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  • Avatar correlateclinically 
    Participant
    Status: Resident
    Posts: 4
    Joined: 12/31/2018

    S: As you may have guessed I am radiology resident. I’m hoping this post and the ensuing discussion will help others in my situation. I’ll describe my financial state and kindly ask the assistance of you fine forum members. I’m glad that some of you get off on this sort of thing!

     

    O: Vitals:

    Income: 80-90k c some 1099 moonlighting

    Budget: Don’t really have one (I know)

    Loans: 230k @ 3.1% refinanced c Sofi (thank you WCI!) making the $100/mo in-training payments

    Investment accounts:

    Traditional IRA @ TIAA 18k (my parents are teachers at set this up for me) 100% in TIAA S&P500 Index

    Roth IRA @ Fidelity 1k (I rolled a rollover IRA into here yesterday) 100% in Fidelity total market Index. Will start making the max contribution.

    No disability insurance

    No emergency fund

     

    A/P: 32 yo male with a net worth of -210k

    Been improving my literacy (listened to all 86 podcasts and have read some of the book)

    Get some disability insurance? I’m marrying a doctor soon and plan to “use her” as mine eventually (thanks, honey)

    Start an emergency fund

    I had assumed that the TIAA IRA was a Roth (it’s not) because I was giving my parents $5500/year to put in there. They said something about converting the traditional IRA to a Roth but my understanding is that I could only do $5500/year of said conversion.

    Consulting you all primarily for recs regarding this TIAA traditional IRA account

    Should I transfer it to Fidelity so I can fund my Fidelity Roth IRA with it? I understand that I will have to pay tax on that transfer. Would it be better to fund my Roth IRA with cash?

     

    Have a Happy New Year and please correlate clinically

    #177425 Reply
    Liked by Vagabond MD
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3344
    Joined: 01/08/2016

    Transfer it to your residency retirement plan.

    #177472 Reply
    Liked by MPMD, ENT Doc
    Avatar wa2106 
    Participant
    Status: Physician
    Posts: 127
    Joined: 11/29/2017

    You can convert as much as you’d like to Roth.  The $5500 limit is for direct or indirect yearly contributions.  You would owe taxes at your marginal rate if you go that route.

    The other option as Peds mentioned is to check to see if your residency 401k/403b accepts IRA rollovers – that’s a way to avoid taxes.

    As a side note, you should have more savings if your salary is $80k and you’re only putting $1200/yr toward loans.  I’d recommend a budget.

    Good luck!

    #177479 Reply
    Dreamgiver Dreamgiver 
    Participant
    Status: Physician
    Posts: 683
    Joined: 03/09/2017

    I’d convert that tIRA to a Roth while you are in a low bracket, taxes owed won’t be too much and it will allow you to easily to backdoor Roth in a few years. Other than that I’d keep putting $6000k/yr in a Roth IRA,. If your residency has a match on the 401k contribute up to the match first. Develop an emergency fund too and make sure to have a solid individual own occ DI policy.

    #177501 Reply
    Avatar jhwkr542 
    Participant
    Status: Physician
    Posts: 1022
    Joined: 02/15/2016

    It sounds like you’re a little confused on everything, so I’ll clarify a few mistakes from your post (side note: we need a WCI dictionary page):

    Traditional IRAs can be transferred to different financial institutions, and there are essentially no tax consequences.  And you don’t fund your Roth IRA with a traditional IRA; you convert it.  You can convert as much traditional IRA money to Roth in any given year.  There is a $5500 annual limit on contributions (will be $6k in 2019).

     

    When you put it in the IRA at TIAA, was it deductible or non-deductible? Converting it either way now is probably the best move.  Whether it was deductible or not initially will depend on how much in taxes you owe.

    #177512 Reply
    Avatar correlateclinically 
    Participant
    Status: Resident
    Posts: 4
    Joined: 12/31/2018

    You can convert as much as you’d like to Roth.  The $5500 limit is for direct or indirect yearly contributions.  You would owe taxes at your marginal rate if you go that route.

    The other option as Peds mentioned is to check to see if your residency 401k/403b accepts IRA rollovers – that’s a way to avoid taxes.

    As a side note, you should have more savings if your salary is $80k and you’re only putting $1200/yr toward loans.  I’d recommend a budget.

    Good luck!

    Click to expand…

    That is great news thank you! I have a 403b at Fidelity (same institution as my Roth IRA) from my internship.

    To avoid taxes I would roll the TIAA traditional IRA into the Fidelity 403b then convert the 403b to Fidelity Roth?

    I had been paying $330/month on loans prior to refinancing. Last night I read the Motorway to Dublin chapter in WCI and it motivated me to come up with a budget.

    Thanks for your help.

    #180199 Reply
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2124
    Joined: 08/01/2016
    To avoid taxes I would roll the TIAA traditional IRA into the Fidelity 403b then convert the 403b to Fidelity Roth?

    Click to expand…

    Don’t avoid taxes. Pay it now while you are in a low tax bracket. After attending and marrying another physician you will never be in this tax bracket again.

    Tax on $18K in your tax bracket will not amount to much.

     

    #180206 Reply
    Avatar correlateclinically 
    Participant
    Status: Resident
    Posts: 4
    Joined: 12/31/2018

    It sounds like you’re a little confused on everything, so I’ll clarify a few mistakes from your post (side note: we need a WCI dictionary page):

    Traditional IRAs can be transferred to different financial institutions, and there are essentially no tax consequences.  And you don’t fund your Roth IRA with a traditional IRA; you convert it.  You can convert as much traditional IRA money to Roth in any given year.  There is a $5500 annual limit on contributions (will be $6k in 2019).

     

    When you put it in the IRA at TIAA, was it deductible or non-deductible? Converting it either way now is probably the best move.  Whether it was deductible or not initially will depend on how much in taxes you owe.

    Click to expand…

    Thanks for clarifying, sorry for confusing the terminology! Now I know the difference between a conversion, transfer and contribution.

    The TIAA contribution was deductible.

    #180243 Reply
    Liked by Vagabond MD
    Avatar Panscan 
    Participant
    Status: Resident
    Posts: 663
    Joined: 03/18/2017

    When did you refi for 3.1%? That seems very low for a resident. I would do that in a heartbeat

    #180252 Reply
    Avatar correlateclinically 
    Participant
    Status: Resident
    Posts: 4
    Joined: 12/31/2018

    When did you refi for 3.1%? That seems very low for a resident. I would do that in a heartbeat

    Click to expand…

    A few months ago. It is 3.1% variable. Interestingly, my s/o so has the same 800 credit score and also refinanced recently but only got 4%. Her balance is much lower than mine, which is I guess why.

    #180514 Reply

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