New attending physician--seeking recs on rollover this tax year

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wikiradio
Posts: 16
Joined: Sat Jul 26, 2014 12:13 pm

New attending physician--seeking recs on rollover this tax year

Post by wikiradio » Thu Jul 12, 2018 1:17 pm

Hi all,

I finally finished after a long 6 years of post-graduate medical training. Thankfully, I had several opportunities to moonlight and am situated in a LCOL area. I have no student debt and was able to save some money in my retirement accounts. I am seeking advice on how to rollover my funds in a way that makes sense financially. A snapshot:

34yo M, married, 1 baby, non-working spouse.
TX
Emergency Fund: funded
Credit card: 10k 0% debt until July 2019.
Home paid off.

My Solo 401k at e-trade: 60k
My 457b split between Valic and Voya: 100k

My Roth IRA: 45k
Her Roth IRA: 33k

Expected HSA contribution this year: $6900

My total income expected this year (after maxing all available retirement accounts):
W2 - $113500
1099 - $15000

Because I finished my fellowship at the end of June, I only made half of fellow salary in 2018. This amounted to ~30k. From this salary, I was able to max out my 457b for 2018, bringing my income through end of June 2018 to $11500. First week of July, I did some locums and made 15k in 1099 income. I had my group give me a loan and bonus when I signed in 2017 so I was able to decrease some of my income for 2018. My group wont give me access to a 401k until 2019.

My question is, I know I should rollover my current retirement accounts to Roth but this would give me a large tax bill because I will be more than doubling my income by doing that. Realistically, my salary is much lower than its going to be in the future but its still quite a bit.

Any ideas on how i could get all this to vanguard? I was thinking to rollover my 457s to my etrade account and then rollover my etrade solo 401k to my vanguard roth ira. Is this advisable (or doable?)

Any recs would be greatly advised! Thank you.

tenkuky
Posts: 483
Joined: Sun Dec 14, 2014 4:28 pm

Re: New attending physician--seeking recs on rollover this tax year

Post by tenkuky » Thu Jul 12, 2018 1:35 pm

Key question is whether the 457 is a governmental one or not.
That limits your rollover/distribution options.
If governmental, consider not rolling it over to an IRA or other account as it gives flexibility of earlier tapping without penalty compared to IRA. If you rollover, you lose that flexibility. Balance that vs. how many fees and how limited the options are in the 457s.
If non-governmental, you can't rollover into IRA. You might have to take some form of distribution (lump, spread etc), find out about that and it will be a taxable event. Or roll in to another non-governmental if allowed. Depends on investment options and fees.

wikiradio
Posts: 16
Joined: Sat Jul 26, 2014 12:13 pm

Re: New attending physician--seeking recs on rollover this tax year

Post by wikiradio » Thu Jul 12, 2018 1:53 pm

See this is why I come here! I just called my benefits adviser and she told me its a governmental 457b plan. Perhaps then, I could keep the 100k in my 457 and just transfer the money to one vendor (the cheaper one with better funds). Then I could roll over my current solo 401k into my roth IRA.

This way I am rolling over 60k to Roth and paying less taxes and I get to keep that no early withdrawal fee benefit of the 457 plan.

ExitStageLeft
Posts: 814
Joined: Sat Jan 20, 2018 4:02 pm

Re: New attending physician--seeking recs on rollover this tax year

Post by ExitStageLeft » Thu Jul 12, 2018 2:36 pm

It would probably be a good idea to make sure whatever you do this year won't complicate your savings in 2019 and beyond. If your income next year exceeds $199,000 you won't be able to make Roth IRA contributions for yourself or spouse. In that case you can do what is called a backdoor Roth to fill that tax-advantaged space.

If you have a balance in any tradional IRAs, it complicates things significantly. You'll want to anticipate if a backdoor Roth will be needed, and if so make sure there are no traditional IRAs.

tenkuky
Posts: 483
Joined: Sun Dec 14, 2014 4:28 pm

Re: New attending physician--seeking recs on rollover this tax year

Post by tenkuky » Fri Jul 13, 2018 1:25 pm

Another thing to consider is you don't HAVE to do a Roth conversion this year.
Check with your employer when they offer you a 401K next year, do they have Roth 401K option too?
Also, you have at least 2 decades of high earnings, but you might want to retire early and the time before early retirement and age 70 would allow you to convert to Roth at a lower (possibly) bracket than even this year.
No harm in a couple of decades of tax-deferred growth.
Your Roth percentage of total is not bad now either.
You could also do a small portion of conversion now, just to test the waters and see what it does to your taxes.

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