WCI #230: Congress Proposes New Tax Bill Impacting High Earners

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 is your host, Dr. Jim Dahli. This is White Coat Investor podcast 230. What is going on with the tax bill in Congress? The White Coat Investor is proud to introduce our no Hype Real Estate Investing course which will provide the framework for developing further knowledge and experience as you progress in your real estate investing career. We call it an introductory course because there's always more to learn. But this is no short, superficial course. There are over 200 lectures and videos adding up to more than 27 hours of content by over 15 different instructors. We think it just might be the best real estate course on the planet. Continue your wealth building journey today with the no Hype Real Estate Investing course@whitecoatinvestor.com courses. You can do this and the White Coat Investor can help. All right, before we get into this too much, I think we need to talk a little bit about what is going on in Washington, what is going on in Congress? So we're recording this on September 21st. It'll be published on September 30th. Now, the proposed reforms in Congress were summarized in a document released on September 13th by the staff of the House Joint Committee on Taxation. So that got reviewed the next day by the House Committee on Ways and Means. That was on September 14th, one week before we recorded this, and then was published to the world. Basically, what they're thinking about in Congress. There's a few things you need to know about this. The first is that they're planning on going through the reconciliation process. What does that mean? Essentially what that means is that it's filibuster proof when it gets to the Senate. And with Democrats controlling the House and the Senate and the White House, chances are in some form this bill is going to get passed. Now, I normally don't spend a lot of time talking about bills that haven't yet been made into law, but I'm kind of making an exception on this one for a few reasons. One, it's fairly likely that something is going to get passed here. Okay, so that's number one. Number two, almost everything in this bill is going to affect you. The worst part about this is that I'm probably going to have to update like a thousand blog posts on the site because of all the changes that are going to happen. It's almost like the people writing this bill went through the White Coat Investor website, found every way that we can save money on taxes as high earners and put the kibosh on it. Okay, so what's the big picture for this? Well, as I mentioned in a post that I published last week, I think it was on the 24th last Friday. You can go and read that if you prefer getting this sort of information in written format. But the big picture there is that Congress is controlled by Democrats, okay? The House, the Senate and the White House, of course, too, are all controlled by Democrats. And a few years ago, you may recall that the opposite was in place. Republicans controlled the House, the Senate and the White House. And what did we have? We had a big tax bill that cut taxes. And so it shouldn't be any surprise when Democrats control all three Houses that we get a tax bill that increases taxes. And so that's the big picture. More so than that, President Biden has said many, many times that his priority is to not raise taxes on anybody making less than $400,000 a year. Now, that's a little bit nebulous, right? There's all kinds of income out there, total income and adjusted gross income and taxable income. And it sounds like there's even going to be another kind of defined income that comes out of this process. But basically $400,000 if you're single, $450,000 if you're married. These taxes are all aimed at people making more than that. Now, they're still going to affect people that make less than that, and we'll talk about that here in a minute. But for the most part, that's who they're aiming at. They basically are feeling that high earners are not paying their fair share and should pay more in taxes. So that's the big picture that you need to understand as we go into this discussion. Secondly, remember that this thing is just a bill, okay? Like the old song that you hear when you go to your kid's presentation in elementary school, right? It's just a bill up on the Hill. It's a long way to become a law from a bill. And so while it's good to be informed and try to make an impact on your elected representatives, in fact, I highly recommend, by the way, that you contact your elected representatives and express your probable displeasure with this bill. One of the easiest places to do that is@house.gov representative find your representative and you can send them an email. I've already emailed my representative, although I'm already quite confident he won't be voting for this bill. But at any rate, I wouldn't make a lot of changes to your financial plans based on something that's just a bill. Okay? It's going to change significantly between now and when it becomes a law. It's good to know about it. But for the most part, be careful making changes if it's not a change you would do. If this thing doesn't become law, you, you really ought to think twice about whether you want to do it until it becomes law. Now, there's been a lot of talk about some changes that could happen that are not in this bill and you should be aware of that. One of which is an elimination of the step up in basis of death. Now, this basically says when you die and your grandkids inherit your house, it's as though they bought your house on the day you died. That's the step up in basis on death. For tax purposes, they don't have a gain. Whatever gain you had in that or your taxable portfolio or the value of your business or whatever is all wiped out, out. And they start with the value on the day you died. So that's their basis for that asset. That's not changing. That's good. I think that would be bad policy to change that. And obviously it's going to cost the next generation a lot of money in taxes. But I think that was a good move they made and I'm glad the Democrats on the committee recognized that. Another thing they've been talking about is equalizing capital gains taxes in ordinary income tax rates. Now they're talking about raising both of those, but they decided not to equalize those. Again, I think it's bad policy to equalize them. There's a couple of reasons why long term capital gains taxes are lower than ordinary income taxes. One is recognizing that a lot of those gains are just inflation. You really shouldn't have to pay taxes on inflation. But two, it encourages investment. So I think there's a good reason to have a lower long term capital gains income tax rate. So that's not changing either. So let's talk about what is changing. If the bill is passed in its current form, probably the biggest change is the ordinary income tax brackets are going up. Primarily the top one. Now, this is totally misleading though, right? Because they say, well, we're basically just going back to what it was before the Trump tax cuts three years ago. We're going back from 37% to 39.6%. That's kind of misleading though, because right now the top tax bracket, if you're married doesn't start until $628,000. But under this bill, the top tax bracket will start at $450,000. So it's not just people going from 37% to 39.6%. There's going to be a lot of people going from 35% to 39.6%. So they're also changing where that bracket starts. The other thing they're doing is creating an entirely new bracket. Now granted, this bracket is not going to affect most of the people listen to this podcast because this new bracket starts at $5 million, $5 million in their new taxable income. And obviously most people, even very, very successful Doctors, don't have $5 million in income a year. But nevertheless, it's a new tax bracket. And it's basically, they're not calling it that, they're calling it a 3% surtax, but it functions like a tax bracket. So in reality, the top tax bracket is going from 37% to, to 42.6%. And yes, in addition to that, you've still got the 0.9% Obamacare tax. You've still got 2.9% Medicare tax on top of that. And of course you've got state taxes, which in My state's about 5%. In California, the top bracket is 13.3%. That all still applies. In fact, somebody making millions of dollars a year in California is going to be looking at a marginal income tax rate of about 60%. That's right. So three fifths of every additional dollar they make is going to the government. Okay, so another big change, increased capital gains tax brackets. Instead of the top tax bracket being 20%, it's now going to be 25%. And yes, guess where that's going to start. If you're single, $400,000. If you're married, $450,000. That one's not going to affect me as much. I don't pay a lot in capital gains taxes. Just because we tend to donate our appreciated shares to charity and we have lots of tax losses saved up from the Corona Bear. And of course, just like you tack on that 3.8% NIIT tax now onto your 20% bracket, you're going to be tacking that on still to the 25% bracket. So in reality, it's 28.8% on your long term capital gains. Okay, another change that's happening is the QBI deduction or the 199A deduction. This is the pass through business deduction. This one's People have had a really hard time wrapping their head around it. I've had several posts on the blog about it. But the bottom line is, as long as you're not in a specified service business like medicine, 20% of your ordinary business income is a tax deduction right now. And so that is a huge tax deduction for a lot of business owners. The idea behind it was to equalize for S corporations the lower tax rates that C corporations were getting. That's why it was put in place, was to kind of make it a fair playing field so you didn't have to change your business structure just based on law. So what are they doing? Well, they're not getting rid of it, but they're capping it. So if you're filing single, the biggest this deduction can get is $400,000. If you're married, it's $500,000. And so they're basically just decreasing it. I mean, they're talking about increasing the corporate tax rates too. So maybe they're still accomplishing the same thing where it's a level playing field between C Corps and S Corps, but it's pretty much bad for any of us that have big 199A deductions. Another thing that's bad for S Corp owners is the NIIT tax change. Okay, the whole point of forming an S Corp is so you don't have to pay payroll taxes on the portion of your income that you call a distribution rather than salary. So if you're making $600,000, you might call $300,000 salary and $300,000 distribution. And you would save your Medicare tax on that distribution 2.9%. You would also saved that Obamacare tax 0.9%. So that was awesome, right? That's why you formed the S Corp as a doctor, was to avoid paying those taxes that might be $10,000 a year in taxes. If you're calling $300,000 distribution instead of salary, well, basically they're just viewing that as a loophole that should be closed and it's going to be gone. So even in whatever you call distribution, you're going to pay the same taxes on it as though it were salary. So there's really no point if this goes through like this to be in an S Corp. And so that's a pretty significant change for a lot of white coat investors that have formed S Corps for precisely that reason. Okay, here's another one that's going to affect a whole lot of people that make less than $400,000 or $450,000 a year under proposed changes. The backdoor Roth IRA and the mega backdoor Roth IRA are gone after this year. This bill passes in its current form. They're gone. Basically, you're not going to be allowed to do a Roth conversion of after tax money in retirement accounts. You can't do it in your IRAs, you can't do it in your 401s. So that basically means that step two of the backdoor Roth IRA process is gone and step two of the mega backdoor Roth IRA process is gone. This is your last year to do it. Obviously, if you want to make any of those conversions, might be a good idea to do that before the end of the year rather than waiting into 2022 because you're not even going to be able to do it for your 2021 contribution if you make it after the first of the year. It gets worse though. You can't even do Roth conversions of pre tax money starting in 2032. There's a big delay, another 10 year delay before you can do that if you're a high earner. So if your taxable income is $400,000 single, $450,000 married, you're not going to be able to do Roth conversions at all. That's basically going back to the way the law was before 2010. 2010, Congress changed that law which enabled us to do back Roth IRAs and other Roth conversions. And it's going back to the way it was before 2010. Okay, here's another one. There's a couple of new RMD rules. You remember the story of Peter Thiel, I think I'm pronouncing that right. But Peter Thiel is the guy who somehow managed to buy this startup company, did really, really well inside a Roth IRA. And so he ended up with this $20 million Roth IRA. Right? And it made all this news and it was in Forbes and it was all over the place and everyone was like, that's not fair. But anyway, this basically should be called the Peter Thiel rule in this tax bill. Basically, they don't want you to have big retirement accounts anymore. When I say big, they're talking about $10 million plus retirement accounts. So if you have more money than $10 million in there and you have an income of more than $400,000 single, $450,000 married, you are going to have an RMD. Even if you're not 72 yet, even if you're 33, you're going to have an RMD required minimum distribution that is going to be 50% of the amount over $10 million. So if you got a $16 million IRA, you're going to have to take out $3 million. And the next year, you're going to have to take out $1,500,000 plus million dollars. And very rapidly, it's going to get very close to $10 million. Again. There's an additional rule for Roth accounts. If you have more than 20 million in retirement accounts, before you even apply the other required minimum distribution, you're going to have to take out the lesser of either everything that's Roth or everything over $20 million. So the RMD is 100% of everything over $20 million and 50% of everything over $10 million. So the good news, you're not going to have to pay the early withdrawal penalty. You know, the 59.5 rule, that's not going to apply, but you're still going to have to take that money out. And so the bottom line for people who are able to get really, really large retirement accounts, you're not going to be able to do that anymore. Another change that's going to affect fewer people is the idea of a defective grantor trust that's basically going away. And people do that using irrevocable life insurance trusts as an estate planning tool. This law is basically making that so it's no longer a useful estate planning tool anymore. Maybe people buy fewer whole life insurance policies to put inside their irrevocable trust because of this, but it's, you know, they're viewing that as a loophole that needs to be closed. Okay, here's another big thing. The estate tax. Right now, the estate tax exemption is basically $10 million per member of the couple. Okay? So if you're married, it's $10 million for you, $10 million for your spouse. But that number was indexed to inflation such that the total is now almost $12 million each. So $24 million in total. Now, that was scheduled to be halved in 2026. They're basically accelerating that. So it's going to be halved in 2022. So instead of having this estate tax exemption of $24 million for a married couple next year, you're going to have an estate tax exemption of $12 million. If you're single, it's only going to be $6 million. So the bottom line is a whole lot more people are going to need estate planning attorneys starting next year. Okay, now that's just accelerating something that was going to happen in four years anyway. But it's definitely a change. It's going to affect estate planning pretty significantly. Okay, here's another thing about estate planning. Family limited partnerships are becoming less useful now. The way people did this is they were able to pass assets onto their children at a discount by putting it in the family limited partnership. The heirs weren't able to get it for a number of years and that made it less valuable to them. And so it cost the estate less of the estate tax exemption to pass it to the kids via a family limited partnership. Basically what they're saying now is those rules, those discounts only apply to real businesses, real family businesses. It doesn't apply to a bunch of stocks and real estate or whatever non business assets you are trying to pass to your kids using that same method. So it's going to be a lot less useful for estate planning. The child tax credit is becoming more generous. Many doctors are still going to be phased out of this, but it could be as high as $3,600 per kid under 6 per year, so likely going to be more generous. The wash sale rules are going to change. Right now there's actually what a lot of people consider a loophole and that's why they're closing it. But wash sale rules don't count for cryptocurrency, commodities, foreign currencies, et cetera. It applies to stocks and mutual funds. Right. You got to wait 30 days before you can buy that thing back. As the law is right now, you don't have to do that for Bitcoin. You can sell your Bitcoin, take the loss, buy Bitcoin back an hour later, and it's not a wash sale. So I expect that one is probably going to go through. Given that the IRS looks at cryptocurrency now as a investment. They don't look at it as a currency, they look at it as investment. Okay, so what should you do about all this? Well, you ought to pay attention to it. You probably ought to write your congressperson, but for the most part, what can you do? Well, if you're planning on doing a backdoor Roth IRA for 2021, get it done before the end of the calendar year. If you're planning on doing a mega backdoor Roth IRA before 2021, get it done before the end of the calendar year. If you are planning on any other Roth conversions of after tax money, do that before the end of the calendar year. If you want a defective grantor trust or an irrevocable life insurance trust, get it done before the end of the year it sounds like any that are already established are going to be grandfathered in. Any non business assets that you want to pass to your kids through your family limited partnership, get them in there before the end of the year. Don't bother tax gain harvesting though. Get this, the long term capital gate rate change is going to be retroactive to September 14th. So you know, just selling your stuff and buying it back to avoid paying 25%. So you can only pay 20% on it. That's not going to work. Too late for that already then. Of course, remember this is just a tax bill and the final law is probably going to be significantly different. All right, hope that's helpful as a review of what's going on in Congress. You know, by the time you hear this, it'll have been another week from the time that I wrote it or recorded this podcast. So something may have even changed in that time period. This is probably going to change pretty rapidly in the next few months, so keep an eye on it. Realize that something I said today may not be completely accurate by that time. Okay, what else can I tell you about? Oh yes, WCICON 22, we opened registration for this a week ago. As I record this, by the time you hear this, it'll have been about two and a half weeks. We didn't sell out immediately. We got enough people signed up and registered for it that thankfully we're not going to take a loss on it. Which in the COVID era that's always a worry. You know, you worry there's going to be a terrible business move to have any sort of a convention or conference or anything like that. But we got enough people that we're not going to lose money on it. So we're super happy about that. But it's not full. There are seats available and so if you'd like to come, we would love for you to come. But I want to tell you a little bit more about it and also what some of the deadlines you want to be aware of are with regards to the conference. So let's talk a little bit about that. Pull up the registration page here. You can find this, by the way@whitecoatinvestor.com WCICON22 okay, so this conference is a hybrid conference, so it's going to be there for you both if you want to come and have the true in person experience. And it's going to be there for you if you would rather do what we did last year, what we did last March, the virtual experience, which turned out awesome, we had Over a thousand people come to the virtual experience and it was really, really cool. And this virtual experience is going to be even better. There's even more cool software that we can use to interact in the virt experience. It's going to be great. It's not going to be the same as the in person experience, but it's still going to be very great. So we're doing both. And it's your choice how you want to participate in WCICON 22. The event kicks off February 9, 2022, 6pm we're going to have an evening reception. It's going to be great. I love this part of the conference. We get to meet everybody and be in person and have some good food and really get things started. The classes start the next morning, Thursday, February 10th. Basically, we're going to have six or eight hours of classes a day, Thursday, Friday and Saturday. These include keynotes. And we got some great keynote speakers. We've got Bill Bernstein coming back. Last time he was with us was in Park City in 2018. We've got nationally syndicated columnist Michelle Singletary coming. We've got Jim Lang that we had on podcast just a few weeks ago, coming as a keynote speaker. Of course, I'll be speaking. We got lots of other great speakers as well. You've heard of most of these speakers. They're great people and they're coming out to provide this stuff for you. Right? We got Barbara Hamilton, we got Brent Lacey, we got Brian Foley, Corey Fawcett, David Graham, Don Baker. You know, the list just goes on and on and on, right? Fat Ahmad, Jay Adkisson, right. He's going to be talking about asset protection. We had him on the podcast not that long ago. Kate Mangona, Laura McEldery, married to doctors. Right. The physician on fire is coming. Passive Income MD is coming. They're all going to be there. You want to meet these people. This is a great opportunity to do it. So we have both the keynotes and we have all these great breakout sessions divided into three tracks. Basic finance, Advanced Finance for those looking for a little bit more. And we found in past years that people have come wanting both of those things. So we're providing both of them, two totally separate tracks. And you can mix and match as you like. And then of course, the wellness component. And what's amazed me over the years, right, we put in a bunch of wellness stuff into this conference because we thought, well, it's got to qualify for cme so people can get CME and come using their CME dollars. But what we found is a lot of people are really interested in the wellness content. They're not just interested in the finance content. So we really bumped up the quality and the quantity of that. We have lots of great wellness content. And the truth is, with COVID we need that. I've never seen doctors so burned out as they have been in the last six months. And so I think this is a really important part of the conference. And so not only do we have this wellness track where you're going to be learning all about wellness, but after the classes for the day end, we have all these great wellness events planned for late afternoon and evening. And so there's going to be a lot of other cool stuff going on. You know, pickleball, golf, you name it. It's going to be some fun stuff that we're doing in the evenings. And it's really for those who come in person, it's going to be an experience. Yeah, I know. It's not the cheapest way to learn personal finance. Right. The blog's free. This podcast is free. The newsletter's totally free. Right. The books are 9.99 on Kindle. There are cheaper ways to learn personal finance. This is our premium product, our premier product, and it is an experience. Okay, yes, you're going to learn tons of new stuff about personal finance and about wellness and about investing, but you're also going to have an experience. And so I think that's gonna be a really awesome thing. I am sure looking forward to getting together with you personally. After two years, it will have been since we did it before, and even that one took place right as Covid was hitting. And so really, it's been four years since we really were able to get together in person as a WCI community. And so I'm super looking forward to that. Now, obviously, Covid's still going on, Right. There's still a pandemic. COVID virus is never going away. Hopefully cases will be a lot lower in future years. I guess we don't even know that, really, but we're doing all we can to make this a safe experience. Yes. You're still going to have to travel from wherever you are to Phoenix. You know, anytime you walk out of your house, there's risk. I think a lot of the risk involved in traveling is a lot less than going to the ER these days, quite frankly, there's risk there. So we're doing all we can to minimize that. The first thing we're doing is you have to be vaccinated. I know some people even Doctors, even people listening to this podcast, don't want to get vaccinated, and that's fine. I respect what you want to do. I don't think it's the best medical decision for the vast majority of people, but I respect that. You have your freedom to choose. What you can't do, though, if you've made that choice, is come to the in person version of the conference. Okay, everybody coming in person, all the speakers, all the participants, y' all gotta be vaccinated, okay? Fully vaccinated. Otherwise you still have the virtual option. You can take the virtual option, you can be totally safe from your home, and we don't have to worry about you being a carrier of COVID and passing it to other people, et cetera. So that's one main thing that we're doing to reduce the risk of COVID transmission at the conference. It's basically America's kind of split into two groups of people. We got the vaccinated people and we got the non vaccinated people. And this pandemic at this point is almost completely among the non vaccinated. At least the serious cases are those getting hospitalized are almost all unvaccinated. Those who are dying, almost all unvaccinated. And so this live conference is for the other segment, those who have gotten vaccines. So that's going to reduce risk dramatically. Now, we're still doing all the other things, right? Our meals, our lunches are going to be served outside. We're going to be outside as much as we can naturally. We're going to have all the hand washing, sanitizing stations. You can wear masks the entire time. Heck, you can come in a PAPR if you want. It might be a little hard to hear the speakers with all that air moving past your ears. But you want to come in an N95 or wear whatever mask you prefer, you can do that to reduce risk as well. You know, you can avoid handshaking, those sorts of things. People are going to be more spread out than they have been in some past conferences. We're deliberately not selling a certain percentage of seats just to provide additional spacing in the classrooms. Especially if we don't sell out, we're gonna have all kinds of space. The way it's set up now, you got at least three feet away from anybody else. And if we don't sell out, it'll be even more. And so there's lots of ability to socially distance at the conference as well. So we're doing all we can to address that. We know that the main Reason people aren't coming to the in person event is just Covid, Covid, Covid. This thing's still going on. But if you are comfortable traveling, if you are comfortable coming to an event where everybody's vaccinated, we want to provide that event for you. If you're just not ready for that yet, hey, the virtual event's going to be awesome. It really is. It was a great experience last year. It turned out really well. We're doing the same sort of a production this year. And so it should be really awesome if you just want to do the virtual. Okay, I think I've talked about COVID I've talked about what's going on at the conference. And let's talk a little bit about deadlines. There's two deadlines you need to know about. The first one is primarily if you're planning to come to the in person conference, October 19th is the deadline for early bird pricing. After that, the price goes up. Okay? So the cheapest way you can come is to sign up before October 19th. So that's number one deadline you should keep in mind. The other deadline you should keep in mind is December 1st, and that's the deadline for getting the swag bag. Now, our conference is known for having the best swag bag ever out there, right? We're talking a WCI T shirt, we're talking about swag from the sponsors, we're talking about books from all the keynote speakers. It's going to be a book from Jim Lang, a book from Michelle Singletary, a book from Bill Bernstein. One of my books is going to be in that package. In order to get that swag bag, you have to register whether it's in person or virtual by December 1st. The reason why is we got to print the books. Mine's pretty easy to print. We can probably get copies of mine in just two or three weeks. But a lot of these other ones we have to go through traditional publishers and it takes us a couple months to get the books and especially if you're virtual, to ship them out to you. And so it just takes time. And so you got to sign up by December 1st if you want to get that. After December 1st, you don't get the swag bag. And so that's the other big deadline. Now, obviously, the virtual, you can sign up on day three of the conference if you want. We're going to sell those as long as we can, but we are going to cut off the in person registrations. I believe it's January 3rd. It's at the very beginning of January just because we got to get numbers to the hotel for meals and that sort of stuff. And so those are your deadlines you should be aware of. October 19th is probably the biggest one if you're coming in person. December 1st is probably the biggest one if you're going to come virtually. But looking forward to that conference. It's going to be a wonderful time. We're going to have hundreds of people there in Phoenix and I'm hoping as many people as we had last year for the virtual option, which is over a thousand. And so I think it's going to be really, really good. All right, let's get into some of your questions here before we do anything else. Our first one is a PSLF question again related to Covid. No surprise there. Let's take a listen to it.

So I'm calling because I have a question about Public Service Loan forgiveness and some of the COVID changes that have happened with federal loans. So basically I'm a second year resident now. I've been making zero dollar payments for the last year since I decided to skip my forbearance and go into repayment right away so that I could have 12 of those 120 payments be $0. I just reapplied to recertify my income and as I was supposed to, but they told me that they had put my application to recertify my income on hold until March of 2023 because Covid has basically extended that recertification anniversary deadline. So what this means is that I will continue to make zero dollar payments for the next two years until 2023 and I won't be able to and don't have to recertify my income even though it's gone up until then. They also said that those $0 payments will count toward my PSLF 120 payments. So this just seemed very interesting to me. I'm wondering if you can like confirm that this is something you've heard other people experiencing. I kind of feel like I this is a great deal for me that 25% of this 10 year period will now be $0 payments. And if this is true, should I be telling all of my friends to also skip their forbearance go into repayment or are they too late now? Because I guess they'll be based on their 2021 tax returns or 2020 tax returns during which they've made money.

All right. Well that's weird. You're the first person that's mentioned this to me. So if you have Also, I'm talking to the readers. If you have also gotten this answer on the phone from any of the loan servicing companies, send me an email editorwhitecoatinvestor.com I'd like to hear about it because this is the first I've heard of this. Now, if this is really the way it is and you're going for PSLF, this is all good for you. Instead of making $100 or $200 or $300 a year payments during residency, you're making $0 payments. So this is great for you. It's just going to be more money forgiven and better cash flow for the next few years. But I would not say that this is how the program's designed. I don't think this is policy. In fact, I'm skeptical that if you called back and talked to a different representative on the phone that you would even get the same answer. But so long as they are accepting your income being nothing for calculating your PSLF or your IDR payments toward pslf, might as well take advantage of it. Okay. It might be worth a second call though, just to double check. But you're right. If you skip that six month forbearance period by consolidating your federal loans as you come out of medical school, you get six more months of payments toward 120. That's not a new thing that's been going on for a long time. So. So I Definitely encourage every Ms. 4 to file a tax return if they're planning on going into an IDR program and especially if they're going for PSLF and then to consolidate and skip that forbearance period. You don't want to be in forbearance. If you're going for any sort of forgiveness program, that's a bad idea. It's like the worst possible option. That's even worse than refinancing in a lot of ways. But it sounds like you're doing everything right. You may get a little additional blessing there. I would not count on it. If it happens, great for you. It might be that you are just a bug in the system and somehow slipped through it. That's kind of what it sounds like to me. More likely you just got bad information from someone who doesn't know what they're talking about on the phone. In the meantime, I would continue to fill out the paperwork you need to fill out and keep records of every zero dollar payment that you're making. Hope that's helpful. All right, let's take our next question. This one's about defined benefit plans.

Hi, this is Andy in the Midwest. Thanks for all you do, Jim. I'm in private practice in a surgical subspecialty and we our office has a defined benefit plan. The defined benefit plan has been open for quite some time and after review we have decided to close the plan and reopen new one. As you have talked about in the past, I am currently planning on rolling my defined benefit plan into our 401k which has pretty good options. However, I am a little concerned about the fees involved. Would it be wiser or an option to consider opening a self directed 401k at a different institution and roll my defined benefit plan into there? I feel like I would be able to control the investments and maybe have lower fees involved. What do you do with your defined benefit plan? Thanks.

All right. Remember, anytime you close a defined benefit cash balance plan, there's got to be a legit reason for doing so. Usually it's a business structure change or something like that. If it's been five plus years, it's probably not as big a deal to close it. But if you're closing this thing after it's only been open a year or two, you better have a very good reason because the IRS is going to ask about it. The other downside is there's cost to closing it, right? There's accounting costs, actuarial costs. It's not totally free to just close a defined benefit plan. Make sure it's the right move for the business first. But it sounds like you've already decided that this plan is going to be closed and you're going to roll the assets over. What most people do, they just roll it into their 401. Right? If you're in charge of this business and you've got a good 401 in it, and you've got a good defined benefit plan in it, why wouldn't you want to just use your own 401? So that's what most people do. It sounds like maybe you don't like your 401. It's got a bunch of fees or something. If it's a crummy 401 then it's worth looking at other options. If you have an individual 401 from a business you own, right? Self employed income is a requirement for an individual 401, then you can roll it there. I have an individual 401. Well, I guess I had one. It's now the White Coat Investor 401 since we have employees now, so I don't have an individual 401 anymore, but it's a great 401. I would have no hesitance whatsoever into rolling a defined benefit plan that I had for my clinical practice into that 401. But the 401 I have at the clinical practice is also very good. I wouldn't feel bad about rolling it in there either. What have I actually done in the past? We've had two closure events and both times I've rolled the money into the federal TSP that I've kept open since I was in the military. A big bond holding for me. I'm not even sure it's my main nominal bond holding anymore just because my portfolio has grown so rapidly. But my main one for a long time was the TSP G Fund. And so by rolling money back into the tsp, I've been able to put more money into the G Fund than I would have otherwise been able to just from my military service. That's what I've done with mine. But basically you pick the best 401k available to you and roll it in there. Now, as I mentioned at the top of this podcast, the Roth ira, the backdoor Roth IRA may be going away based on these changes in Congress. That's the main reason we stopped rolling things like this into traditional IRAs, which could also be a self directed traditional IRA. And if that is truly gone, we're not going to be able to do backdoor Roth IRAs anymore. Well, the reason you didn't want to do an IRA rollover is kind of gone. And so like I said, I may have to change a whole bunch of blog posts on the blog if that tax bill really goes through in its current form. So keep that in mind. Bear in mind that a self directed individual 401 does have a few advantages over a self directed IRA, particularly if you're putting equity real estate in there and there's a tax you can avoid if you use a 401 instead of an IRA for that. In general, I think equity real estate goes into taxable anyway and so I don't think that's a big deal. But that might be an option for you is just to go into an Iraq. If you do it before the end of this year, it'll screw up your backdoor roth IRA for 2021. But if you're not doing this until 2022, maybe it doesn't matter anymore. Maybe you can just go straight into a traditional IRA. Alright, next question is from email. If I turn 50 in February 2022, can I make an IRA catch up contribution in 2022 or do I have to be 50 for a full year? Nope. If you turn 50 on December 31st of 2022, you can make your catch up contribution on January 2nd, 2022. Can't make it on the first because the businesses are all closed, but on the second you could make it. And so you just have to turn 50 at some time during that year. You don't have to be 50 for a full year, you just have to turn 50 in the same year that you make the catch up contribution. Hope that's clear. Alright, our quote of the day. This one comes from Sunny Sakar. Do not mistake simple index fund portfolios as simplistic. They're actually quite sophisticated. Standing on the shoulders of decades of peer reviewed market research, a few Nobel prizes, and cold hard undeniable evidence of success. All right, I agree with that. Our next question is clarification about a solo 401 for a side business. Let's take a listen to that one.

Hello, Dr. Dalle, this is Mark, a physician in New Jersey. I have a follow up question to a recent Speak pipe question. When a physician asked if he was an owner of a business with employees if he would be able to open up a solo 401k for his side gig business, of course your answer was no, that is not allowable. However, you did note if the private practice was not in full ownership by that physician that it might then be possible. So I wanted to clarify. If I put my solo practice business as 50% ownership by myself and 50% ownership for my wife, would I then be able to open up a solo 401k for a side gig business? Thank you very much. Thank you for all that you do.

All right, Mark, good question. I don't think your workaround's going to work. The relevant number here is 80% control. Okay? If the same group of people control 80% of both businesses, they're considered related. Okay? And you only get one 401k for all of the businesses. And you have to consider the employees of all of the businesses when you do it. The issue here with just giving it to your spouse, 50% to your spouse and 50% to you is the IRS considers what your spouse owns as being owned by you. So if it was 50% your friend and 50% you, that would get you around it. Now you could go open an individual 401 for this other business that is owned completely by you, but not your spouse. It's not going to work with your spouse. I'm sorry. Good idea. Not going to work. All right, our next question is about refinancing student loans on 1099 income. Let's take a listen.

Dr. Dali, I'm a practicing physician about a year out of fellowship looking to refinance federal student loans with the forbearance ending in the next few months. And my question is, which loan refinance companies will refinance to a physician who has less than 2 years of 1099 income? At a brief glance, it looks like refinancing might be a bit of a struggle until next year when I have two years of 1099 income. Thank you for all that you do, and thank you for answering my question.

All right, good question, Allison. This is actually a better question for Cindy, who has been working at the White Coat Investor here for a long time, and she also does the podcast production. So it was really convenient for me to be able to ask her the answer to this. And believe it or not, you're the first person to ever ask this question. For the most part, this is not an issue like it is with getting a mortgage. When you're trying to get a mortgage and you got 1099 income, it's harder to get a mortgage. There's no doubt about it. But it is not nearly as hard to refinance your loans. It takes a little bit more paperwork, et cetera, but for the most part, you can still do it. Common bonds, latest deal, the 0% deal they have until the forbearance period ends. They're not letting you do that with 1099 income. But all of the other lenders on our list don't seem to have a problem with it. So I would go through the usual process of applying to two or three or four or five of those and taking the lowest rate they give you. Now, if one of them tells you we're not going to do you just because you're 1099, fine. You should still have multiple other options. I would also be interested in hearing about you after you go through that process. If there's a bunch of them telling you that they won't do your loans just because you have 1099 income, because we're really not getting that feedback from anybody. People are saying, yeah, I'm getting my student loans refinanced, no problem, even though I'm an independent contractor, even though I only have 1099 income, even though. Even though I'm only three months out of residency or I'm not even out of residency yet, it doesn't seem to be the issue that you sound like you're worried it is. So if you are having a big issue, I'd like to hear about it. And maybe we can do a blog post on this question. If there really are a bunch of people turning you down because to our understanding, that is not a reason people are getting turned down for refinancing. So you want to refinance your loans, I would just go ahead and do it. Maybe Common Bond isn't the first one that you apply to, but I think after January 31st you may even be able to do it with them as well with 1099 income. So let us know. Stay in touch and we'll update the podcast too if we hear that I just gave terrible advice. All right, our next one comes from email. I'm writing to you today because I have a question that might be applicable to many of your listeners. I'm sure it is, having read this. I'm six months pregnant with my firstborn. I'm the breadwinner of my family. More so now that my husband is out of a job due to to Covid. We follow all your financial pearls and I read persistently about finance. One thing that I just started doing in light of the upcoming edition of the Families in regards to all the things I should be preparing financially for the upcoming birth of my child, other than opening a 529 account, which I would actually argue is a pretty small part of this, my husband's not very interested in finances and I've been managing it all for the most part. Common situation. Although I wish people would work together better as couples on their money. I already have disability term life umbrella and actually have increased the payouts for my disability and term life recently. It's wonderful. Good job. Some of My concerns questions are 1. Birth can be traumatic and at times deadly to mothers. I worry that if I die during my delivery and my child survives, my husband and child may not receive all of my assets. Might even lose the house since my paycheck pays for the majority of the mortgage. My husband is the beneficiary of my accounts and life insurance in the event of my death. But is this a enough? I live in Philadelphia, if that matters. Well, this is the purpose of life insurance, right? The idea with life insurance is that it replaces your portfolio at financial independence. So if you need $5 million so you and your husband never have to work again, then the total of your portfolio plus your life insurance should be $5 million. That's how it works. That's the point of term life insurance. And as your portfolio grows closer and closer and closer to that number, you can decrease the amount of insurance you have until you become financially independent, you can drop your term life insurance. So if the amount of life insurance you have is not enough to pay off the mortgage, to provide for your husband and child to be able to stay in that home and live more or less the same life they're living now, then you need more insurance. That's probably going to be a little bit difficult. I think you said you're six months pregnant. It's going to be tough to get life insurance at this point. But after you deliver and it's been a few months and everything went well, it does most of the time. And hopefully, well, this time it's time to increase your life insurance. You don't have enough. Sounds like you just increased it though. So you're better off than you would have been. But basically that's how you cover this particular risk. Okay. Number two, I was contemplating estate planning, but wouldn't it make more sense to do it after the baby is here? Well, I mean, the ideal time to do estate planning is the day before you die, because then it's easy to tell where everything goes. But the problem is you don't know when you're going to die. And so you should do estate planning now. That's the best time. And then update it as you go along. Putting a will in place is kind of the bare minimum, especially once you have a kid. That will should dictate not only who's going to take care of that kid in the event you and your spouse die, but also who's going to manage the money in the event that you and your spouse die. And so, yes, it's probably important to get that in place. Yes, you're going to need to update it as you have children, as you get married, as you have divorces, as all these life changes happen. But that's not a reason not to get started doing it. So I like your idea of at least doing some minimal estate planning at this point. Last question. Are there books, articles that talk about financial preparations and strategies in setting up secure financial plans for children, including how to slowly transfer wealth and the pros and cons for each. For example, opening a 529 account when the child is such and such age for this amount, ways your children can start earning so they can start a Roth IRA early, different types of trusts, et cetera? Yeah, I've written about a lot of this stuff over the years. On the blog, we've talked about it on the podcast. It's great to do all that stuff. If you're looking for a book, I think the best one on that particular subject is called make youe Kid a Millionaire, I think is what it's called. And it goes through all the different things, 529s, Roth IRAs, utmas trusts, et cetera, even I think it goes through some types of variable annuities as well as options to make your kid a millionaire. And the truth is, if you got 60 years of compound interest to work on that money, you don't have to put that much money into it in the very beginning for them to become a millionaire. But I'll tell you the approach I use with my kids 529s, we didn't have any money when they were all born, so their 529s were very small until recently. And now we put in the max amount each year. And so we've got sizable 529s for each of them. With the idea that that money pays for college, plus any graduate or professional school, as much as it can. They're probably still going to have contributions of their own from scholarships, from working in the summers, from working during the school year, and if they go to professional school, probably a few loans, too. I suspect we'll see about that when we get there. So that's, number one, you can open that in your name and change the beneficiary to your kid if you want, but you're only three months away from delivery. Just wait three months until you have the Social Security number and go ahead and open a 529 for your kid then. Okay. Number two, we have UTMA accounts, Uniform Transfer to Minor Accounts. What? These are taxable accounts for your kid. The tax play here is that basically the first, I can't remember if it's $1,100 or $1,200 in income in that account is not taxed. And the next, again, I can't Remember if it's $1,100 or $1,200amount is taxed at their income tax rate. So basically 10%. And after that, any income above and beyond that is taxed at your income tax rate. That's known as the kitty tax. But the bottom line is if you invest it tax efficiently in some index funds, you can basically get about $100,000 in there before you have to start paying taxes at your income tax rate on that money. So that's the second thing we have for Our kids, we call it their 20s fund. This is the money for them to go on a mission, buy a car, buy a first house, pay for a wedding, pay for a honeymoon, travel to Europe. In some ways, it's our opportunity to see how they manage money before we arrange for them to receive more money in the form of inheritances later in their lives. Basically, I look at it as, like, when would it have been really nice to get money from my parents? It's not in my 60s or 70s when they die, it's in my 20s. That's when I really needed the money and when it made a huge difference where it would have made a huge difference in my life. You know, I wouldn't have had to donate plasma for grocery money like I was back in college. And so that's kind of the idea behind that fund for us. The one downside of that is it's the kids money. In most states, when they turn 21, it's their money. If they want to blow it on hookers and cocaine, there's nothing you can do about it. Okay? The third thing is Roth IRAs. For any earned money, it can go on the Roth ira. You can give them an equal amount of money out of your earnings for them to spend if you want. But the total amount that they earn can go into a Roth IRA up to the contribution limit for the year, currently $6,000 per year. And so we do that. I call it the Daddy Match. Basically, whatever they earn, I put in a Roth IRA form. And the idea being that if they don't touch that until 60, it'll have 40 or 50 years of compounding. So how do they earn money? Well, once they're 10 or 12, they can start babysitting and doing lawn mowing stuff around the neighborhood. Remember, doing chores for you doesn't count. It's got to be for somebody else. As they get older, they may have more of a standard type of teenager job. And all that money can go into a Roth ira. If you want to do it really young, you're going to have to be creative, though. One thing I did for my kids is, as you noticed, if you read the blog, there's a lot of pictures of my kids on the blog. And we pay them to be models for the blog. And that's legitimate. You pay them a fair rate. You keep your, you know, you do it all by the books. You keep a timesheet and you have contracts and you fill out the immigration or not the immigration paperwork, but the paperwork that proves they're U.S. citizens. And you do W2s and W3s every year and you make it legit. You can do that as well. Let's see. Yes, she gives a few more comments that I thought were worth sharing. You might have noticed this paper that came out a few weeks ago about how surgeons miscarry at twice the rate of non physicians. And I suspect if we look at other specialties, it's probably going to be increased as well. And the impressive thing about that paper is that that happens even when you're controlling for age, work hours and the use of ivf. And so an additional part of planning I agree with this is probably cutting back on work in the third trimesters. And in a family where you're the sole breadwinner, that's a big deal. You add that for three months or whatever working halftime, you add that to a three month maternity leave. That's a lot of cash you need just to get through this period. And so saving up a big fat cash buffer is very prudent in this sort of a situation. I think as soon as you become pregnant or find out you became pregnant at five, six, seven, eight weeks, whatever, that's the time to go crazy building up a huge pile of cash, right? Maybe even stop your retirement account contributions, stop any 529 contributions, maybe cancel a vacation or two. Put off buying that Tesla and pile up cash, cash, cash, cash, cash to get you through that six month period to have that cash. In the event something goes wrong, you might have some complication that keeps you out of the workforce for even longer. Other people have looked at some of these other policies like aflac and found that to be a pretty good deal. It's a short term disability policy. Look into any short term disability policy you have at work. It may cover not only complications of pregnancy, but it might cover just being pregnant and just delivering a baby. So read what's actually covered in those policies. They can also help bridge that cash flow gap that you have. Hope that's helpful to you. All right, let's take another question on paying tithing. Here's an interesting1.

Hi Dr. Dali, thanks for everything you do. My question concerns tithing from UTMA accounts for children with some help from their grandparents. We've been saving for college fairly aggressively the past couple of years and have reached the point where we think our children's 529 accounts are close to fully funded, assuming average future market returns. Our next goal is to fund a UTMA account for help with post college expenses. We're fortunate enough that the grandparents on both sides would like to contribute a combined total of approximately $20,000 per child per year to these accounts. Unlike when they wrote a check to help us fund the 529 accounts, they would like to make the UTMA contributions primarily in the form of low basis stock transferred directly to the UTMA accounts. As people of faith, we believe that tithing is important and would want our children to continue to tithe on these gifts. While this was relatively simple when the gifts were in the form of a check, eventually going into a 529 account, we know that our ability to take money out of a UTMA account on behalf of our minor children is much more limited. Would it be legal for our kids to pay their tithe on these gifts by withdrawing funds from the UTMA account? The language on what is permissible with UTMA funds seems fairly general in nature to us, and we're not sure if this would be allowable or not. Thanks in advance.

All right, great question. I think I've spent more time thinking about tithing than almost everybody else on the planet. Here's the bottom line with tithing. What you do with it is between you and God. That's the bottom line. So do what you feel is best after thoughtful pondering and prayer. But let me give you a few guidelines. I think in general, with most types of accounts, like retirement accounts, HSAs, et cetera, it's easier to not pay tithing on what went in there, on what grew in there over the years, and to pay it when you take the money out of the account. That's the way I treat retirement accounts. That's the way I treat HSAs, et cetera. And I think that's probably the easiest and the right way to do it. Can you do that with the UTMA as well? As long as you're reinvesting all those dividends, it's really easy to do it that way. And then you're simply paying tithing when you make withdrawals. Remember, the idea behind a UTMA account is that they're going to be taking the money out in their 20s, right, when they're going to college or whatever. And so at that point, you can basically take the money out and use it however you like. It's just a taxable account. You can give it to anybody, you can give it to charity, you can give it to the homeless guy on the street, you can spend it on whatever. There's no rules, right? It's just a taxable account. And so I think that's probably the easiest way to deal with with this issue, if for some reason they're taking a bunch of income out of it as they go along, it's probably a good idea to pay some tithe in on that income as it goes along. As far as the IRS rules on this, the money just has to be spent for the benefit of the child. I think that's a justification you can make. If the child pays tithing, you know they're spending it for that particular purpose. Now it might be a bad idea if you try to claim that on your taxes as a charitable deduction. That might look like it's for your benefit. But as long as that's not being claimed, I think it's perfectly fine to take it out to pay tithing on that. But honestly what I'd do is I'd wait until they start making withdrawals from the account and pay tithing on that. Hope that's helpful. That's not the way I treat my taxable account as an adult, but I think it's a pretty reasonable way to treat my kids taxable accounts, which is what utmas are. And in fact that is how I treat my kids. Utmas from a tithing perspective is none of that money has been tithed going in. None of that money has been tithed as it grows. And it'll be up to them to pay tithing on it as they make withdrawals down the road. Hope that's helpful to you. If you have more questions about that, feel free to send me an email. I don't think I've ever done a big blog post about tithing. I'm not sure that it's a subject of enough general interest for the entire WCI community, but maybe ought to get around to doing that sometime. It's just interesting because a lot of faiths tithings just basically means an offering. They don't look at it as any sort of a strict 10% of income or 10% of increase kind of rule. But for those religions that do, questions like these matter. But when you go down that rabbit hole, you'll find all kinds of questions that matter what to do with an hsa, right? Because you can only take the money out and use it for healthcare expenses. You can't take the money out for tithing and healthcare expenses. So you gotta pay the tithing from some other fund of money. Same way when you withdraw 529 money, for instance. Other questions that come up right, if most of a long term capital gain is inflation, does that really increase? Is that really income? Should you really be paying tithing on the entire thing or should you adjust it for inflation? What about if you do tax loss harvesting? How should that be treated from a tithing perspective? So if you really want to get in the weeds, there's a lot of things to think about with tithing, and in the end you'll likely arrive at the same conclusion I have. Which as it's between you and God all right, next question. This one's about 401 as let's take.

A listen Dr. Nolik first, I want to thank you for the work you've put in both the blog and the podcast. They have been a great introduction, a great guide in the path to understanding personal finance. I'm a 30 year surgical subspecialty resident with a question about how to manage a 401A while transitioning to fellowship and attending hood, I have a 10% mandated withholding. This account, which is matched a little better than one to one by the employer fund, is fully invested immediately and be fully portable on separation from my institution. I had intended to roll this into an ira, then do a Roth conversion during the year consisting of half residency and half fellowship, but had a few concerns. First, by the time of separation I'll likely have 70 to $85,000 in this account. Clearly the tax bill and the conversion are going to be sizable compared to a resident or fellow salary. Additionally, my current program does not allow for moonlighting. We did buy a house at the start of residency and barring some huge housing bear market should have a decent amount of equity by the time we sell. Does it make sense to plan on using the funds from selling to pay for the conversion and run the risk of a downturn in the market in the interim? I'm still trying to build a decent emergency fund, pay out the last couple thousand in credit card debt for medical school, and we are looking to have a child in the next two or three years, so I'm unsure if I'll be able to put aside enough for the taxes otherwise. Secondly, I'm unlikely to go to fellowship in my current state of residence. How do I best arbitrage the state income tax rates between my current state and wherever I do fellowship? Can I choose to file where to file or do I just split it? No sum to both. I'd also given some thought to holding back a year's max HSA contribution to do the once in a lifetime IRA to HSA funding to save a little on the tax bill. Does that sound reasonable? Finally, should I just suck it up and wait to do the conversion until the year consisting of half fellowship and half attending. So the money isn't a problem, but take a hit on a higher tax bracket. Thank you again.

All right, lots of great questions. I've talked about this period of time before. This is a really hard period of time. That first six months when you're moving into the big bucks, you have all these needs for cash, and the amount of cash you have is just really limited. Right? You might have to start saving up to buy into a practice. You want to get a house, you want to do Roth conversions. Like you're talking about, you need to beef up your emergency fund. Maybe you've got some credit card or auto debt you need to get paid off. All of a sudden, now you got to start paying on these student loans. You have all these great uses for cash, and you just don't have enough cash to go around. And so you got to rank them. You got to decide what's most important to you. The most important thing, honestly, is what percentage of that new income you've got going toward building wealth. That's what really matters. Whether it goes toward your student loans or to max out retirement accounts, that doesn't matter so much. It's really all about the amount of money going toward building wealth. But if you can squeeze in paying for this Roth conversion that year, that's a good thing. Especially given the talk in Congress about maybe limiting your ability to do Roth conversions later in your career. This might be the only way you're going to be able to get a sizable Roth account going. And so I'd encourage you to do it if you can. That's certainly another reason why you shouldn't wait a year when your income's higher. You might not be able to, might not be allowed to do the Roth conversion, even if you have more cash to do it with. So I'd try to do it if you can. Is it a bigger priority than beefing up your emergency fund or paying off credit card debt? Probably not. Is it a bigger priority than maxing out some retirement account? Maybe, maybe not. It's a judgment call on your part, and so good luck with that decision. It is a good thing to do if you can do it. As far as the state arbitrage, I would claim that conversion in the state you're living in when you do it. Okay, so if you are going from a low income tax state to a high income tax state, I would do the conversion your last month of fellowship or residency or whatever, right? Then you can claim it in that state. That's where you were when you did the conversion. That's totally fair. If you're going to a lower income tax state, maybe I'd do it in September or maybe October, just in case it's enough money that requires you to pay quarterly estimated taxes. Better to do it in October than you don't have to make the payment until January 15th. It gives you a little more time to come up with that cash. And that's another thing to keep in mind. Right. The truth is paying for this, paying the taxes for this, you really have until April to do it. Right. You might get nailed on not staying in the safe harbor as far as not making quarterly estimated payments, but there's a little bit of leeway in doing that your first year. So instead of having to come up with the money by September, you might not have to come up with the money until next April, which would be a lot easier for you as an attending physician. So that's probably what I would look to do. But do consider that state arbitrage as far as this one time IRA to HSA thing, that's kind of a gimmicky thing. I don't really see any big reason to do that. If you put in an ira, that's good. If you put in an hsa, that's good. But using the IRA to make an HSA contribution, I don't see a huge benefit to doing that. So I wouldn't monkey around with that. If you're eligible to use both, I'd try to max out both. Those are both good things to do with your money. But again, period of life in which the money is limited. The other thing you can do if you wait is you don't actually have to do a Roth conversion on this money. I would say what most people do is they roll it into a 401. And you can roll it into the 401 at the fellowship, you can roll it into the 401@ your new job, whatever you want to do. Then you don't have to pay any taxes on it at all. And you can use that cash for the other cash needs you might have paying off loans or saving up a practice down payment or a house down payment or whatever your other cash flow needs are. I'm sure you have a whole bunch of them. And then you can not do the Roth conversion. Your call, though. Good luck with your decision. It's not an easy one. All right, this is getting to be a long podcast, so we better cut it off. There I've got a couple more questions, but I think we're going to push that to our next podcast. 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My dad your host, Dr. Daly is a practicing emergency physician, blogger, author and podcaster. He is not a 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.

Sam.