Podcast #136 Show Notes: Taxes on Stock Options and Deferred Compensation

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There are non-qualified stock options and incentive stock options. They are each taxed very differently. A listener joined a startup and was offered shares of stock in the company. If his company is acquired by a larger company he wanted to know how those stock options are taxed. Are all the taxes paid at the time of acquisition? Is it in the capital tax bracket? Is there a way to mitigate these taxes in any special way? In this episode, we talk about the two different stock options and how they are taxed. It gets complicated.  In non-qualified stock options, you have to pay your full ordinary income tax rate on the difference between the two prices and pay payroll taxes. For the incentive stock option, it depends on whether you are subject to the alternative minimum tax. Most doctors don't deal with stock options very often but if this situation applies to you, you will find the answers to how you are taxed on those stocks in this episode.

For everyone else, I still answer lots of listener and reader questions in this episode too. If you are considering medical school I discuss the choice of where to go to school. If you are trying to make the decision between Roth contributions or tax-deferred contributions we address that in this episode, as well as deferred compensation, paying tithing, hiring a financial advisor, front loading 529 accounts, and refinancing student loans in residency.

This podcast sponsored by Bob Bhayani at drdisabilityquotes.com. They are an independent provider of disability insurance planning solutions to the medical community in every state and a long-time white coat investor sponsor. They specialize in working with residents and fellows early in their careers to set up sound financial and insurance strategies. He is very responsive to me and to readers having any sort of an issue, so it is no surprise that I get great feedback about him from our readers and listeners. If you need to review your disability insurance coverage to make sure it meets your needs or if you just haven’t gotten around to getting this critical insurance in place, contact Bob at drdisabilityquotes.com today by email [email protected] or by calling (973) 771-9100. Just get it done!

Quote of the Day

Our quote of the day today comes from Thomas Stanley, who you'll know from Millionaire Next Door fame. He said,

“High income producing but low net worth physicians have a propensity to acquire luxury items such as expensive prestige makes of motor vehicles. But balance sheet affluent doctors drive Toyota's.”

That makes me feel good, because I have two Toyotas in the garage.

Taxes on Stock Options

“I just joined a startup and was offered 10,000 shares of stocks at a $.05 grant price. If, in three years, the company is acquired by a larger company at $1 a share, what are the taxes that I'd have to pay? Are all the taxes paid at the time of acquisition? Is it in the capital tax bracket? What else should I know about these shares? Is there a way to mitigate these taxes in any special way?”

Being offered some stock options is great if the company does well.  But it is important to know how they are taxed. It is pretty complicated though and I didn't have enough information from this listener to completely answer his question. There are two different types of stock options. There are non-qualified stock options and incentive stock options. They are each taxed very differently.

When you exercise non-qualified stock options, it is basically is earned income. Not only do you have to pay your full ordinary income tax rate on the difference between the two prices, between that $.05 and that $1, but you also have to pay payroll taxes. You have to pay Social Security and Medicare taxes. That is called a non-qualified stock option.

The other one is an incentive stock option, which is probably what this listener has. The way these are taxed really depends on a couple of things. First of all, whether you're subject to the alternative minimum tax. This can actually make you subject to the alternative minimum tax because it is a preference item for the AMT. So it might increase your alternative minimum tax. But basically if you exercise the option and sell the stock within the same calendar year, you're paying tax on the difference, between the market price at sale and the grant price, at your ordinary income tax rate. If you hold onto the stock, the difference between the grant price and the market price becomes an AMT preference item, so you might end up having to pay AMT on that. Now, you can get a credit for excess AMT tax paid, but it might take years to actually use that up, depending on your AMT tax situation.

What you need to realize though, is if you hold that for a year and then sell the stock, at least the sale of the stock is now going to only be taxed at your long-term capital gains rate. That is a little bit better. So assuming you have incentive stock options, the idea is to hold on to that stock for a year after you exercise it and then pay at the lower long-term capital gains rates. I don't deal with a lot of stock options because doctors don't get them very often, and so it's not a common topic on my blog or on the podcast.

Reader and Listener Q&A

Deferred Compensation

A listener is switching jobs, both W2s,  and is owed some deferred compensation money from his previous employer. He was just going to invest it in a taxable account but recently found out it is being paid out as a 1099 income. Now he wants to know if there are any additional tax deferred or tax advantage retirement accounts at his disposal with this one time payment.

Certainly, you want to get as much tax benefit from something as you can. But you already paid payroll taxes on this money when it went into this 457 or similar account. You can't expect, when that money comes out, that it then counts as earned income. You're not paying payroll taxes on it again, you're just paying ordinary income taxes on it. So I don't think that this money is eligible to go into a retirement account. I don't think it is earned income. Yes, it is coming on a 1099, but lots of things come on a 1099. All kinds of investments will send you money on a 1099 that are not earned income, that cannot be used to put money in a SEP-IRA or a solo 401k. So I don't think that's going to be an option for this listener. What other accounts can you put the money in? You can always invest more money in a taxable account, either in tax efficient mutual funds, or perhaps, if you're interested, into equity real estate. All very good in a taxable account.

Deciding Where to Go to Medical School

Some people are fortunate enough to have choices when it comes to medical school. A listener was trying to decide between selling their home and using the money to attend the in-state medical school, finishing debt free. Or moving to another state where they really want to live and having to take out loans in addition to selling the home. Worst case scenario they thought they would have to borrow $80,000 in loans.

What a wonderful position to be in to have that sort of money that going to medical school debt free is an option. One of the best investments you can make is in your education, especially becoming a doctor or other high income professional. The question here is do you go to your in-state school debt free or do you rack up $80,000 to go to the school you want to? I'm not sure there is a right answer to this question. $80,000 is not a huge scary thing for me. If I could get every doctor in the country to get out of medical school only owing $80,000, I would consider that a very fair price for medical school. If I owed $80,000 as an emergency physician coming out of residency, I would have it paid off by Christmas. Truly. I'd just keep living like a resident for six months and throw the extra add it.

So, yes, you can come out and be a little bit further ahead if you go to your in-state school or you can owe $80 grand, maybe it will be $100 grand by the time you finish residency, and go where you want to go.  I don't think that's unreasonable. $80 grand as an attending physician, even a relatively low paid one can knock out $80,000 pretty quickly if you continue to live like a resident for a year or two. It's not a lot of debt for a physician, but coming out debt free is pretty darn attractive to.

Roth Contributions vs Tax Deferred Contributions

Do you do your tax deferred 401k? Or do you do your Roth 401k? It is a very complex question that many people struggle with. There is a lot that goes into it, but the main deciding factor is what your tax rate is going to be when you pull the money out. For most doctors, they will pull the money out at some tax rate lower than what their tax rate was during their peak earnings years. That is the case even if tax brackets go up. Now if you're a super saver or you're going to have 120 doors of real estate and that's producing income for you in retirement or you're going to end up with an $8 million IRA, that's not necessarily the case.

Putting money into a Roth account preferentially does mean more money is going into tax protected and asset protected accounts. But at the same time, you don't want to be paying 35% or 37% taxes on something that you could later pull money out at 10%, 15%, 20%, etc, just to get that benefit. So the general rule is during peak earnings years, use tax deferred accounts as much as possible, during non peak earning years, use Roth accounts as much as possible; but that's a rule of thumb. There are lots of exceptions to that.

What to Do with Retirement Accounts When Leaving Employer

When you leave an employer you can do a couple things with that retirement account. You can leave it where it is if the fees aren't super high and the investments are good. You can transfer it to your new retirement account, again if the fees aren't too high and the investments are good,  I would just move it to the new account and keep your life simple. That will allow you to continue to make Backdoor Roth IRA contributions. For anyone who doesn't make enough money that they have to do their Roth IRA contributions through the Backdoor, you can just roll this stuff into a traditional IRA. That was the classic advice for years, and years, and years. It's just not the right advice for a high income earner, because it precludes you from doing Backdoor Roth IRAs every year.

Front Loading 529 Accounts

Should you take advantage of the ability to front load five years of a 529 contributions or  contribute as you go along year to year to take advantage of the tax benefits?

It is a little difficult to say. This listener asking this question is in Michigan where you basically get a 4.25% tax deduction. But the additional tax benefit of that money not being taxed as it goes, assuming your investment in something like a total stock market index fund, is not that high per year. It's perhaps 0.3% a year, something like that, maybe 0.4% a year. That's the benefit of eliminating that tax drag. And so, if it's just one year, well, that tax break makes a much bigger difference than 0.3% or 0.4% a year. But if you multiply that out over 10 or 20 years, we'll 0.3% or 0.4% a year can make a bigger difference in the long run.

Personally, I just do it year to year, because I figure I've have other things to do with my money most of the time, whether it's saving for retirement, saving for a home renovation, or buying a boat. I've never put in there more than $15,000 a year. Personally, I like getting that tax break each year on my state taxes so I spread it out and use the money for other things.

The likelihood that you don't have something else to use your money for seems a little bit low to me, so that's probably what I would do, but it's not necessarily a bad thing if you want to front load it. That can certainly make more of a difference then you're going to get off the state tax deduction, but it's pretty close. This is not a big difference, that is going to make any significant impact in whether you become financially successful or not. So don't spend a lot of brain power trying to calculate this out

High Deductible Health Plan vs a PPO

“I am up for annual enrollment of my health insurance policy and I have a question regarding choosing a high deductible health plan versus a PPO. In the last couple of years, the high deductible/HSA option was cheaper and has the added benefit of the HSA tax savings, and so I chose that one. This year, costs have increased and the all-in premium, plus out-of-pocket maximum, for the high deductible slash HSA plan is $1,632 more expensive than the PPO plan. Given that under the high deductible health plan, I would be contributing $7,100 in 2020 to the HSA before taxes, the tax saved by contributing to this plan, and the 24% tax bracket, would be $1,704, and would effectively make the difference between the plans awash. To me, this makes the high deductible/HSA plan to be the better option, as I can contribute to the HSA and still may end up not paying the whole all in amount by the end of the year. I want to make sure that this makes sense to you and may end up helping some other employed physicians decide between health insurance options.”

A lot of people wonder about HSAs. Should I get this policy just to get the HSA? In fact, I had a question from one of my partners whose spouse works at the local university and basically has a Cadillac insurance plan provided to them for very little money. He was wondering if they should ditch that and buy a high deductible plan just so they could use an HSA. No, no, no. That's not the way you do it. The first thing you do is decide what plan is right for your family. If an employer, yours or your spouses, is offering some really great plan, take that plan. If they're paying all the premiums on it, that is a better deal than going out and finding your own high deductible plan, even with the HSA benefits.

If your employer is offering you two separate plans, you have to run the numbers, and decide whether you're a relatively high healthcare costs utilization family or relatively low one. If your spouse has MS or rheumatoid arthritis or something and you're going to hit your max deductible every year, then you just run those numbers assuming you're going to hit your maximum out of pocket every year. In that case, most of the time, the regular low deductible PPO is usually the right choice. But if you don't use a lot of health care, like my family doesn't, you're almost surely better in a high deductible plan. And then you get the added benefit of the HSA. Run the numbers, don't just get so excited about using the HSA that it causes you to make a bad health insurance decision. Make the health insurance decision first, and if the right plan for you is a high deductible plan, then you use the HSA, because it, as a triple tax free account, probably your best investing account out there.

Refinancing Your Student Loans in Residency

“I'm currently leaning against a future in academics, although I haven't ruled it out completely, so I don't know if PSLF is necessarily for me. I do know, however, that there are some advantages with not privatizing my loans. Namely, the ability to put my loans in forbearance should the need arise. I'm currently scheduled to begin payments to the pay as you earn program in December of this year, and I was wondering if you had any guidance on when or if I should refinance my student loans?”

When do you refinance your student loans in residency? He thinks he's probably not going into academics. Well, how much is that probably? Is that a 5% chance? Is that a 20% chance? Is that a 1% chance? If you really think there's a decent chance you're going into an academic position, or going to work for the VA, or some sort of position that will qualify for public service loan forgiveness, you don't want to refinance your public loans, your federal loans, in residency, because once you refinance them, that's it; you are not going to get public service loan forgiveness for those loans. If you think there is a halfway decent chance you are going to go for public service loan forgiveness, don't refinance.

The second issue he brings up his forbearance.  You're not going to need forbearance. Forbearance is for people that aren't making much money, certainly not somebody that's married to another doctor as this listener is. The likelihood that you're going to need forbearance is so low, I think it can be totally ignored. Now, there is one other thing you have to be thinking about though, and that's not the pay as you earn program, that's the revised pay as you earn program. Remember it can pay you a subsidy one half of the interest that accrues in any given month during your training, above and beyond what your required payments are. So for example, if you had $200,000 in loans at 6%, that's $1,000 a month in interest. If your payments are $200 a month, that's $800 of interest that's not being paid each month. Under repay, $400 of that just goes away, and $400 of it is added on to the balance of your loan each month. That's how the repay program works.

Now, being married to another doctor, especially if you're filing married, filing jointly, you're probably not actually qualifying for any significant subsidy there. You're probably paying the full amount of interest that's accumulating each month, but you have to look at that and decide how much subsidy am I getting? If you're getting a big subsidy, you may be better off with the effective rate under repay after the subsidy, than you would be with the rate you can refinance to. A lot of people worry about the payment size because they can only make low payments during residency, but this is not an issue with refinancing your loans. If you're refinancing with some of the companies that do resident refinancing loans, you can get $100 a month payments.

You can afford those as a resident, I know money's tight, but you can afford $100 a month payments. So the low payment is not an issue to not refinance loans. You can refinance your loans if you're not getting much from repay, and you can refinance to a lower rate than your effective rate under repay, and of course you want to make sure you're not going for public service loan forgiveness.  If you're ready to refinance, just be careful doing it in residency. You don't want to botch your chances to get public service loan forgiveness, if that's truly what you should be doing with your federal loans.

Tithing

A listener asked about tithing. I have a lot of thoughts on tithing. The issue is people think of tithing as different things. Some people think of tithing as money they give to charities, sometimes it's just any amount they give to their church. Some religious affiliations are pretty legalistic about it and really kind of do it to the penny, 10% of your income, and they argue over gross versus net income. There are a lot of things that you can do with tithing. But the truth is anything I say is only going to apply to a pretty small percentage of my listeners because they're the only ones who look at tithing in the same way I do. A lot of people just look at it as something completely different. And half of you out there are going, “Tithing? Why would anybody give any money to a church in the first place?”

But a couple of principles to think about, that I think a lot of people don't consider when they're doing tithing, particularly those who are a little bit more legalistic about it and try to really calculate out what 10% of their money is. The first principle is this whole gross versus net thing. I kind of generally tithe on gross, but you still have to ask, “Well, what's included in gross?” I don't do it on gross revenue for my business.  I subtract out business expenses before that, but generally not in my taxes. Well, what if I lived in Scandinavia? And my tax burden was 60%, or 70%, or 80%? Well, then it really probably wouldn't make sense to tithe on gross, because that might end up being a third of your net income. It's just too big of a chunk I think in that sort of a situation. In the US, our tax burdens are generally lower. Even mine's only about a third of my income that goes toward taxes, and so it's a very different situation, I think, than some of those high tax countries in Europe.

Another thing to keep in mind is just the ease of calculating things. For example, I think the approach most people take when it comes to retirement accounts is they don't pay tithing on money that goes into retirement accounts, but they plan to pay tithing on that money when they take it out of retirement accounts. The benefit of doing that is you don't have to keep track of any sort of weird tithing basis of the money in that account. You ignore it until you take money out of the account in retirement. A lot of people wonder, too, about Social Security. For example, if you're paying tithing on your Social Security taxes that go in, should you pay tithing on the social security when it comes out? That's another question that you have to wrestle with when it comes to tithing. There's obviously no right answer here. It is really between you and God. So, go to God, work it out, come up with something reasonable and pay your tithing.

Hiring a Financial Advisor

A listener asked about the cost of a financial advisor.  If you want someone to help you, to stand by your side, when it comes to your financial planning and your investment management, I think that's a reasonable thing. I'll bet 80% of doctors want or need a good financial advisor. If you are one of that 80%, I recommend you find someone that gives you good advice at a fair price.

Now, it may be, after a year or two, that you go, “You know what? This isn't worth the 3, or 4, or 5, or $7,000 a year I'm paying. I don't feel like I'm getting that much value out of it.” That's great. You fire them and move on and manage your investments yourself. If you realize, as time goes on, that you really like having someone there to be by your side, to bounce ideas off of, to help you stay the course in a nasty bear market, then that's fine. It is far better for you to pay five grand a year to a financial advisor than it is for you to bail out in a bear market when you have a $2 million portfolio. The first is a financial cost, it may slow down your retirement by a few months or even a few years, but it's not going to be a financial catastrophe. So, if you feel like you need someone by your side, hire someone just make sure it's someone good and make sure they're charging you a fair price.

Full Transcription

Intro: This is the White Coat Investor podcast, where we help those who wear the white coat get a fair shake on wall street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dahle.

Dr. Jim Dahle: This is White Coat Investor podcast number 136, taxation of stock options and deferred compensation. Wow, it sounds really boring. I assure you this podcast is a lot more interesting than that title. Maybe that title will be good for the search engines to bring some people in to find it, though. This podcast is sponsored by Bob Bhayani, at DrDisabilityQuotes.com. He's a truly independent provider of disability insurance planning solutions to the medical community nationwide and a longtime WCI sponsor. He specializes in working with residents and fellows earlier in their careers to set up sound financial and insurance strategies. He's very responsive to me anytime readers have an issue, and recently got this feedback by a reader. “Having had some pretty terrible financial salesman come speak to my residency program, I'm trying to do better now that I curate our conference as a chief. I wouldn't hesitate to recommend Bob to anyone, and his place on your recommended page is well deserved.”

Dr. Jim Dahle: So if you need to review your disability insurance coverage to make sure it meets your needs or if you just haven't gotten around to getting this critical insurance in place, contact Bob at DrDisabilityQuotes.com, or by email, at infodrdisabilityquotes.com, or by calling (973) 771-9100. All right. Our quote of the day today comes from Thomas Stanley, who you'll know from Millionaire Next Door fame. He said, “High income producing but low net worth physicians have a propensity to acquire luxury items such as expensive prestige makes of motor vehicles. But balance sheet affluent doctors drive Toyota's.” That makes me feel good, because I got two Toyotas in the garage.

Dr. Jim Dahle: Thanks for what you do, it's hard work. I had one of my partners come to me the other day and say, “Man, I'm feeling burned out.” He works 15 nights a month, and I'm not surprised if he's feeling a little bit burnt out; I was burned out working three or four nights a month. And so I can really relate to somebody that doesn't want to work and stay up for half of the nights the rest of their career. But that's kind of what you have to do if you don't put yourself in a financial position to do whatever you want to do. And that is by not necessarily being completely financially independent, but at least having your financial ducks in a row. So I encourage you to do that, it does make a difference in your clinical practice, and I'm a firm believer that it makes you a better parent, a better partner, and a better doctor to have your financial ducks in a row.

Dr. Jim Dahle: If you have not signed up for the White Coat Investor newsletter, please do so w
hitecoatinvestor.com//newsletter. One of the cool new things we have with our newsletter is our real estate opportunities list. If you sign up for that, I will send you emails about special deals I've worked out with private real estate investments. If you're interested in those, be sure you sign up for that portion of the newsletter. Otherwise, you basically get to pick what you want to get. You can get every blog post in your email box, you can just get the monthly newsletter, you can get the monthly newsletter plus a weekly kind of digest of the blog posts from the previous week, you can get any combination of those four things you want. Whitecoatinvestor.com/newsletter.

Dr. Jim Dahle: By the way, if you're having an issue with one of my advertisers, email me. I can fix almost all of those within just a few hours. If it's an issue with the student loan refinancing company or an insurance agent, et cetera, let me know about it. Not only do I want the feedback when people are having problems with them, so I can adjust my list of who I recommend as needed, but you'd be surprised how responsive they might be to me if I shoot them an email and say, “Hey, fix this, will you?” For example, I have people come to me and say, “You know what? I've been working with one of your insurance agents for six or nine months and they're just not responding very well to me, and I've decided to move on to somebody else.” Well, if they would have emailed me eight months ago, I would have fixed that issue then and they would have insurance in place. I mean, I'd feel terrible if somebody, heaven forbid, needed their disability insurance or their life insurance in the interim while they're waiting for somebody that wasn't responding to them.

Dr. Jim Dahle: So if you don't feel like you're getting the service that I promised you from anybody that advertises with me, please let me know. Most of the time I can fix the problem, and if I can't fix the problem, I'll get them off my list. All right. Let's take some questions off the SpeakPipe. Now, if you want to get your questions on the White Coat Investor podcast, go to speakpipe.com/whitecoatinvestor. You can record it up to a minute and a half long, and we'll get it on the podcast and we'll answer your question. Our first one comes from Holly from Knoxville. Let's take a listen.

Holly: Hey Dr. Dahle, I am not a physician or high income earner, but my husband and I will be selling our home and moving to med school somewhere next year. He's worked really hard and he has a few MD acceptances, but right now we're trying to decide between staying in state and using the money from the sale of our house to pay completely for med school, or moving to North Carolina to go to the school that he really wants to go to and still probably having to take out some loans after using all of that money from the sale of our home. Right now, we know kind of quality of life that we would probably prefer to move to North Carolina. Worst case scenario, we would have to take out about $80,000 in loans, and in either scenario we would be living completely off of my social work salary. So, I'm just curious. I would really appreciate your thoughts on these two options. Thanks.

Dr. Jim Dahle: All right, this is a great question. I like this one. What a wonderful position to be in to have that sort of money, even going to medical school, debt free is an option. For most of us, that's not even an option, so congratulations on that. It sounds like one or both of you had a prior career, maybe not necessarily high income one if you're a social worker, but it's great to have those sorts of funds. One of the best investments you can make is in yourself, in your education, especially becoming a doctor or other high income professional. That's often one of your best investments. So very much recommend that. You can obviously get into a medical school, because he did. So yes, invest your money in yourself and a future higher income, that's a great thing to do. But the question is, and it sounds like you're selling the house either way, whether you stay in state or whether you go to North Carolina?

Dr. Jim Dahle: So that's not really the question. The question here is do you go to your in-state school debt free or do you rack up $80,000 in North Carolina? I'm not sure there's right answer this question. It sounds like you at least, and probably both of you, would rather go to North Carolina. Maybe the school's a little bit better, maybe it's certainly a better living environment, which does matter. I mean, it's four years long. That sort of thing does matter. $80,000 is not a huge scary thing for me. If I could get every doctor in the country to get out of medical school only owing $80,000, I would consider that a very fair price for medical school. If I owed $80,000 as an emergency physician coming out of residency, I would have it paid off by Christmas. Truly. I'd just keep living like a resident for six months and throw the extra add it.

Dr. Jim Dahle: So, yes, you can come out and be a little bit further ahead if you go to your in-state school or you can owe $80 grand, maybe it will be $100 grand by the time you finish residency, and go to where you want to go to. I don't think that's unreasonable. Now if you coming to me and saying, “I can go to my state school and get out owing $250,000 or I can go to North Carolina and owe $400,000,” I think we've got a different question here. But $80 grand as an attending physician, even a relatively low paid one, say you're in occupational medicine, or pediatrics, or family practice, or whatever, you can knock out $80,000 pretty quickly if you continue to live like a resident for a year or two. Okay? No problem. So I'm okay with that. It's not a lot of debt for a physician, but coming out debt free is pretty darn attractive to. All right. Let's listen to our next question. This one comes from an anonymous listener.

Anonymous: Hi Jim. Thank you for all you've done for us physicians with our financial literacy. I have a question regarding a Mega Backdoor Roth IRA or at least a varying of such. I am in a 401K plan that allows us to put an employee $90,000 contribution into a 401k that either can be designated as a pretax designation or as a Roth designation. The employee matched the maximum up to $56,000, so I could put this money in entirely $56,000 tax deferred, or I could choose to put my employee contribution in as after tax dollars. This is probably similar to a Mega Backdoor Roth IRA, except for the fact that all of this money could be tax deferred all the way up to $56,000.

Anonymous: My question to you, is there an advantage to doing the Roth? Or is it equivalent and depends on what you chose to do and how many bags of assets that you choose to put your money into? I do max out my Backdoor Roth IRA with both my spouse and myself. My real question is, is there more power to put this money in a Roth designation, because equivalently you are putting more money into your retirement because of the fact that you're putting more dollars earning in tax deferred contributions in place? I appreciate your thoughts, thanks.

Dr. Jim Dahle: Okay, so this one's not entirely clear what's going on with this person's retirement account, but they want to know whether they should do a Mega Backdoor Roth or take tax deferred money. Well, this is the same question that everybody else deals within their 401K. Do you do your tax deferred 401k? Or do you do your Roth 401k? And it's a very complex question. There's a lot that goes into it, but the main deciding factor is what your tax rate is going to be when you pull the money out. And for most doctors, they will pull the money out at some tax rate lower than what their tax rate was during their peak earnings years. That's the case even if tax brackets go up. Okay? Now if you're a super saver or you're going to have 120 doors of real estate and that's producing income for you and in retirement or you're going to end up with an $8 million IRA, that's not necessarily the case.

Dr. Jim Dahle: Yes, you make a good point here. That putting money into a Roth account preferentially does mean more money is going into tax protected and asset protected accounts. But at the same time, you don't want to be paying 35% or 37% taxes on something that you could later pull money out at 10%, 15%, 20%, et cetera, just to get that benefit. So the general rule is during peak earnings years, use tax deferred accounts as much as possible, during non peak earning years, use tax free or Roth accounts as much as possible; but that's a rule of thumb. There are lots of exceptions to that. You might be one of those exceptions. I really don't have enough information to really know.

Dr. Jim Dahle: Okay, this one comes in via email. Hi, I'm trying to figure out the best option for my current 403(b) money when I leave for a new job, which is also going to be a W2 job. Should I leave it in the current location, which has decent options? Should I transfer it to a solo 401k? Is that even possible? Or should I transfer it into the new job 403(b)? Well, if you have no other income, if there's no self employment income, you're not self-employed; you can't just go open a solo 401k. Now, you could get some self employment income, you could do some moonlighting, you could even do surveys, right? But technically you got to have a survey taking company that you start and go get yourself an employer identification number, and actually plan to have a business going forward, even if that business is just taking surveys. And you can put it in a solo 401k if you wish to.

Dr. Jim Dahle: But the easy thing to do here is to either leave it in the old 401k, if it's really good. Sorry, I said 401k. 403(b). Or move into the 403(b), which is probably what most people would do in this situation, unless the 403(b) is terrible with super high fees and lousy investments, I'd probably just move it to the new 403(b) and keep your life simple. That'll allow you to continue to make Backdoor Roth IRA contributions. Now, for anybody who doesn't make enough money that they have to do their Roth IRA contributions through the Backdoor, you can just roll this stuff into a traditional IRA. That was the classic advice for years, and years, and years. It's just not the right advice for a high income earner, because it precludes you from doing Backdoor Roth IRAs every year. All right, let's take another question off the SpeakPipe from Alex. This one's about stock options.

Alex: Hi, Dr. Dahle. I just joined a startup and was offered 10,000 shares of stocks at a $.05 grant price. If, in three years, the company is acquired by a larger company at $1 a share, what are the taxes that I'd have to pay? Are all the taxes paid at the time of acquisition? Is it in the capital tax bracket? What else should I know about these shares? Is there a way to mitigate these taxes in any special way? Thank you for all you've done, it's been a great help.

Dr. Jim Dahle: All right, so Alex was offered some stock options. That's great, especially if this company does great. But he wants to know how they are taxed. Well, it turns out this is really complicated and I don't actually have enough information from you, Alex, to answer the question. It seems that there are two different types of stock options. There are non-qualified stock options and there are incentive stock options, and they're each taxed very differently. In non-qualified stock option, when you exercise that and sell the stock, or rather when you exercise that, that basically is earned income. Not only do you have to pay your full ordinary income tax rate on the difference there between the two prices, between that $.05 and that $1, but you also have to pay payroll taxes. You've got to pay Social Security and Medicare taxes on that. That's called a non-qualified stock option.

Dr. Jim Dahle: The other one is an incentive stock option, which is probably what you have, but the way these are taxed really depends on a couple of things. First of all, whether you're subject to the AMT, because this can actually even make you subject to the alternative minimum tax, because it's a preference item for the AMT; and so you've got to bear in mind that it might increase your alternative minimum tax. But basically if you exercise the option and sell the stock within the same calendar year, you're paying tax on the difference, between the market price at sale and the grant price, at your ordinary income tax rate. If you hold onto the stock, the difference between the grant price and the market price becomes an AMT preference item, so you might end up having to pay AMT on that. Now, you can get a credit for excess AMT tax paid, but it might take years to actually use that up, depending on what your AMT tax situation.

Dr. Jim Dahle: What you need to realize though, is if you hold that for a year after that and then sell the stock, well, at least the sale of the stock is now going to only be taxed at your longterm capital gains rate, so that's a little bit better. So assuming you have incentive stock options, the idea is to hold on to that stock for a year after you exercise it and then pay at the lower longterm capital gains rates. I hope that's helpful and answered your question. I don't deal with a lot of stock options because doctors don't get them very often, and so it's not a common topic on my blog or on the podcast, but certainly, if I have botched that, I assure you, I will hear from it soon.

Dr. Jim Dahle: Speaking of which, I've got the Mia Culpa I need to acknowledge from our recent podcast on the taxation for vehicles. I got nailed on this one because I said a Tesla model X does not qualify for the special tax preference, that a car that weighs over 6,000 pounds, in gross vehicular weight, qualifies for. And it turns out I was wrong, it's not about the weight of the car. It's about the weight of the car with all the people and the cargo in it.

Dr. Jim Dahle: And so each manufacturer comes up with a GVWR for the car, and that value for a Tesla Model X is over 6,000 pounds. So if you want to get a Tesla X because the tax benefits are a little better for it than a model 3, I have to acknowledge they are a little bit better, just like they would be for buying an SUV or a pickup truck for your business. Just be aware of that. Okay? And remember that self-employed people, that's not you that has an employee job down at the hospital and drives your Tesla in there to commute. We're talking about a car that's used for business. All right, let's take our next question off the SpeakPipe. This one from Shawn.

Sean: Hi, Dr. Dahle. My name is Sean, calling from Detroit. I'm an emergency medicine doctor, my wife is in her last year of fellowship in pediatric cardiology and we have a one-year-old daughter. My question is about 529s. We've gotten some advice from my colleagues at work and was wondering if you had any thoughts. In Michigan, the state withholding tax is 4.25% and 529 contributions are deductible up to $10,000 per year. Dr Jay recommends contributing $10,000 a year for 10 years. With compounding, this should grow to approximately $250,000. Dr. C has the same goal of $250,000, but recommends a one time contribution of $80,000, saying that the benefit of the extra time to grow tax free with compounding outweighs the tax break per year.
Sean: We have put $10,000 per year in the last two years, but with my wife's expected increase in salary, we should have enough to make a big one time contribution according to Dr. C's plan, if you think that's best. We are still maxing out my 401k, her 403(b), my HSA and Backdoor Roth. Since the 529 grows tax free, this seems better than putting the extra income in a taxable brokerage account. Should we stick with the $10,000 per year plan? Go for the big contribution? Something else you'd recommend? Thanks for your help.

Dr. Jim Dahle: Okay, so Sean is asking whether he should take advantage of the ability to donate and front load five years of a 529 contribution, or whether he should contribute as he goes along year to year to take advantage of the tax benefits? Well, it's a little bit difficult to say, right? When you put that money in, in Michigan, you're getting basically a 4.25% deduction, and so that's worth something. But the additional tax benefit of that money not being taxed as it goes, assuming your investment in something like a total stock market index fund, is not that high per year. It's perhaps 0.3% a year, something like that, maybe 0.4% a year. That's the benefit of eliminating that tax drag. And so, if it's just one year, well, that tax break makes a much bigger difference than 0.3% or 0.4% a year. But if you multiply that out over 10 or 20 years, we'll 0.3% or 0.4% a year can make a bigger difference in the long run.
Dr. Jim Dahle: Personally, I just kind of do it year to year, because I figure I've got other things to do with my money most of the time, whether it's saving for retirement, or saving for a home renovation, or buying a boat, or whatever. And so I've just kind of decided to kind of go along as I go saving for college for the kids rather than ever front load it. I've never put in there more than $15,000 a year. In fact, I've only been doing that much for the last year or two, but it's not a crazy thing to do. Personally, I like getting that tax break each year on my state taxes. And so I spread it out and use the money for other things.

Dr. Jim Dahle: The likelihood that you don't have something else to use your money for seems a little bit low to me, so that's probably what I would do, but it's not necessarily a bad thing if you want to front load it. That can certainly make more of a difference then you're going to get off the state tax deduction, but it's pretty close. This is not a big difference, this is not going to make any significant impact on whether you become financially successful or not. So I wouldn't spend a lot of brain power trying to calculate this out, which one's better for you, because it's going to come out to a very close amount. Okay. Let's take our next question off the SpeakPipe from Wes.
Wes: Hi Jim, I'm an anesthesiologist. I just took a new job with a new employer and I've got a question about some deferred compensation money that I'm owed from my previous employer. So a little background, my old job and my new job is all W2 salary, and for this year I've already maxed out my 401k, HSA, and Backdoor Roth IRAs for my wife and myself. My previous employer does still owe me about $75 to $80 K gross in a deferred compensation that I'm owed on termination from that job. My original plan was to invest a big chunk of this money in a taxable account, but since leaving, I've found out that my old employer has sold out to a larger national entity and now that same $75 to $80 K of deferred compensation is going to be paid out as 1099 income.

Wes: So my question is, now that I have this chunk of money coming to me as 1099 income, are there any additional tax deferred or tax advantage retirement accounts at my disposal with this money? And again, this is just a onetime payment, I don't anticipate any ongoing or any future 1099 income. Thanks again for all that you do.
Dr. Jim Dahle: Okay. Wes' question is about deferred compensation, right? His employer owes them $75 or $80,000, but now he find out it's not coming to him on a W2, it's coming to them on a 1099. So he's going, “Maybe I ought to open up a solo 401k or a SEP-IRA and put this money in there,” right? Well, it makes sense, you can understand his question. Certainly, you want to get as much tax benefit from something as you can. But here's the deal: you've already paid payroll taxes on this money when it went into this 457 or similar account. And so you can't expect, when that money comes out, that it then counts as earned income. Again, you're not paying payroll taxes on it again, you're just paying ordinary income taxes on it. And so I don't think that this money is eligible to go into a retirement account. I don't think it's earned income.
Dr. Jim Dahle: Yes, it's coming on at 1099, but lots of things come on a 1099, right? All kinds of investments will send you money on a 1099 that are not earned income, that cannot be used to put money in a SEP-IRA or a solo 401k. So I don't think that's going to be an option for you, Wes. What other accounts can you put the money in? You can always invest more money in a taxable account, either in tax efficient mutual funds, or perhaps, if you're interested, into equity real estate. All very good in a taxable account.

Dr. Jim Dahle: All right. I thought we would take a look at an email I had sent to me by a reader. Doctors, you guys that are listening, blog readers, they get emails like this all the time, and sometimes they share them with me and they're kind of fun to see. But, honestly, I've seen so many of these, it's not a particularly new thing I get. I've seen a lot of these over the years. Let me see if I can find the email here. Okay, here it is. So this is an email sent to me from a dentist out of Colorado. So, he was basically trying to line up term life insurance and apparently made the mistake of not going to one of my recommended insurance agents on the website, because they don't do this.
Dr. Jim Dahle: So, his agent writes in, “I've attached the term life array. It's based on 1 million, but for the cost of 2 million, just double the amount of the premium. Once we have your approval, we can schedule a meeting to discuss options,” et cetera. Okay. Well, that makes sense, that seems reasonable, right? And so the dentist writes back, “Hey, I was looking around with some other quotes on the internet and wondering what you thought. I attached this from term4sale.com and I think I can get a $2 million 20 year term for about half what your considering giving me with Guardian.”

Dr. Jim Dahle: Okay, so now the agent comes back. “These are just cheap term writers without the ability of converting the term to a high quality permanent life product down the road. Those rates also don't include the writers I would typically add to a term policy; waiver of premium, extended conversion and terminal illness writer. I can write cheap term for you through the same kind of term brokerage, but the reason for doing Guardian terms that you would have guaranteed conversion to the highest quality permanent life product that is available. Plus, they'll refund your term premiums when you convert. We haven't had a chance to discuss permanent life insurance with you yet, but it plays an important role as a key asset within your overall financial plan. When you learn how it works, you'll likely want to convert some or all of your term over to that kind of permanent coverage. Doing the term for now just locks in the protection.”

Dr. Jim Dahle: All right, so here comes the pitch, right? This is the pitch to buy, not only whole life insurance, but return of premium whole life insurance. So the doc writes back, “Thanks for the information. I'm interested in cheap term life insurance without the need for permanent life insurance. I know we haven't discussed in detail, but I've had another guy pitch it to me and the more I read into it, the less I'm interested. If Guardian can do a simple term life insurance policy, then let's shop somewhere else. Thanks for the offer though.” So he comes back, “We do have cheap term brokers that we can send your exam and lab results to for quick approvals, so I can certainly do that right away for you if you wish.”

Dr. Jim Dahle: However, he launches into another sales pitch. “On the permanent life insurance policy, I work with thousands of high income, high net worth families all over the country, and I can assure you that if you use a properly designed permanent life insurance policy as part of your overall plan, in addition to retirement accounts, Roths, non-qualified investments, et cetera, it will help you have more income and retirement, better tax efficiencies and you will be able to have, if you only use term life insurance. The problem is that there are hundreds of life insurance companies with many subpar products, it's just a very few people know and understand the difference. So the naysayers that you are reading articles from say negative things about permanent life insurance, they simply don't understand this difference. I can show you how it's done and I can pretty much guarantee you're not going to see it from anyone else, but we will have to take the time. If you're open to learn, I'm happy to help you understand.”

Dr. Jim Dahle: Then he writes another email because I think the doc stopped talking to him, given all these sales pitches he's given him. “Just following up. Is there a day and time we can jump on a web meeting and I can walk you through how permanent life insurance is used to generate more income in retirement? I understand you have not had this conversation before and you will not learn this strategy by reading White Coat Investor and other related blogs. You mentioned someone pitched permanent life insurance to you, I'm confident that they don't understand how it's properly used.” Amazing. This is the only insurance agent who understands how to properly use whole life insurance in the entire world. No, he's just selling you stuff. Okay?

Dr. Jim Dahle: If you are running into an insurance agent, especially once you tell them once that you are not interested in whole life insurance, they keep trying to pump you on it, you're going to the wrong person. The reason why they pump this stuff is because it pays so well, number one. The commissions are very high, 50% to 110% of the first year's premium is what the commission is on a whole life insurance policy. So that's number one, it pays very well. And it's very “Difficult to get a man to understand something, when his salary depends on his not understanding it.” That's a quote from Upton Sinclair. However, reason number two is these guys get their education from the insurance company. He truly believes what he's saying. He believes he's doing this doc a favor by selling him a whole life insurance policy, when in fact, he almost surely is not. The likelihood that this dentist is one of the very few docs who can benefit from a whole life insurance policy is pretty low. All right, let's go on to our next question here. This one comes from Ryan in Colorado.

Ryan: Hi Dr. Dahle, and thank you for all that you do. I am up for annual enrollment of my health insurance policy and I have a question regarding choosing a high deductible health plan versus a PPO. In the last couple of years, the high deductible/HSA option was cheaper and has the added benefit of the HSA tax savings, and so I chose that one. This year, costs have increased and the all-in premium, plus out-of-pocket maximum, for the high deductible slash HSA plan is $1,632 more expensive than the PPO plan. Given that under the high deductible health plan, I would be contributing $7,100 in 2020 to the HSA before taxes, the tax saved by contributing to this plan, and the 24% tax bracket, would be $1,704, and would effectively make the difference between the plans awash.

Ryan: To me, this makes the high deductible/HSA plan to be the better option, as I can contribute to the HSA and still may end up not paying the whole all in amount by the end of the year. I want to make sure that this makes sense to you and may end up helping some other employed physicians decide between health insurance options. Thank you.
Dr. Jim Dahle: Okay, so Ryan's asking about a high deductible plan versus a PPO, although honestly, it sounds like Ryan's already made a decision here and he's just letting you guys know how he got there. But here's the deal, right? A lot of people wonder about HSAs. Should I get this policy just to get the HSA? In fact, I got a question from one of my partners whose spouse works at the local university and basically has a Cadillac insurance plan provided to them for very little money, and he was wondering if they should ditch that and buy a high deductible plan just so they could use an HSA. No, no, no. That's not the way you do it. The first thing you do is you decide what plan is right for your family. So if an employer, yours or your spouses, is offering some really great plan, take that plan, right? If they're paying all the premiums on it, that is a better deal than going out and finding your own high deductible plan, even with the HSA benefits.

Dr. Jim Dahle: So if your employer is offering you two separate plans, you've got to kind of run the numbers, and you know whether you're a relatively high healthcare costs utilization family or relatively low one. If your spouse has MS or rheumatoid arthritis or something and you're going to hit your max deductible every year, then you just got run those numbers assuming you're going to hit your maximum deductible, you're going to hit your max out of pocket every year. And in that case, most of the time, the regular low deductible PPO, EPO, whatever plan you want to call it, is usually the right choice. But if you relatively don't use a lot of health care, like my family doesn't, you're almost surely better in a high deductible plan. And then you get the added benefit of the HSA. And so it's good to run the numbers the way Ryan has, just don't get so excited about using the HSA that it causes you to make a bad health insurance decision. Because you make the health insurance decision first, and if the right plan for you is a high deductible plan, then you use the HSA, because it, as a triple tax free account, is probably your best investing account out there. All right, let's take our next SpeakPipe question. This one from Rudy.

Rudy: Hi Dr. Dahle. My question is regards to refinancing your student loans while in residency. To give you some context, I'm currently an intern in a surgical subspecialty with approximately $230,000 of student loan debt from medical school. I'm also married to a resident who fortunately does not have any debt, although she only plans to work part-time once her training is complete. I'm currently leaning against a future in academics, although I haven't ruled out completely, so I don't know if PSLF is necessarily for me. I do know, however, that there are some advantages with not privatizing my loans. Namely, the ability to put my loans in forbearance should the need arise. I'm currently scheduled to begin payments to the pay as you earn program in December of this year, and I was wondering if you had any guidance on when or if I should refinance my student loans? Thanks for all you do.

Dr. Jim Dahle: Okay, this is a great question. When do you refinance your student loans in residency? So Rudy owes $230,000, he's married to another resident that's debt free. That's wonderful. He thinks he's probably not going into academics. Well, how much is that probably? Is that a 5% chance? Is that a 20% chance? Is that a 1% chance? If you really think there's a decent chance you're going into an academic position, or going to work for the VA, or some sort of position that will qualify for public service loan forgiveness, you don't want to refinance your public loans, your federal loans, in residency, because once you refinance them, that's it; you are not going to get public service loan forgiveness for those loans. So if you think there's a halfway decent chance you are going to go for public service loan forgiveness, don't refinance.
Dr. Jim Dahle: The second issue he brings up his forbearance. Come on, you're a two doc family. A two doc family, you only owe $230,000. You really think you're going to need forbearance? You're not going to need forbearance, okay? I mean, come on. Forbearance is for people that aren't making much money, certainly not somebody that's married to another doctor. The likelihood that you're going to need forbearance is so low, I think it can be totally ignored. Now, there is one other thing you got to be thinking about though, and that's not the pay as you earn program, that's the revised pay as you earn program. Because remember, it can pay you a subsidy one half of the interest that accrues in any given month during your training, above and beyond what your required payments are. So for example, if you had $200,000 in loans at 6%, that's $1,000 a month in interest. If your payments are $200 a month, that's $800 of interest that's not being paid each month. Under repay, $400 of that just goes away, and $400 of it is added on to the balance of your loan each month. That's how the repay program works.

Dr. Jim Dahle: Now, being married to another spouse, especially if you're filing married, filing jointly, you're probably not actually qualifying for any significant subsidy there. You're probably paying the full amount of interest that's accumulating each month, but you have to look at that and you've got to decide, well, how much subsidy am I getting? If you're getting a big subsidy, you may be better off with the effective rate under repay after the subsidy, the effective interest rate, than you would be the rate you can refinance to. A lot of people worry about the payment size because they can only make low payments during residency, but this is not an issue with refinancing your loans. If you're refinancing with some of the companies that do resident refinancing loans, you can get $100 a month payments.

Dr. Jim Dahle: So you can afford those as a resident, I know money's tight, but you can afford $100 a month payments. So the low payment is not an issue to not refinance loans. You can refinance your loans if you're not getting much from repay, and you can refinance to a lower rate than your effective rate under repay, and of course you want to make sure you're not going for public service loan forgiveness. If you want to learn more about refinancing and see the special deals that the White Coat Investor has arranged for you with these refinancing companies, go to whitecoatinvestor.com/student-loan-refinancing. Those are the best deals on the internet for refinancing your student loans, so go there today. If you're ready to refinance, just be careful doing it in residency. You don't want to botch your chances to get public service loan forgiveness, if that's truly what you should be doing with your federal loans. All right, our next question comes via email from Andy, who says, “Can you do a podcast on tithing?” Well, I'm probably not going to do a full podcast on tithing.

Dr. Jim Dahle: I've actually written some articles about tithing in the past. You can find them on the internet. I'm not sure I've ever actually published one on my website, but I've got a lot of thoughts on tithing. The issue is people think of tithing as different things. Some people think of tithing as money they give to charities, sometimes it's just any amount they give to their church. Some religious affiliations are pretty legalistic about it and really kind of do it to the penny, 10% of your income, and they argue over gross versus net income. There are a lot of things that you can do with tithing. But the truth is anything I say is only going to apply to a pretty small percentage of my listeners because they're the only ones who look at tithing in the same way I do. A lot of people just look at it as something completely different. And half of you out there are going, “Tithing? Why would anybody give any money to a church in the first place?” And so I'm not sure it makes sense to do a whole podcast episode on tithing.

Dr. Jim Dahle: But a couple of principles to think about, that I think a lot of people don't consider when they're doing tithing, particularly those who are a little bit more legalistic about it and try to really calculate out what 10% of their money is. The first principle is this whole gross versus net thing. I kind of generally tithe on gross, but you still got to ask, “Well, what's included in gross?” I don't do it on gross revenue for my business, right? I subtract out business expenses before that, but generally not in my taxes. Well, what if I lived in Scandinavia? My tax burden were 60%, or 70%, or 80%? Well, then it really probably wouldn't make sense to tithe on gross, because that might end up being a third of your income, of your net income. It's just too big of a chunk I think they're in that sort of a situation. In the US, our tax burdens are generally lower. Even mine's only about a third of my income that goes toward taxes, and so it's a very different situation, I think, than some of those high tax countries in Europe.
Dr. Jim Dahle: Another thing to keep in mind is just the ease of calculating things though, too. For example, I think the approach most people take when it comes to retirement accounts is they don't pay tithing on money that goes into retirement accounts, but they plan to pay tithing on that money when they take it out of retirement accounts. The benefit of doing that is you don't have to keep track of any sort of weird tithing basis of the money in that account, and so you just kind of ignore it until you take money out of the account in retirement. A lot of people wonder, too, about Social Security. For example, if you're paying tithing on your Social Security taxes that go in, should you pay typing on the social security when it comes out? That's another question that you got to wrestle with when it comes to tithing. There's obviously no right answer here, right? There's no law of tithing. There's no 800 page tithing code, and it's really between you and God. So, go to God, work it out, come up with something reasonable and pay your tithing.

Dr. Jim Dahle: Okay. This next question also comes in via email. Somebody else that wanted a dedicated podcast to a specific subject. He says, “Is there any chance you could do a dedicated podcast on this?” And he's talking about a post I wrote about AUM fees. “Currently, I do have my money being managed by JP Morgan. As you're aware of, they have gone into the robo advisor realm, charging AUM fees well below 1%. There's a genuine concern on my part that having an active human element to the matter provides a level of financial security. My mathematical side recognizes this is not rational thought, but my emotional side seems to placate my nerves. Is there any way the podcast could be geared toward helping physicians or any professionals overcome the emotional aspect of having someone actively managing your funds?”

Dr. Jim Dahle: I don't really know what you're asking Sedad. I'll be honest. If you want somebody to help you, to stand by your side, when it comes to your financial planning and your investment management, I think that's a reasonable thing. I'll bet 80% of docs want or need a good financial advisor. If you are one of that 80%, I recommend you find somebody that gives you good advice at a fair price. I have a list of advisers on the website, just like I have a list of recommended refinancing companies, a list of student loan specialist, a list of insurance agents, such as the sponsor of this podcast, Bob Bhayani, and I recommend you work with one of them.
Dr. Jim Dahle: Now, it may be, after a year or two, that you go, “You know what? This isn't worth the 3, or 4, or 5, or $7,000 a year I'm paying. I don't feel like I'm getting that much value out of it.” That's great. You fire them and move on and manage your investments yourself. If you realize, as time goes on, that you really like having somebody there to be by your side, to bounce ideas off of, to help you stay the course in a nasty bear market, then that's fine. It is far better for you to pay five grand a year to a financial advisor than it is for you to bail out in a bear market when you have a $2 million portfolio. The first is, yes, it's a financial cost, it may slow down your retirement by a few months or even a few years, but it's not going to be a financial catastrophe. So, if you feel like you need somebody by your side, hire somebody, just make sure it's somebody good and make sure they're charging you a fair price.

Dr. Jim Dahle: All right. This episode was sponsored by Bob Bhayani, at drdisabilityquotes.com. He's a truly independent provider of disability insurance planning solutions to the medical community nationwide. Bob specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. Contact him today by [email protected], or by calling (973) 771-9100, or you can hit him up in the Facebook group. He's been sponsoring the White Coat Investor Facebook group for a number of months now and a lot of you are getting to know him there. Make sure you're signed up for the White Coat Investor newsletter. We've got a new forum built, it's really slick, and it took us a while to get people migrated over to the new one, but it's got way better features and it is running way better than the old forum. So be sure to check out the White Coat Investor forum as well, that's at whitecoatinvestor.com/forum, and we'll see you in there with any questions you may have. Please leave us a five star review and tell your friends about the podcast. Head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor podcast.

Disclaimer: My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author and podcaster. He is not licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only, and should not be considered official personalized financial advice.