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    I’m a dental resident and my wife is a pathology resident. I have 1 year of residency left and she has many more....(shes doing academia after). We have $0 debt.

    We are each contributing a little to our respective residency 403(b) plans which does not match. I am the only one currently with a Roth IRA. I’ve been maxing that out for the last couple years when I’ve been able to do so.

    In the next few months, I will be starting a moonlighting job, getting paid as a 1099 along with my residency W2. And I will have some more money to invest. I’m trying to figure out how best to invest my money.

    I was planning on opening my wife a Roth IRA and maxing out both Roth IRAs at 11k.
    I was also planning to open a solo 401k with Vanguard and fund that a bit. I plan to eventually roll my 403(b) into my solo 401k. I would rather fund a 401K rather than my 403(b) because I am leaving in a year.

    Does that sound like the best plan going forward? I want the option to do backdoor roths in the future.

    Also, I’m not sure if I quite understand the employee contribution part. If I put in 3k into my 403b does that mean I can put in 15k into the solo 401k or if I put money into the 403b then I'm stuck with just 25% of my 1099 to put into my solo 401K.

     




    Sorry about the basic questions. Just starting to wrap my head around this. Thanks


  • #2
    Wow, zero debt - that's impressive! No need to apologize for "basic" questions. You're obviously good money managers. Thoughts and answers:

    1. Curious as to why your wife is passing up the Roth in favor of a non-matching 403b while you're in residency at a relatively low marginal tax bracket.

    2. You're correct that, if you put $3k into the 403b, you'll be able to add $15k to your SOLO-k.

    3. Correct to set up the SOLO-k. Possible to hire your wife for bookkeeping/administration and set up a SOLO-k for her, also? It doesn't take much and then she'll have the ability to roll her 403b in, also.

    4. If you're sure you're going to be able to set your money aside for the long term, I recommend an appropriately-diversified equity index ETF portfolio. The 2013 edition of Nick Murray's Simple Wealth, Inevitable Wealth will explain what to do and why behavior is the most important part of investing.


    Our Guide for Residents summarizes areas residents should focus on to start off on the right foot as attendings. And, of course, you'll find an abundance of information on the blog section of WCI. If you find a useful article, be sure to scroll down to the "Related Posts" just a bit beyond the end of the post.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3
      Thanks you. I'm also a bit confused as to what it means to exercise the roth option within the 401K. Could I roll over the 403b into a Vanguard solo 401K roth and be hit with a tax bill? If that's possible is it also possible to roll over the 403b into a solo 401k to avoid the tax burden and convert the whole amount later to roth?

      Comment


      • #4




        Thanks you. I’m also a bit confused as to what it means to exercise the roth option within the 401K. Could I roll over the 403b into a Vanguard solo 401K roth and be hit with a tax bill? If that’s possible is it also possible to roll over the 403b into a solo 401k to avoid the tax burden and convert the whole amount later to roth?
        Click to expand...


        That is what you want to do (r/o into a SOLO-k, not Roth), unless you want to take the tax hit on a Roth conversion now while you're in lower tax brackets. You will pay taxes on anything you move from your 403b to a Roth IRA.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

        Comment


        • #5
          Your "employee" contribution to 403b/401k has to be 18k or less, so if you do 3k to the 403b, you can do up to 18k to the 401K.

          BUT, you can also make employer contributions to the solo-401k, since on a 1099 you are the employer as well.

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          • #6




            Your “employee” contribution to 403b/401k has to be 18k or less, so if you do 3k to the 403b, you can do up to 18k to the 401K.
            Click to expand...


            He could contribute only $15k or less if contributing $3k to the 403b. Combined employee contribution to all plans c/n exceed $18k. With the SOLO-k, other contributions will be from the employ"er" not "ee".
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

            Comment


            • #7
              Thank you for the great responses and Johanna your guide listed on the site was very very helpful, I will be recommending it to all my coresidents.

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              • #8
                Another question, the company my hospital uses to administer the 403B charges .19% on top of the .06% that is standard for Vanguard Total Bond Market Index Inst Fund. Is this a reasonable fee bringing the total expense to .25%?

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                • #9







                  Your “employee” contribution to 403b/401k has to be 18k or less, so if you do 3k to the 403b, you can do up to 18k to the 401K.
                  Click to expand…


                  He could contribute only $15k or less if contributing $3k to the 403b. Combined employee contribution to all plans c/n exceed $18k. With the SOLO-k, other contributions will be from the employ”er” not “ee”.
                  Click to expand...


                  Thanks for the correction! That's what I meant: the total employee contribution should add up to 18k or less, but then you can additionally contribute to a solo 401K as employer.

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