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  • No Retirement Account at New Job

    Hi All,

    I started my new job, and there are no retirement accounts that I am being offered. The salary is on a W2, so I am apparently not able to set up an independent 401k. What do you all think I should do? Ask to be paid on a 1099, so that I can establish my own plan? Ask Employer to make a retirement account for me, although through my initial talks he seemed hesitant before. For now I can essentially only contribute to the backdoor roth, but that is only 5500 per year. I want to contribute up to 50k per year.

     

     

  • #2
    What kind of practice is this? Are you a sole employee for another single physician? Being paid as a 1099 instead of a W2 isn’t quite as easy as just asking.

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    • #3
      Why did you take this job?

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      • #4
        Yeah, bummer. Hopefully your paycheck makes up for lack of benies?

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        • #5
          When you find a potential job, this should be looked at from a benefits perspective. This is essentially 3-4% less salary than other jobs would have been (not even accounting for loss of tax-benefits, which would be hard to calculate). Having said that, there's nothing wrong with just having a taxable and backdoor Roth. Also don't forget HSA. Adjust savings accordingly.

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          • #6
            well the salary initially wasn't bad and the practice is good. I initially assumed that I could set up something on my own, until I talked with my accountant recently.

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            • #7
              I am not a sole employee. It is a group practice. I just assumed that I would be paid on a 1099, so that I could open an individual retirement account. However, it is W2 as I found out recently.

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              • #8
                I had better offers with better benefits. But I chose the practice that was a better fit, better work environment etc. I chose to sacrifice short term for better long term potential. I thought some of the intangible assets in this practice outweighed the tangible benefits in other practices.

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                • #9
                  will you never be able to contribute to a 401k?  or is there a 1 year period of employment before you will be able to contribute?

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                  • #10
                    he said that after I become partner, there is a one year waiting period or something before the 401k kicks in. I am sure it is all negotiable.  I mean it is not like the best offer out there, but I wanted to get my foot in the door for potential long term prospects, partnerships etc. Its my first job out of fellowship, so I wasn't focusing too much on retirement savings first year. I am probably paying down a lot of my debt anyways.

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                    • #11
                      What if I create my own LLC? And have him pay me via the LLC? Would I have to ask him to pay me via 1099? Is that even worth it?

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                      • #12
                        'I am sure it is all negotiable'

                        Actually, it's usually not, their plan document outlines criteria for eligibility.

                        'Long term potential'

                        If they're not taking advantage of no brainers like a 401k for their doctors, you've got to wonder what else about the financial side of the practice is woefully mismanaged.

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                        • #13
                          It doesn't sound like a great situation. You may not be focusing on your retirement the first year but overlooking potential retirement plans is a pretty big thing to overlook.

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                          • #14
                            It's common for there to be a one year waiting period and plan enrollment happening two times a year for new employees.  So if they let people enter the plan in October and April but only if you've been there for a year, you might have to wait longer than a year.

                            This certainly isn't desirable but not uncommon.  And I'd be surprised if you had to be a partner to participate in the 401(k) once you are there for a year.

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                            • #15




                              What if I create my own LLC? And have him pay me via the LLC? Would I have to ask him to pay me via 1099? Is that even worth it?
                              Click to expand...


                              It doesn't work like that. You can't be 1099 if you a substantively an employee, which you would be. It would be illegal for them to pay you as a 1099. Now if you moonlight in the ER or something then you could 1099 that. If this is truly the best fit for you then I suggest you ride it out until you're eligible for the 401k. In the meantime save as much as you can into after-tax accounts.

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