The Intern Thread

[jfoxcpacfp]

akwho wrote:

My employer mandates 4.5% of my paycheck be direct deposited into a 457 which they match at 3%.  I just read the fine print. They are investing it in a fund Invesco Stable Asset Fund. ER 0.27%.  Annual return a disappointing 1.54% over the past 5 years.   No way to change which fund I’m in through their online portal, going to call the office and see if I can get into something better. https://www.invesco.com/portal/site/us/dc/collective-trust-funds/product-detail?productId=87 Reminder to check your 457 and other employer sponsored plans to see what default fund they have you in.

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Honestly, when you graduate training and are comparing job offers, I believe you should include a review of the SPD's for each employer. Hire a CFP or CPA for 2 or 3 hours to analyze if you are not comfortable doing on your own. If you stick with a position for many years, a good versus a weak plan can have a huge impact on reaching your retirement goals.

[jfoxcpacfp]

FutureDoc wrote:

51500 – 16000 = 35500.  Which should get us down below the 37000 cutoff to take full advantage of the 50% credit for contributions.

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I agree. Looks like the planets aligned perfectly for you this year (including moving up the grad date, serendipitous). Congratulations!

[akwho]

Question for the thread:

 

My hospitals 457 plan: 4.5% mandatory deposit, 3% employer match, invested in a bond fund with bad ER's and ~1.46% return annually

 

1) When I leave employment with this hospital can I roll over the entirety of the 457 fund (likely will be 30k) all into my Roth in one go?

2) Would it make sense to put additional savings up to the 18k limit into this 457 plan with the ultimate goal of converting it into my Roth?

 

[FutureDoc]

Is it a government 457 or a private 457?  That affects your ability to transfer it.

[akwho]

It is a government 457

[jfoxcpacfp]

akwho wrote:

It is a government 457

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1. Yes, you will be able to roll it over to a Roth IRA at one time.


2. Whether it would make sense depends upon many other factors (your goals, your overall plan, your tax bracket at the time of r/o, your current tax bracket) and is beyond the scope of the information provided.

[jfoxcpacfp]

FutureDoc wrote:

Sure thing Johanna, unless I messed something up it looks roughly like this. Combination of things

 

Income: $51500 from dual resident salaries for half a year.

$3000 into residency 457 (no roth option at this point), roth is probably a better option, and I might open a roth IRA at vanguard before year’s end.
$5000 in a childcare FSA,
$3000 into a HSA (would do more but have very generous employer matching for almost 3k)
$4000 deduction for education expenses from 4th year medical school
$1000 approximately for moving expenses ( matched in a different city so moving for work)

Sum total of deductions: $16000

51500 – 16000 = 35500.  Which should get us down below the 37000 cutoff to take full advantage of the 50% credit for contributions.

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You probably already noticed this, but if the $3k that goes into a 457 is all yours, your spouse can also qualify for $1k credit by contributing $2k to an IRA or retirement account at work. If the $3k is split between you, you should each contribute another $500 to retirement to get the maximum credit.

[JoeCaponeCHFC]

Hello akwho, thanks for sharing your experience. Don't know who you are exactly but happy to hear that I was helpful. Best of luck with your training and with life!

[WWillkie]

My spouse and I are both interns. Can we both take advantage of the lifetime learning credit and deduct a total of $4k on our 2019 return?

[jfoxcpacfp]

WWillkie wrote:

My spouse and I are both interns. Can we both take advantage of the lifetime learning credit and deduct a total of $4k on our 2019 return?

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Possibly. Your AGI must be $110k or less to qualify for the full credit (20% of expenses up to $10k). The credit phases out at $130k. So, if your AGI is < $110k and you each have $10k in education expenses (total $20k) you can get the full $4k credit on your 2018 return, not 2019.

As interns, you are still paying for post-secondary education? I guess I'm really clueless - I thought interns had already graduated medical school.

[CFEonline]

akwho wrote:

Savers Credit either 10%, 20% or 50% of your first $2000 invested in a Roth IRA is returned to you in credit form.  That’s right you could make $200, $400 or even $1000 just by doing what you should do anyways, and invest in a Roth.  The amount you get back is dependent on your taxable income (any even bigger reason to ensure you take your max deductions). Student loan interest payment deduction the first $2,500 of student loan interest is deductible.  Make sure to make one $2,500 payment some point in the first half of intern year 2016 to lock in this deduction. Moving expenses deduction – Certain people may qualify to deduct moving expenses from their taxable income.  Check form 3903 to see if you’re one of them.

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Is it possible to amend your taxes from prior years to claim some of these credits? Particularly the moving and savings credit could be useful.

[AlexxT]

jfoxcpacfp wrote:

As interns, you are still paying for post-secondary education? I guess I’m really clueless – I thought interns had already graduated medical school.

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Med student graduate in May / June.

Internships / Residencies begin July 1, finish June 30.

So the first year out of med school, your annual salary is around 52k, but you only draw a salary starting in July.  The residency might be anywhere from 3 to 7 years, usually, and you get annual raises of around 2-3k.

When you finish your residency or fellowship ( ie post residency training ) your salary will probably be in the high 50's to low 60k. You then begin your real job in July or maybe August-September, at which point you will be earning your real salary, in the 200k and up range ( up to 1 million, apparently ).

[WWillkie]

jfoxcpacfp wrote:

WWillkie wrote:

My spouse and I are both interns. Can we both take advantage of the lifetime learning credit and deduct a total of $4k on our 2019 return?

Click to expand…

Possibly. Your AGI must be $110k or less to qualify for the full credit (20% of expenses up to $10k). The credit phases out at $130k. So, if your AGI is < $110k and you each have $10k in education expenses (total $20k) you can get the full $4k credit on your 2018 return, not 2019.

As interns, you are still paying for post-secondary education? I guess I’m really clueless – I thought interns had already graduated medical school.

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Thanks for the reply - and yes, I did mean 2018 return, not 2019. My mistake!

[WWillkie]

jfoxcpacfp wrote:

As interns, you are still paying for post-secondary education? I guess I’m really clueless – I thought interns had already graduated medical school

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We made our last tuition payments in March 2018 and graduated in June 2018.

[jfoxcpacfp]

Of course ops: ! Then, if you're under the income limits, you should be ok.