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Retirement Accounts Advice

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  • Retirement Accounts Advice

    Newer to learning finances and working my way through the FYFA. Was hoping for a bit of input on my current accounts and what may be reasonable next steps to start today while I'm building up my financial know-how.

    I just finished training and am starting as a 1099 independent contractor. My wife, another physician, is in the last year of her fellowship training.

    We're late to the retirement game, but better late than never. Our retirement accounts currently sit as follows:
    -403b (Residency, $36k)
    -Profit sharing 401k (from moonlighting gig employer, $4,600)
    -Roth IRA ($37k; have already made my $6k contribution this year)
    -Looking at options to start either a 403b or 457b through her employer (contributions would only be until June 2023 when she finishes)
    -Opening a Roth IRA

    As an IC, I am going to open an individual/solo 401k and contribute to that this year, but otherwise:
    - I'm not quite sure what to do with the existing 403b and 401k that I'll no longer be contributing to.
    - Since I don't expect the traditional IRA contributions to be greater than $50k for the remainder of this year, could I do a backdoor Roth conversion with that money in 2023 and then 'start over' contributing back into that same traditional IRA?
    - Then a year from now, what might be a good use of the small retirement savings my wife will have built up?

    Appreciate all input!



  • #2
    First off, you’re not late. You’re fine.

    Some more details would be helpful, but just off the bat, you don’t have to do anything with the 403(b) and 401(k).

    What are the fees and investment options like in each? And in your wife’s new plan?

    You can roll yours up into whichever is better as well. Or, more likely, into your future solo 401(k).

    Make sure to check her plan documents for match, vesting, etc.

    Would probably pass on her 457(b) if she’s only there for a year and just dump it into taxable.


    • #3
      My 403(b) is through Fidelity. About 80% is in a Fidelity Freedom 500 Fund Class K with an expense ratio of 0.65%. The other 20% is in a Fidelity 500 Index Fund, large cap-blend with an expense ratio of 0.015%.

      The 401(k) is through Schwab. Just realized I was auto-enrolled into a managed account service at 0.28% that I think I'll cancel. Otherwise, it's spread out pretty equally across 11 different index funds including S&P500, low-, mid-, and high-cap growth and value index funds with expense ratios between 0.02-0.14%.

      When you say roll mine into whichever is better, what does that mean exactly? Convert both the 403(b) and 401(k) into the new solo 401(k)?

      Looking closer at my wife's options, it describes a 401(k)-style savings choice where she would contribute 7% of annual eligible pay, before taxes, up to IRS maximum and that her employer contributes 8% of eligible annual pay up to IRS maximum. Is that the same as saying they match up to 8%? As far as vesting, I need to keep digging.


      • #4
        Yes, you can roll the 401k/403b into the new solo 401k. It is mostly convenience. Personally I’d tend towards the low expense ratio diversified index funds like the S&P500. I agree with dropping the spread management and would also drop the er=.65 funds.

        Your wife’s match sounds pretty good. The issue with 457b plans has to do with forced payouts and portability. If a government plan you can treat it like a 401k and roll it over to her new employer. If nongovernmental they will pay it out and cause a tax event.


        • #5
          Thanks for your help!