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No Retirement Account at New Job

Home Retirement Accounts No Retirement Account at New Job

  • Avatar newdoc1 
    Participant
    Status: Resident
    Posts: 47
    Joined: 02/24/2018

    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.

     

     

    #237391 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 3073
    Joined: 01/03/2017

    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.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #237398 Reply
    Liked by wonka31
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4715
    Joined: 01/08/2016

    Why did you take this job?

    #237399 Reply
    Liked by Hank, pulmdoc
    Avatar G 
    Participant
    Status: Physician, Small Business Owner
    Posts: 1905
    Joined: 01/08/2016

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

    #237403 Reply
    Avatar jhwkr542 
    Participant
    Status: Physician
    Posts: 1339
    Joined: 02/15/2016

    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.

    #237405 Reply
    Liked by wonka31, G
    Avatar newdoc1 
    Participant
    Status: Resident
    Posts: 47
    Joined: 02/24/2018

    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.

    #237434 Reply
    Avatar newdoc1 
    Participant
    Status: Resident
    Posts: 47
    Joined: 02/24/2018

    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.

    #237435 Reply
    Avatar newdoc1 
    Participant
    Status: Resident
    Posts: 47
    Joined: 02/24/2018

    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.

    #237438 Reply
    Liked by AZPT, jhwkr542
    Avatar HandFellow 
    Participant
    Status: Physician
    Posts: 222
    Joined: 01/18/2016

    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?

    #237441 Reply
    Liked by Vagabond MD
    Avatar newdoc1 
    Participant
    Status: Resident
    Posts: 47
    Joined: 02/24/2018

    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.

    #237444 Reply
    Avatar newdoc1 
    Participant
    Status: Resident
    Posts: 47
    Joined: 02/24/2018

    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?

    #237445 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 730
    Joined: 06/18/2018

    ‘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.

    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 3073
    Joined: 01/03/2017

    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.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #237450 Reply
    Avatar DavidGlennCPA 
    Participant
    Status: Accountant
    Posts: 99
    Joined: 06/12/2019

    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.

    David Glenn, CPA | Glenn Advisory
    https://www.taxcpafordoctors.com | (808) 321-5664

    #237452 Reply
    Avatar GUtiger 
    Participant
    Status: Physician
    Posts: 24
    Joined: 03/18/2018

    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.

    #237453 Reply
    Liked by Zaphod, Tim

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