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What to do with residency 403b?

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  • Avatar kaymaza 
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    Hey everyone I have a question about what to do with my residency 403b. I have about 22k sitting in my 403b all from the University matching. I’m wrapping up my family med residency in a few days and I plan on doing locums work for about 1-2 years before settling down in a specific location. I was wondering what I should do with this account? Should I set up an individual 401k and roll it over into that or should I just hold it in the 403b and wait until I get a W-2 job and wait to see what retirement plan that job would offer and roll into that? Also, I do have a Roth IRA with Vanguard that I’ve been contributing into throughout residency. Should I roll it into that? Any help is appreciated thanks everyone!

    #226011 Reply
    Avatar Peds 
    Moderator
    Status: Physician
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    Joined: 01/08/2016

    Did you read the blog post or other threads of the same question?

    #226041 Reply
    Olórin Olórin 
    Participant
    Status: Resident
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    Joined: 05/12/2018

    Since you will have independent contractor 1099 income, you should open a solo-401k. You can then roll the entirety of your 403b over without any tax penalty (a Roth IRA rollover would be taxable). The solo 401k is worth having and maintaining (for small amounts of locums income in the future, etc) even if you eventually transition to a w2 position.

    Steady plodding brings prosperity; hasty speculation brings poverty – Proverbs 21:5

    #226046 Reply
    Avatar JBME 
    Participant
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    Joined: 03/26/2018

    Are you sure that matching money will be completely vested by the time you leave?

    #226066 Reply
    Avatar kaymaza 
    Participant
    Status: Resident, Physician
    Posts: 10
    Joined: 08/18/2016
    Hey everyone I wanted to follow up on my original post. I’ve done some research about what should be done with the 403b but I wanted to get some input from everyone. I’ve narrowed it down to 3 options:
      1. Create a solo 401k and roll the 403b into that.
      2. Rollover to existing Roth IRA. I’ve been maxing out my contributions into a Roth IRA throughout residency and I have about 28k currently. This option was suggested by a lot of posters on the WCI Facebook group page based on prior posts that I’ve gone though on this topic. I’ve tried to estimate how much taxes I would owe. I made about 30k as a resident this year and I’ll be making roughly around 53k this year doing locums work. That puts my total work earnings to 83k and if I rollover my 403b that has 23k that would put my total income to 106k. Subtracting the standard deduction (12.2k) would put me at 93,800 placing me in the 24% income tax bracket which would be around $16,686 in taxes. No state income taxes since I’m based in a no income tax state. My question is, is it still worth it being in the 24% tax bracket to roll it over into my Roth IRA?
      3. Leave it in the 403b and wait until next year when I get a W2 job and potentially roll it over into that job’s retirement plan.
    Any input is appreciated thanks.
    #244291 Reply
    Avatar kaymaza 
    Participant
    Status: Resident, Physician
    Posts: 10
    Joined: 08/18/2016

    Are you sure that matching money will be completely vested by the time you leave?

    Click to expand…

    Yup it is completely vested since I’ve left.

    #244292 Reply
    Avatar Chessknt 
    Participant
    Status: Resident, Physician
    Posts: 13
    Joined: 04/16/2018

    You can also roll over to trad ira and leave as pretax instead of solo 401k I believe.

    #244295 Reply

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