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Individual 401k

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  • Individual 401k

    I am currently in fellowship and about to sign with a private practice.  They offer a 401k profit sharing plan but after 1 year of employment.  Other than offering a HSA, I am on my own for saving for retirement my 1st year.  I just wanted to see if I was thinking in the right line of opening a backdoor roth IRA for myself and my wife and then filling out some online surveys so that I can open up an individual 401k to fund for the first year? I haven't looked into that process too much but hopefully fairly painless, if that is the route I have to go my first year.  Thanks for the help.

  • #2
    You should pretty much always be doing backdoor Roth, regardless of 401(k).

    Your individual 401(k) contributions are related to your individual self-employed income. Unless you already have a large amount of pretax IRA that you need a non-IRA account to roll into so you can do backdoor Roth, getting a couple hundred dollars in self-employment income by doing surveys will mean you can only put in 20% of that as employer maybe a few hundred dollars is you take lots of surveys.

    How will you receive income from this private practice? As a W-2 employee, I presume? Possibly as an additional shareholder-employee in an S-corp? Can you still make employee contributions and just not receive employer profit-sharing contributions in your first year?


    • #3
      Thank you for the prompt response!  Thanks for clarifying the individual 401k 20% contribution, I now see that really won't be an option now(I do not have a large IRA).  I will be a W-2 employee until I buy in at the 2 year mark under the hospital so I am hoping I can take your advice and ask about making employee contributions.  Thanks again.


      • #4
        Hey RUorthodoc,

        Yea, I think you would have to become a professional "survey-taker" for the solo 401k to make sense . With a one year window, it may be more of a hassle than anything. I agree with DMFA, see if you can contribute to the 401k this year with the understanding that the profit sharing or match has a one year waiting period.

        Taking surveys to open a solo 401k is commonly utilized when you have outstanding IRAs and they need to be moved to a 401k in order to clear the way for backdoor Roth IRAs. Hence, you would just need to earn a few dollars to be able to open the solo 401k and then roll over the miscellaneous IRAs.

        In the meantime, the HSA could be a great tool to help with your taxable income for the year.