I am a partner in a large physician-only specialty group. I am 32 (third year of practice).
Currently I am production based and making about $580,000/yr, which after overhead/billing expenses is about $520,000/yr. Out of that we pay our own expenses such as malpractice, health insurance, etc. We have a corporate profit sharing ($54k/y) plan.
We are discussing selling our practice. Initial offers are in the 1.2mm/partner range. In exchange I would sign a 5 year agreement to work for about $400,000/yr (including paid malpractice, subsidized health insurance, +/- small retirement match) with a clawback of the buyout if we left early. I will have been a partner >1 year at that point so my understanding is I would owe long term capital gains only on the buyout.
I am weighing whether this makes financial sense for someone like me in the early stages of my career. If I took the 1mm post tax and dropped it in to VTSAX that is about 4mm at age 55 (assuming 6% growth). In exchange for this I would be trading some autonomy, taking a small decrease in income (500 to 400k, but that 100k would be at the top of the federal/state tax bracket = taxed at 50%) and losing my corporate profit sharing plan (only the standard 401k plan is offered as an employee of the new company). I could of course leave after five years and pursue another partnership track job or a better employed job, but my wife is pretty settled and comfortable in the area.
Any thoughts?
Currently I am production based and making about $580,000/yr, which after overhead/billing expenses is about $520,000/yr. Out of that we pay our own expenses such as malpractice, health insurance, etc. We have a corporate profit sharing ($54k/y) plan.
We are discussing selling our practice. Initial offers are in the 1.2mm/partner range. In exchange I would sign a 5 year agreement to work for about $400,000/yr (including paid malpractice, subsidized health insurance, +/- small retirement match) with a clawback of the buyout if we left early. I will have been a partner >1 year at that point so my understanding is I would owe long term capital gains only on the buyout.
I am weighing whether this makes financial sense for someone like me in the early stages of my career. If I took the 1mm post tax and dropped it in to VTSAX that is about 4mm at age 55 (assuming 6% growth). In exchange for this I would be trading some autonomy, taking a small decrease in income (500 to 400k, but that 100k would be at the top of the federal/state tax bracket = taxed at 50%) and losing my corporate profit sharing plan (only the standard 401k plan is offered as an employee of the new company). I could of course leave after five years and pursue another partnership track job or a better employed job, but my wife is pretty settled and comfortable in the area.
Any thoughts?
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