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  • 403b to Roth?

    Just started pgy1. My residency automatically takes 7.5% of our paycheck as called a fica alternative. I believe it will go into a 403b account. I believe I can. Convert this to my Roth correct? What is my best strategy going forward? Should I convert to Roth every year? At the end of residency? Or is there a better option? I want to make sure I can do backdoor Roth when I start as an attending.

  • #2
    You should be able to convert to a Roth upon separation from service. As to in-service conversions, that depends upon the plan document. If I had to guess, I would guess that the plan does not allow this because funds withheld from these plans are typically put in insurance products (annuities). Again, consult your plan document as it is the playbook participants and the plan must use.

    As for other options, you can probably contribute more to your alternative plan but you would probably be better off at this stage having the minimum required amount withheld and setting up and funding a Roth IRA on your own.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thanks for the reply. I already plan to max out my spouse's and my Roth IRA. Just want to make sure I make the best moves with the new 403b which I'm not as familiar with. I mostly want to make sure that I don't do something that prevents me from doing backdoor Roth.

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      • #4




        Thanks for the reply. I already plan to max out my spouse’s and my Roth IRA. Just want to make sure I make the best moves with the new 403b which I’m not as familiar with. I mostly want to make sure that I don’t do something that prevents me from doing backdoor Roth.
        Click to expand...


        Read the plan document carefully. As long as neither of you own a pre-tax IRA, you will both qualify to contribute to backdoor Roth IRAs after you become an attending. After you complete training, you can either roll your 403b to your new employer's retirement plan (if the plan allows), roll it to a SOLO-k (if you are an independent contractor or s-corp owner), convert to a Roth and pay the taxes, or leave it where it is until an opportunity to move it opens up. Tax planning can help you make the right decision.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5




          Just started pgy1. My residency automatically takes 7.5% of our paycheck as called a fica alternative. I believe it will go into a 403b account. I believe I can. Convert this to my Roth correct? What is my best strategy going forward? Should I convert to Roth every year? At the end of residency? Or is there a better option? I want to make sure I can do backdoor Roth when I start as an attending.
          Click to expand...


          403bs are in the same vein as 401ks and are treated as such with respect to backdoor rIRA and the prorata rule.

          so if your choices are good, then leave it there.

          if you want to convert it to a roth you could pay the tax. this is dependent on your tax bracket every year whether or not you think youll come out ahead.

          if your new job has a better retirement plan and accepts incoming plans, then you can move it at that time.

           

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          • #6
            Hey guys.  I'm about to graduate from residency and I just read The Whitecoat Investor book, and some of the other books that have been recommended on here.  I'm moving from Texas to Rhode Island for my new job.  I have a 403b plan through fidelity with about 38K in it, I want to convert that to roth IRA and just let it grow tax free for the most years possible and take the hit now while I'm most likely earning under 190K per year (single filer).  I'm assuming I'm going to be taking about a $9000 tax hit come tax season though.  How can I negate this?  Any suggestions?  I'll be moving, but my employer is paying for that.  Student loan interest, but that's a joke.  I usually get back about $2300 per year right now, which I'm assuming will be even less next year.  Any suggestions?

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            • #7
              If that's what it is, that's what it is. You might want to have a CPA review your situation to see if you're missing anything. Better now than later considering you're about to graduate.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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