Fellowship to Attendinghood : Second Half Retirement strategies for late bloomer

[GeneDen]

Hoping to tap the collective wisdom of WCI family. I’m in my early 40’s and extremely late for retirement saving and related terminologies and processes are alien to me. Please forgive my ignorance.

Just started my first attending job immediately post-fellowship with an employer which has 403B, 457 and employer matching contributions into 401K and the 403b has option for Roth (after tax contribution)
I made a typical fellow annual salary until graduation June 30,2022 and signed a contract for annual salary ~ $400,00. Wife is a stay- at-home mom. Student loan is about $75,000 and renting for a year or two.
Up until now this year, I only contributed a miniscule $2000 of pretax dollars via the university retirement plan and determined to max out any allowable pretax space i.e., 20,500 x 2 (403B and 457). I called customer service at my 401K service provider to ask few questions and strategize and didn’t find it helpful and basically told me they don’t know about Mega Backdoor Roth IRA or Backdoor IRA.

1. Is the ‘after tax contribution’ option built-in the 403b to allow Megaback door Roth conversion or designed for a different purpose?
2. What is the best way to exhaust pretax retirement space between now and December 30,2022? We have been living spartan and be able to stretch the dollar to make this happen if the systems allow.
3. Is it allowed to do both backdoor and Mega backdoor Roth IRAs during the same year? How can one know from contributing over the maximum allowable limit for the year?
4. Any financial or tax tips appreciated for a broke trainee who will be well compensated for second half of the year.

[GasFIRE]

1. Obtain the Summary Plan Description to determine if the MBDR is allowed or not. I suspect not and you may be confusing what you have available, Roth (after-tax contribution) employEE elective deferral with non-Roth after-tax contributions, which is a completely separate type of contribution.

2. If you can afford the max contributions, ask whoever is in charge of payroll to withhold the necessary amount before the end of the year. You'll have to deduct previous retirement withholding from your fellowship from your 403b contributions but the 457 is separate.

3. BDR and MBDR are completely separate. You just have to have the necessary income to make the contributions. The MBDR required a retirement plan that supports this option.

[GeneDen]

1. Obtain the Summary Plan Description to determine if the MBDR is allowed out not. I suspect not and you may be confusing what you have available, Roth (after-tax contribution) employEE elective deferral with non-Roth after-tax contributions, which is a completely separate types of contribution.

2. If you can afford the max contributions, ask whoever is in charge of payroll withhold the necessary amount before the end of the year. You'll have to deduct previous retirement withholding from your fellowship from your 403b contributions but the 457 is separate.

3. BDR and MBDR are completely separate. You just have to have the necessary income to make the contributions. The MBDR required a retirement plan that supports this option.

Thank you this is very helpful! I'll ask the payroll department.

[jfoxcpacfp]

4. Might seriously consider rolling your orphan retirement plan out to your Roth IRA before 12/31.

Not surprising that the plan provider was not very helpful regarding your MBD Roth and BD Roth questions. The person you spoke to may very well have never been asked about those 2 options before. In the insular world of WCI and other physician finance sites, we tend to forget that the outside world doesn’t demonstrate much need to know about Roth options for high income taxpayers.

[The White Coat Investor]

I’m in my early 40’s and extremely late for retirement saving

Let's start by debunking this one. You're not late. 60s is late. 40s is probably average. 30s is early for a doc. 20s is early for a non doc.

[jfoxcpacfp]

Let's start by debunking this one. You're not late. 60s is late. 40s is probably average. 30s is early for a doc. 20s is early for a non doc.

Deserves many more upvotes than it has gotten.