Timothy Sumer

The ultimate benefits of a Roth IRA vs. a traditional IRA are subjective depending on the individual and what tax bracket they expect to be in when they reach retirement age. In other words, would you prefer to receive your tax benefits now or after you retire? Since Roth IRA contributions aren't deductible and qualified withdrawals are tax-free, they may ultimately be a better option for those in a relatively low tax bracket at the time of investing. However, if you qualify for the traditional IRA tax deduction and are in a moderate-to-high tax bracket, then the immediate tax savings might be a better tradeoff. As a general rule of thumb, if you expect to be in a lower tax bracket when you retire, a traditional IRA might make more sense. However, if you expect to be in the same or higher tax bracket when you retire, it could be wiser to pony up the tax dollars upfront with a Roth IRA. But again, if you’re unsure of what your financial situation is going to look

If you’re a resident or military member, maximize Roth contributions. If you’re in a low-income year for any reason, such as a sabbatical, use Roth contributions. Use a personal and spousal backdoor Roth IRA each year. That way, even if you choose to make all tax-deferred 401(k) contributions, you’re still getting some money into Roth accounts. If you can pay the tax with money in a taxable account and expect to work part time or retire in your 50s, then consider making Roth conversions during those years before receiving Social Security or a pension to “fill up the lower brackets.” If you save and invest more than 20 percent of your gross income, lean a little more toward Roth investments. If you save and invest less, use tax-deferred accounts preferentially. The White Coat Investor has been helping doctors with their money since 2011. Our free financial planning resource covers a variety of topics from doctor mortgage loans and refinancing medical school loans to physi

The best accounts to invest in are generally those with the lowest fees and taxes as those are an investor's greatest enemies. A typical doctor may have access to some or all of the following tax-protected accounts: Retirement: 401(k), 403(b), 457(b), 401(a), Profit-sharing plan, Defined Benefit/Cash Balance Plan, Individual 401(k), SEP-IRA, SIMPLE-IRA, traditional IRA Roth 401(k), Roth 403(b), Roth 457(b), Roth IRA Taxable (i.e. non-qualified) account Education: 529 Coverdell Education Savings Account Taxable account Healthcare: Health Savings Account Taxable account General Investing: Taxable investing account An employee ought to become an expert in the accounts his employer offers. The self-employed physician will generally want to use an individual 401(k). Most doctors will want to use a Backdoor Roth IRA. Those who are using a High Deductible Health Plan should take advantage of a Health Savings Account, a triple tax-free Stealth IRA. 529s are generally superi