

At that age, 412(e)(3); he's a maximum rate tax payee so the deduction value is worth far more than the opportunity cost of the annuity return(might as well be 0% to help drive up the contribution) vs the open market. No DB is going to even approach the deductibility.