WCI #251: How to Fix the Retirement Account System

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 251 how to Fix the Retirement Account system. Did you know that the White Coat Investor not only has a podcast and a blog, but but several books that will help you on your way to financial independence. These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances or early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help. All right, welcome back to the podcast. I hope you're enjoying the podcast. We are combing through the responses to the survey we got. We had over 3,000 responses to that survey I asked you guys to fill out and we're going to try to incorporate as many changes as we can to make what we're producing for you more helpful for you. So thanks to those of you who filled that out. We really appreciate it. I'm recording this before the conference. It's now after the conference. I'm hoping we had an awesome time there. I'll bet we did, since we have at every other conference. But if you are interested, you can buy the content from that conference. It's now packaged up into an online course. You can get information for that@whitecoatinvestor.com CFE2022 I think by the time you hear this podcast on the 24th, that should be ready to go. But it's got all the content. It's over 50 hours. It qualifies for CME. You can use your CME fund to buy it. We call it Continuing Financial Education. So if you've had your initial financial education, however you got that, whether it's from a financial advisor or from reading books and participating on forums, or from taking our Fire Year Financial Advisor course every year, you should still do some learning about finances, investing, et cetera. And the product we provide each year is CFE Continuing Financial Education. This year's CFE 2022. And that's the link whitecoatinvestor.com CFE2022 so be sure to check that out. So the early bird price on this CFE course for the early bird sale, which is February 23rd through March 7th, is $80 off, 10% off. Okay. It's going for 699 and the regular price is gonna be 779. So if you buy that before March 7th, you get the early bird price and you get to experience all the awesome content we at the conference. All right, let's get into one of the questions here that we've titled the podcast after. And then I'm going to rant for a while. So let's take a listen to this question.

Hi Jim, it seems like you have to spend a lot of time explaining how IRAs, 401s, 457, 403s, and all the different types of retirement accounts work, how much you can spend to save in each of these accounts, all the rules and exceptions and all that. So if you were king, how would you reset the whole retirement account system in this country to make more sense for both the government and the citizens?

All right, this is a great question and an opportunity for me to talk about changing the world. You know, every now and then I have somebody encourage me to write for political office. I don't know if they agree with my political views or think I'm reasonable or what it is, but I actually get encouraged fairly often to run for political office. I am not going to do that. Number one, I don't enjoy it. The last political office I held was a student body president back in medical school. And I really don't like being in politics. It's not that fun for me, number one. Number two, half people always end up hating you. So don't expect me to run for politics at any point. It's not like I'm electable anyway. Can you imagine how much stuff could be mined from this podcast and from the blog and put out of, taken out of context and used against me in an election? I mean, there's just no way I'm ever gonna be elect. So you don't have to worry about me becoming president, much less king, but we can still talk about what I'd like to see in the world. It's really hard, however, to talk about retirement, fixing the retirement system without talking about both politics and about taxes. And so the first Thing I ought to tell you about is my politics. All right? I mean, people can kind of read between the lines and probably have figured out some things about my politics. They know I'm a doctor, they know I'm a businessman. So it's not terribly surprising when you find out what my politics are like. But let's start with that. So I consider myself a moderate. I really don't feel comfortable in either political party right now. I don't like feeling like I have to choose between the party that doesn't believe in science and the party that doesn't believe in economics. I probably fall mostly right of center on financial and tax issues, which tends to be my most important issue. At the national level, I probably fall a little bit to the left when it comes to social issues, environmental issues, et cetera. And in local elections, that tends to be my most important issue, tends to be environmental issues. So just so you know a little bit about my politics, I really don't like the extremes of either end of the political spectrum. I think they're both pretty nutty out there, at any rate. Hope that's not offensive to you if you're on one of the extremes of the political spectrum. But that's just where I sit. So I. That'll give you some context into what I'm about to say. As far as the tax system goes, I'm for simplification. I'd love to see 99% of the deductions go away and just have all of the tax rates lowered to make up for it. So instead of the top bracket being 37%, maybe the top bracket is 30%, but you get no deductions. It works out to be the same revenue in the end, but it's way simpler. The other thing I'd like to see happen with the tax code is I'd like to see the welfare programs come out of the tax code and have them be separate. I think everybody ought to pay taxes. Even if you're only paying 100 bucks a year, I think everybody ought to pay taxes. And whatever welfare system we decide to put in place, you know, Medicaid and all those programs, I think it ought to be separate from the tax system and run separately. Maybe that won't be as efficient, but I think combining the two was not an awesome idea. Speaking of retirement systems, you know what else was not an awesome idea was mixing retirement with employment. Why should your employer have control over your retirement? It's the same problem we have with health care and health insurance being tied to employment. That was a stupid idea. You know where that comes from, right? In the 1940s, during World War II, inflation was going gangbusters. And they actually put wage controls in. Employers were not allowed to pay more. They weren't allowed to pay more because they were trying to fight inflation by putting these controls on wages. So what did they do? They started offering benefits, one of which was health insurance. And so as the years have gone by, more and more benefits have been added on. You know, it's a little bit like in the 1970s, right? Banks wanted to pay more interest, but they weren't allowed to by regulation. So what did they do? They gave you a free toaster, right? And so it's the same thing. When the government kind of intervenes in the economic system, Sometimes you get some weird side effects. One of those side effects is our screwed up healthcare system with all the weird insurance stuff that we deal with. And a lot of that comes from the fact that it was tied into employment. You've got an employer choosing your health insurance plan. You've got somebody else paying for your health care. It just gets really messy when you do that. And retirement is the same way. We have added piece here, added a piece there, and now we've got 401s and 403s and 457, 401As and backdoor Roth IRAs and SEP IRAs and 529s and HSAs and able accounts and all these different things to keep track of. So if I were going to be king and I were going to totally revamp our retirement system, I would put some sort of pension plan in place. Now we've kind of got that with Social Security, but I would actually probably beef that up. I would beef it up. Social Security is like the most popular program the government has. Everybody loves Social Security. Okay, not Everybody, but seriously, 90 or 95% of people think Social Security is a good program. It's very rare to find more than five or ten senators at any given time that are against Social Security. Now, everybody wants to change it and tweak it and little things, but the general idea behind it is good. And the reason why you need some sort of pension program out there is there are a whole bunch of people that are either not smart enough to figure it out, not disciplined enough to figure it out, or have had bad luck happen to them or whatever that they're not going to save for their own retirement. And that's probably the majority are not going to figure this out. And so you need something to provide for those people. And I don't think Social Security is adequate. So I would have more of a pension program in place. Pension that everybody qualifies for, you know, some sort of work requirement to pay into it for most of it. Maybe something that doesn't have a work requirement, so we don't have people starving on the streets, et cetera. But that's again, more on the welfare side. And then in addition to that, for those who are interested in doing so, I would have a tax advantage retirement savings program similar to what we have now. It wouldn't be tied to your employer, though. There would be a tax deferred option. There would be a tax free option. You know, everyone would have the same limit. You know, it wouldn't matter how many employers you have. It wouldn't matter what your employer offers. It'd be the same limit. Maybe it's. Maybe it's $50,000 in each of them. You can put $50,000 a year into a tax deferred account, you can put $50,000 a year into a tax free account, and that's it. You know, and obviously most people aren't going to max those out. And people making $10 billion a year are still going to be limited to just putting $100,000 a year into that. And they got to save and taxable beyond that. But that's the sort of program I would put together if I was king. You know, very simple, something for everybody in the form of a pension sort of thing and then some tax advantage savings on top of that. Don't know that that'll ever pass and I'm certainly never going to be president. All right, let's take a listen to our next question here. This one is about the $58,000 cap, which in 2022 is actually the $61,000 cap.

Question about the $58,000 cap on 401k contributions. I have a state job with a pension which is a defined benefit plan as well as a second W2 job which has a 401k. I'm maxing out at 19.5/401k solo that I'd like to contribute to but don't know how much I can. I imagine the total in aggregate is $58,000. My questions are, do the state pension defined benefit plan, which is 6% of my salary at that particular W2 job or my backdoor Roth actually affect the $58,000 number? Thanks for helping me get my financial head out of my rear. Appreciate you.

Okay, great question. First thing, remember, $61,000 this year, not $58,000. Okay? It goes up with inflation each year, and we had a fair amount of inflation last year, so it's gone up quite a bit. The blog post that details all this in extreme detail is called multiple 401k rules. Whitecoatinvestor.com multiple 401k rules. And I go through all of this in excruciating detail. And if you want even more detail, get down into the comments section. But here's the two main rules. You get one employee contribution per year in 2022. That is $20,500 if you are under 50. If you're over 50, you get an additional catch up contribution on top of that. I think it's $6,000 this year. Double check it before you make the contribution. Okay? That's the employee contribution. And no matter how many employers you have, no matter how many 401s you have, that's all you get as an employee contribution. That employee contribution can be tax deferred or it can be tax free, aka Roth. If the account offers a Roth option, the $61,000 limit is a per plan limit. It is a per unrelated employer limit. So if you work for yourself as an independent contractor and you have a W2 job at the hospital, you have two $61,000 limits per year, one for each plan. However, despite having two plans, you only get one $20,500 limit. So what typically happens is a doctor will use his or her employee contribution at the hospital, at the W2 job in that 401, they'll put their $20,500 in there. Hopefully their employer gives them some sort of a match. Maybe they get another 10,000 or 15,000 do. And so they get a total of 30, 35, $40,000 into that account. And then on their moonlighting side, this side gig, they open up a solo or individual 401. And because they've already used their employee contribution, they don't get another one. So all contributions have to be employer contributions. And the amount you can contribute is about 20% of your net income from that side gig. So if you make $100,000 over there, you can put about $20,000 in there. If you make $300,000, you can put $60,000 in there as an employer contribution. Now, you read the rules on how much that is, and it can get confusing sometimes. But if you're a sole proprietorship, just think of it as 20% of your income. Now, if you read the rule, sometimes it'll talk about it being 25%. But when they're talking about 25%, they're not including the contribution. So it's 25% if you don't include the contribution. It's 20% if you do include the contribution, but it's the same number if you are an S corp. The amount that you can put in there is 25% of your salary that your S corp pays you. So even if you make $300,000, if it's only paying you $100,000, then you can only put 25,000 DOL in there as an employer contribution. So you've got to bump up how much it's paying you in order to max that account out if you're in an S Corp. And of course that means you're paying more Social Security and Medicare taxes on that. So be aware of that. Hope that's helpful. As far as the IRAs go, that limit's totally separate. $6,000 if you're under 50 this year, $7,000 if you're 50 plus. That's a totally separate limit from the 401 limit. Likewise if you have a 457B at your job, totally separate limit. All right, hope that's helpful and explains those rules. All right, let's take another question. This one again is on a 401 about a small business 401 hello Dr.

Dalle, this is Mark in New Jersey. I have a small business 401k type of question for you. I am an internal medicine doc with a solo practice in New Jersey with one employee. After wasting a lot of time and money having a small business 401k with ADP years ago as it was not right for my business, I switched to a SEP IRA for the past few years. However, after a more thorough white coat investor financial education, I am now considering switching back to a small business 401k and then subsequently adding a cash balance plan in the next year as my spouse will be rejoining the workforce and this will allow me to both max out the 401k and contribute a significant amount to the cash balance plan. Of course the numbers for the CBP must make sense, but my question ultimately is how to decide if going with Vanguard Small Business 401k with a Census TPA is right for me. I would very like to keep my finances simple as most of my other retirement and 529s are with Vanguard. Aside for my wife's solo 401k and our HSA at Fidelity, are there other companies that may be ideal for my scenario and Is it as simple as contacting a census to find out if they would be able to add on the cbp? Am I thinking about this correctly? Thank you very much for your time and all that you do.

All right, great question. So we put a 401 plan in place here at the White Coat Investor. Initially at the White Coat Investor, it was just me. Then it was Katie, and I remember I gave her half the business and we basically both got to use that solo 401k. We started hiring help. Initially, a lot of our help were independent contractors, and so they didn't qualify to use our Solo 401. They went out and opened their own Solo 401. But eventually it became clear that we needed to convert those independent contractors to employees. And once you have employees at your practice, setting up a retirement plan is no longer a do it yourself project. Okay, I'm very much a do it yourselfer. Right. I still mow my own lawn when I can't get the kids to do it. You know, I paid my own taxes, prepared my own tax returns, even a corporate tax return for many years. Right. I do my own investments. I'm very much a do it yourselfer. This is not a do it yourself project, trust me. You need to get some professional help to do this. If you have employees, in your case, you have one employee, you need professional help. The downside, it's going to cost you more than if you didn't have any employees and could just do a solo 401k. But it's just complex enough that you have to do that. The main thing you will learn as you work with an expert at setting up retirement accounts for a small practice is that the main point of all the rules about retirement plans is that you can't let all the benefits go to the owners and the highly compensated employees. The other employees have to get something. Now, it's not as good as what you can give the highly compensated employees and as good as what you can give the owners, but you have to give them something. And if you do not, there is a penalty. You don't pay the penalty to the irs, though. You pay the penalty to the employees that are being discriminated against by your plan. And so a lot of people, dentists, doctors with a small practice and four or five employees, they run the numbers here and realize that if they want to max out their 401, they're going to have to pay several thousand extra dollars to each employee. And if you got five employees and you're paying three or $4,000 apiece to them in these penalties, that's like $20,000. And they go, it's no longer worth it to me to have a 401 because I have to pay this money to them in order to be able to max it out myself. I look at that and I say, well, what's the big deal? I don't mind that penalty at all, right? I pay bonuses to my employees. I pay them salaries, I teach them about retirement accounts. If they don't learn it just from working in the business on their own, I don't view giving them extra money for retirement as some terrible penalty. So I'm okay with that. If I have to pay them that, that's fine with me. And so that doesn't bother me. But if that bothers you, if your employees don't recognize the value of a match, if they don't recognize the value of you putting money into their retirement account, if they don't recognize the value of having a retire account available at all, you may decide not to put one in place. But when it comes to a small practice, the right answer for you might be a 401, it might be a simple IRA. It's not a traditional IRA. That's a simple IRA. It's a different thing. It might be a SEP IRA. Yes, you can have a SEP IRA with employees. It might be nothing at all, and you just save in your backdoor Roth IRA and your taxable account. But in order to figure out what the right thing is, you really need to kind of have a study done of your practice and the employees and how many employees you expect to add in the future and how many hours they're working and how old they are and how much they want to save. And when you do that, it's a lot easier to figure out exactly what the right plan to put in place is. So unfortunately, this is not something that lends itself well to a big, huge organization that puts out a cookie cutter plan. Because your practice is totally different from somebody else's practice. Maybe your employees are in their 50s and they're really interested in saving for retirement and they really value a 401. And somebody else's practice has a bunch of 22 year olds that really would rather have the cash now. And so those two practices may have a totally different retirement plan put in place. So I recommend you actually go to a smaller firm. And yes, no surprise, we keep a list of these firms on the website. If you go to the recommended tab and go down to retirement accounts and HSAs you will find them right at the top of that page. It's whitecoatinvestor.com retirementaccounts. And you'll see that we've got five on the list right now. And guess who we called when we put the White and Coat investor plan in place? We called these companies, these are the people we used, and we compared them one to another, and we went with one of them and put our plan in place. And we consider the best 401k in the country. It's a great 401k. We've got all the bells and whistles that we could put in there. The employees pay no fees. The company picks them all up. Why wouldn't you want to pay those out of the employee dollars? Right. Of course. That's what you want to do. Or out of the employer dollars. Excuse me, but that's who we recommend you go to. But you've got an employee, you need some help, go to that list. Call up one or two or three of those companies. Get quotes from them. Have your practice studied. It should be pretty easy with only one employee. And figure out exactly what you want to do. If you want to add a defined benefit plan on top of that, you can also do that. We actually ended up deciding not to put a defined benefit plan on top of ours at the White Coat Investor. Not that I have anything against them. You know, I have one in my physician practice. I like it. It's fine. But for us, in our situation, it turned out most of the employees weren't going to use the defined benefit plan. And for us, it reduced our 199, a deduction that will be in place from now through 2025. And so it didn't make sense for us to use it either because we were really only getting a 29% deduction instead of a 37% deduction on it. And so you may make a totally different decision on that, though, and decide to put a defined benefit plan in place in your practice. But that's what you need to know about putting a retirement plan in place at your practice. Hope that's helpful. All right, we got another question here. This one comes from Brian. I think it's about Social Security. Let's take a listen.

Hi, Jim, this is Brian from the Northeast. I wanted to ask you a question about Social Security that I never hear much about. It seems like common wisdom is that if I have a normal life expectancy and I don't need the money to live on, then I should delay taking Social Security until age 70. In order to maximize my lifetime benefit. But it seems to me that if I start taking my Social Security benefit, age age 62 and invest it, I'd easily come out ahead compared to waiting to take Social Security at age 70. By my calculations, if I assume a 5% real return then the break even point between taking Social Security at age 62 versus taking it at age 70 is about 90 years old and if I assume a 7% real return then the break even age is well over 100 years old. Am I missing something here? It seems like if I don't need the money to live on, then I'd be better off taking the money beginning at age 62 and just investing it into something like the Total Stock Market index Fund and let it compound in the next decade or so. What do you think of this train of thought? Am I missing something here? Or should more people be taking their Social Security at age 62 and investing it assuming that they don't need it to live on? Thanks for your input and for setting me straight.

Great question Brian. You're asking the right question. By the way. The common wisdom is to delay till age 70 assuming you're healthy, particularly for the higher earner in a couple. But you're right, it is possible to take the money at 62 and out invest and outperform Social Security. The number I've seen thrown around. I think the best study I saw of this was Mike Piper. I can't remember the exact number. I think he came up with 7% or 8% is what you really needed to make. But keep a couple of things in mind. That 7 or 8% after all your fees. And remember, Social Security also has some tax advantages. But what you're failing to think about are two things. The first is risk delaying Social Security provides a guarantee and that's worth something, right? That Social Security benefit is going to become more valuable no matter what markets do, no matter what happens in your life. An investment doesn't provide those sorts of guarantees. The second thing to keep in mind is Social Security has an insurance component to it. It's helping you insure against outliving your money and it's really the best priced and perhaps only inflation adjusted pension or immediate annuity that you can buy. It's a better deal than going to an insurance company and buying an annuity and it's adjusted to inflation so it's a particularly valuable form of insurance. And if you take that at 62 you have less of that insurance than you would have if you waited until you're 70. So when you account for the value of that insurance, when you account for the lack of risk in delaying Social Security, I think it still makes sense for almost everybody to do. But if you're at age 62 and you're still doing highly leveraged real estate, yeah, it's entirely possible you can outperform Social Security. But if you're just kind of going, eh, I think the stock market's probably going to do better than that over those eight years, I don't think that's a risk worth taking. I just delay Social Security at that point. Especially somebody who's thought so deeply about this question. Chances are you have enough money already to go either way and it doesn't matter that much for you what you do, so do whatever you want. But I'm probably waiting until age 70, at least for my benefit. Now Katie's benefit will be less than mine. We may take that a little bit earlier. We'll have to see what strategies are available at that point. Hope that's helpful. All right, I've got a special guest on the podcast right now. This is something we've been wanting to put in place for quite a while, but have new reasoning to do it. We just got back our annual survey for white coat investors, and one of the questions on the survey was, was whether people are feeling burned out or not. And 57% of white coat investors said they have burnout right now. Now, I'm not terribly surprised. Surveys in the past have shown that number anywhere from a third to 50%. And there's no doubt it's gotten worse in the last two years of the pandemic. But we've been wanting to put something in place to help doctors with this and have finally put all the pieces together for a really awesome program that will help doctors to overcome this and be able to stay in their career. The issue with burnout is that you can't buy burnout insurance. It's not like disability where you can just go out and buy insurance that if you burn out halfway through your career, you can still make the same amount of money. You can't do that. So this is the closest thing to burnout insurance that we can put together. And so I'm bringing somebody back on that's been on our podcast before that, we partnered with to put together a program called Burnout Proof md that person, Dyke Drummond with the happy md. Welcome to the podcast, Dyke.

Hey, great to be here again, Jim. I'm excited to be able to share what we've been working on with your people here on the podcast?

Yeah, by the time they hear this podcast, it'll be after our conference. We're actually recording it before the conference. It's a pretty busy month for us, as you can imagine. But you're also put together a short little program at the conference that was basically oversubscribed. Within just a few minutes we had twice as many people signed up for it as we could fit in the room. So there's clearly a huge need for this. And it's a bit of a spectrum with private coaching on one side and you know, online courses, books, et cetera on the other side. And we've tried to find something in the middle that works for the majority of doctors and really provides an ongoing support system for them to make changes in their lives and their jobs and get over, get through, survive burnout and come out the other side with a career they love and still being able to work toward their financial goals. Can you tell us about the Burnout Proof MD program?

Well, and let me just take a second to tell the people who are listening, if you're listening, who I am. I'm a family doc by training. 10 years in private practice. I actually burned out of my practice way back in the year 2000 and the first thing I did was got certified as an executive coach. I've been coaching doctors and entrepreneurs for about 22 years now. Back in 2010, I was one of the very first physician coaches on the Internet. Started a website called thehappymd.com. i've coached several hundred doctors to recover. And one of the things I tend to do is write about what I see. So when I saw patterns of what was burning people out, what was getting them better, I wrote a book turned into a training. And it's crazy to understand this, but I've now trained 40,000 doctors for about 180 organizations on four continents to recognize and prevent burnout. And the ways that we've done that have been a little bit disjointed in tonality. You can get a coach and have a one on one coach that's just you and the coach working on your specific issue. You can do a training and try and make the training and the tools that it teaches you fit your specific circumstance. Or you could maybe join a support group like the White Coat Investors Support Group, but typically that's on Facebook or some other place where there's a a lot of other things going on. What we've done is taken all three of those things and put them in a single place. I call what we've created Burnout Proof md. I call it a three layer physician support ecosystem. Because what we've done is taken our five top online video on demand training programs that teach the tools that we've tested in the real world of hundreds of doctors lives. We know that they work things that'll help you get home sooner, build life balance in a more ideal practice, even have trainings on how to manage your boss and have the best physician job search training that I know of. It basically turns the process on its head because here's a little thing to understand. When you're getting a job, it's not about whether they want you. It's about whether the job you're looking at is something that matches your ideal practice enough to say yes. So we got training, we do two hours a week of coaching me on the line with the people in the community, two hours to tweak the tools so they fit for you. And the whole thing takes place in a website that you can look at with your desktop computer or your cell phone that allows you to be with a tribe of like minded physicians and everybody's working on the same thing. Here's why this is important in the post Covid window here. So Covid is going to be gone here in a couple of months. I think Omicron is going to give us herd immunity. There's going to be a place where everybody's taking a big breath and nobody really knows what comes next in terms of what your practice is going to look like after Covid, there's going to be a window when you can negotiate with your employer to make a more ideal practice to basically take your practice back. But only if you know what you want and only if you know how to negotiate with them. So there's a window approaching where this is going to be really important. And what we've made available is you can step into these three layers of support inside the burnout proof MD ecosystem. Six months. Hey, there's even 82 hours of CME. There's a whole bunch to talk about inside the program. And that's why we have an introductory webinar that we want to show you that'll go over all the details and answer all your questions.

Yeah. And you can get more information about that@whitecoatinvestor.com coaching just click on burnout proof md there it's right at the top. That'll take you to the webinar and you can sign up for that. But it is more, more than just a course it's an EcoSystem, it's a six month support system. Now talk to people about why we chose to make it six months.

Well, my experience is when somebody comes in to see me and they want to hire me as a coach, typically they've been smashing their face against the same wall for a while, doing the same thing over and over again and expecting a different result. And when we tease it all apart, what's happening to them now and what is the ideal situation they'd like to create. And we start to test some tools to see what's going to work, to develop some new habits, to get new results. It typically takes three to six months to see significant changes. But the really interesting thing is 70% of our coaching clients, since the beginning of my coaching practice 12 years ago, 70% of folks can recover from burnout without changing jobs. And they're always amazed at how small the tweaks are that make the huge difference. Little changes can make a huge, a huge difference. 30% of doctors need to change jobs to get a more ideal practice and to get over their burnout. That's why we developed the ideal position job search formula training. But that time frame is in order to help you do what I call the heavy lifting of taking our training and our tools and starting to implement it in your practice. Now we're not done with you at six months. What happens is you graduate from the first six months into alumni status and there's special alumni rates to continue with the full three layers of support from that point going forward.

Yeah, let's talk about each of those layers. So you get very personal layers. You get three one on one personal coaching calls during the program. You also get the weekly two hour group coaching meetings and then you've got the community behind you. And this isn't a Facebook group, this is a private community. You don't have to be on Facebook to use it. And it's only people that are that are curated.

You don't have to create a fake Facebook ID because you don't want to be there, but you do want some of what the support can offer you. Yeah, it's curated. We're going to choose who's in there, we're going to choose what you see. There's no ads, there's no weirdness like.

Facebook plus you get the 29 plus hours of burnout proof training materials. And the best part about them, well, maybe not the best part, but another great awesome thing about it is there's 82 hours of CME. So if you've got a CME fund. You can use that to purchase this if you are self employed. This is now a business expense. This is a tax deduction. Because you know what, this is an investment in your career just like medical school was. If you can't keep working because you're too burned out, how many hundreds of thousands and millions of dollars are you going to leave on the table? Any sort of six month intensive coaching experience like this isn't going to be cheap. But neither was medical school, neither is a lot of the other things that you invest in for your career. And so I think it's important to understand that this is really an investment in having a full length career rather than burning out in 10 or 15 years after you start.

And I've been dialed into the world of people wanting to help physician burnout both at the institutional and at the personal level. And I don't know another system like this, I don't know of another system that combines a private community with proven training, with proven tools and the coaching that you can get. I mean, you're never more than a week away from a coaching session where you can ask a question and get things adjusted to meet your exact circumstances. I don't know of anything like this. And when I went out on the Internet and I tried to price what it would take to put something like this down together, it's actually what we're doing is charging about one third of what it would take you to put this together on your own, one piece at a time. And one of the interesting things is this is the number one threat to your practice, to your family, to your wealth, and even to your life. Just imagine how old are you? How much longer do you want to practice and what's your annual income? That's a total number where it'll be shocking how little it takes to burn out. Proof yourself going forward because we're going to show you some tools. It's like working out. You're going to be fit, you're going to be ready to brawl with the overwhelm of your practice and have some new moves in your hands.

Awesome. Well, if it's time for you to end the struggle and remember why you wanted to be a doctor, just go to whitecoatinvestor.com coaching and check out burnout. ProofMD. Dyke. Thanks so much for coming on the podcast today to tell us more about it.

My pleasure. Thanks for having me.

All right, Glad you were able to hear about that program. I hope you don't need that program, but it sounds like about 57% of white coat investors do. So be sure to take a close look at Burnout Proof MD and we'll be talking about that more on the podcast. I'm sure over the months and years. This is a long time partnership. We put a lot of time and effort into this selection and putting this program together and hope it'll be really helpful to you. All right, let's talk about annuities and 401s with this question from Lee hello.

Dr. Dali, I have a question about an annuity. We had money moved from a 401 at my place of business into an annuity about five or six years ago. I am realizing that this was probably not a good decision and wondering if there's a way to reverse that and move that money back into the 401k or into some other account. Thanks for your help.

The answer is I don't know. You haven't given me enough details. I don't know if you took the money out of a 401 and put it in an IRA and bought an annuity inside the IRA or if you took all the money out of the 401 and put it into an annuity, which one of those two you did is going to affect the decision and what's available to you. The other thing that will affect it is what is the contract you have with the insurance company and what it allows you to do. Now most annuities can be surrendered. There's often a pretty hefty surrender fee. So you have to look at that, read the contract, see what your options are. I suspect if somebody didn't do you a real disservice. I suspect that this is an annuity inside an IRA at this point, which you can probably surrender the annuity and roll the IRA back into the 401 if you would like to do that. But you got to get more details about this thing to figure out what your options are. And maybe the easiest way way to do that is to sit down with a good hourly fee only advisor just to get an hour or two of advice about your situation and get this sorted out. And if you want to hire them to help, actually do the forms and get that money moved back around to where it's best. You can do that as well. Our recommended list is found under the recommended tab@whitecoatinvestor.com just go down to Financial Advisors there. The direct link is whitecoatinvestor.com Financial Advice Advisors and you can find someone that can help you to get that sorted out and really help you run the numbers and decide what's best for you. All right, let's do our quote of the day. This one's from Robert Duvall, who said, never use money to measure your wealth. Yeah, money matters, but it doesn't matter most. All right, our next question from Randall is also about retirement accounts. It's about tax deferred versus Roth contributions. Let's take a listen.

Hi, Dr. Dali, quick question on tax deferred versus Roth. I know that typically your exception to the rule that you know in your peak earning years you want to do tax deferred preferentially is if you're a super saver. I had planned on being a super saver because I will hopefully enjoy a very high income. However, I've recently been considering later in my career doing a lot more pro bono work and having a much lower income. So I would think in that circumstance that even though I might be a super saver, since my income would be so much lower for this portion of my career, it would still make sense to do more tax deferred than Roth in those peak earning years. Is that accurate? Thank you for all you do. Appreciate it.

Okay, I get this question a lot. Ever since I started talking about super savers being an exception. There's other exceptions too, by the way. For example, if you're trying to maximize your public service loan forgiveness, even during residency, you might be doing tax deferred contributions instead of tax free contributions. So there's other exceptions out there, but the main one for white coat investors to be thinking about is if you're a super saver. Now, what is the definition of a super saver? A super saver is somebody that's still in the same tax bracket in retirement as they were during their peak earnings years. What does that take to be there? Well, it takes a bunch of rental property or it takes a spouse that's 15 years younger than you that still has a high earning career, or it's a massive taxable account kicking out all kinds of dividends and capital gains, or it's a big huge IRA that you'll have RMDs from. You know, we're talking, you know, $5 million plus tax deferred accounts. That's what I'm talking about. When I'm talking about a super saver, it's enough taxable income that your tax bracket is pretty much just as high later as it is now. And when that's the case, or even higher, it's possible it could be higher. But when that is the case, Then you're better off making tax free contributions. Now the main thing you're comparing is your tax rate now to your tax rate later. And even if the brackets move a little bit, the top bracket becomes 40% instead of 37%. That doesn't matter so much as your personal tax situation of whether you're in that top bracket. But if you expect to be in the top bracket the rest of your life, then you probably ought to be giving some consideration to tax free contributions during your peak earnings years. Now in your situation, you you're describing like an early retiree or somebody that's going part time for a significant chunk of their career. That's not maybe somebody that's probably what I would call a super saver. Even though you're saving a lot of money now, even though you're doing great, even though you're going to have enough money to retire early. That's not what I'm talking about with the super saver. Super saver has a lot of money and a lot of income in retirement. And if that's not you, then do the general rule which is tax deferred during your peak earnings years. But here's the truth of the matter, right? These are both good things. It's not like it's bad to put money in a Roth ira. It's not like it's bad to put money into a tax deferred account and get that upfront tax break. They're both great things, but there are situations where one is a little bit better than the other. But don't beat yourself up about it. If you're just not sure which one to do, split the difference, that'll minimize your regret. Yes, one of them will be wrong, but like I said, they're both good things. So it's not really wrong, it's just less right. Good luck with your decision. All right, our next question has to do with C shares and A shares. Looking forward to this one.

Hi Jim, thanks so much for doing what you do. I think I've probably been misled by a well known financial and insurance company often derided by your fellow readers and listeners. My wife and I are both physicians, she's a part time hospitalist and I'm an early career attending surgeon. We've both been maxing out our backdoor Roth IRAs and 403s for several years and I'm in the process of switching our Roth IRAs from different so called advisors. I come to find out my wife's account is composed of C share mutual funds While mine is A shares, an advisor wants me to convert all of my wife's C shares to A shares. I read your blog posts on no load mutual funds and I'm planning to run away from this advice and transfer these accounts to a different company. My wife's account has about 35k and mine has about 58k in our backdoor Roth IRAs. Is there any benefit in converting these to no load mutual funds? Or are no load mutual funds just something we should look to invest in in the future? Thanks so much for your help and hope you had a Merry Christmas.

It's a great question Dr. B. It brings back a lot of bad memories. This is kind of what got me started. This was the camel that broke or the camel. The camel that broke. The straw's back. The straw that broke the camel's back. I realized I had C share mutual funds. I realized that my advisor that I was paying a fee to was fee based, not fee only. Not only had I paid them a fee to give me advice, but I was paying them commissions to put me in to mutual funds. And I had class C or C shares. Mutual funds. Now for those who aren't familiar with these terms, these are terms from the commissioned sales industry generally of mutual funds. A shares are front loaded funds, meaning you pay the load upfront. Typical load might be 5.75%. So if you give them $1,000 to invest, they take 5,750 and put it in their pocket and put the rest in the mutual fund. There are B shares, these are backloaded shares meaning when you take the money out you pay the commission. It can generally be more money than A shares because the money's grown over time. Might be the same percentage, but it's the same percentage of more money. The other thing that they do sometimes is what are called C shares and this is where an additional load is added on top of the expense ratio of the fund to pay the sales agent for selling it to you. So instead of an expense ratio of perhaps 0.4%, you're paying expense ratio of 0.8% and that 0.4% is going to the person that sold that to you for as long as you own that investment. These are all loads or commissions that are charged on mutual funds. But what the people who sell these mutual funds don't tell you is that it is possible that not to pay an A share, B share or C share commission, it's possible to pay no commission at all. And that's called a no load mutual fund. All of the vanguard mutual funds are no load mutual funds. All the ones you should use at Fidelity or Schwab or anywhere else are no load mutual funds. You don't have to pay the load at all. You don't have to pay it up front, you don't have to pay it in the back. You don't have to pay it as you go along. It's no load. The less you pay in expenses, the more money stays in your pocket and that you can use for retirement, that you can use for whatever you want to use the money for. So should you get out of loaded mutual funds? Probably. Certainly if it's a C share fund, you should get out of it, right? Because you're paying ongoing expenses on that every year. The sooner you get out of it and get into a a mutual fund with an expense ratio of 0.03% instead of 0.8%, the more of your money is going to be working for you and the less drag there's going to be on your returns from those fees. Now, with an A share, it's technically water under the bridge. You've already paid that commission. The downside, most of the time, when you buy a mutual fund with an A share, it's not a very good mutual fund. Because the best mutual funds tend to be no load mutual funds. And so what do these funds have to do to get people to sell them? Well, they have to pay bigger commissions to the sales agents. And so you end up with not as good of a fund. But if you really like the fund and the A share, the A commission, the front load is already paid, then you can stay in it. That's okay. But in your situation, she's got $30,000, you got $50,000. You're in the beginning like I was when I figured this all out. Just change over to do the right thing. There's no tax consequences to selling mutual funds and buying what you actually want in your IRA, right? This isn't a taxable account. It's just IRAs, 401 s, et cetera. And so it's easy to make that conversion over. So what I would do is I would get your written investing plan in place. If you don't have that and you don't feel competent to write it yourself right now, I would consider taking our online course. We have fire your financial advisor, which is the option without cme, and we have the option with CME that we call financial wellness and burnout prevention for medical professionals. That's fire your financial advisor, plus about eight hours of CME qualifying wellness Material. So you can buy that with your CME fund or you can write it off as a business expense if you're self employed. And write up your written financial plan. If that's too overwhelming, go hire a financial planner. You can find our list of recommended planners under the recommended tab at White Coat Investor. Just scroll down to Financial Advisors, there's and get someone to help you put a written financial plan together. Now, once you have the plan together, then you make the changes in your IRAs with your investments, et cetera, in accordance with that plan. But there's no huge rush, right? We're only talking about $90,000 together that you've got in there. So what if you're paying an extra 1% for three more months? It's not terrible. It's not that much money. You can take your time, get things really set and move forward with the plan you're confident in. Sorry this happened to you. This happened to me. Right. I had a whole life insurance policy that was totally inappropriate for me. I had C share mutual funds in our Roth IRAs. I've made these mistakes, but that doesn't mean they're not mistakes and you can get them fixed. Sounds like you're getting fixed early in your career and you're going to be off to the races. So thanks for what you do and congratulations on your success so far and figuring this out early in your career. A lot of people never do. All right, speaking of thanks for what you do. Thanks everybody out there for what you do. I know there's often not a lot of thank yous at work and we tend to be people pleasers, especially the physicians in the audience. A lot of ways we're working for thank yous. We want to help people. Yes. But we particularly like being shown a little bit of gratitude sometimes for that. And so if nobody's thanked you today, let me be the first. Thanks for what you do. It's not easy. That's why they pay you so much to do it. They call it work because they have to pay you to do it. All right, let's take one more question. This one's about contributing to your spouse's 401.

Hi Dr. Dali, this is Michael from Ohio. I really appreciate everything that you do. My question may sound too pedestrian, but I was not able to find the answer when searching online. I'm a physician and a primary income earner in my household. My wife is self employed and is receiving symbolic salary, less than 10,000 per year for her 1099 work as a medical biller. I have a 401k plan at work and I'm maxing it out for your advice. And I was wondering if my wife can open a solo 401k and if I or we as a family can contribute to her solo 401 plan. Since our filing status is merit filing jointly, any insight would be appreciated. Thank you for this opportunity to ask my question.

Michael, thanks for being a listener. Wouldn't that be awesome if we could just open a 401 for a non working spouse and put $61,000 of money we earned into it? That's actually the way IRAs work. A spousal IRA. That's precisely how it works. However, you cannot do that with a 401. 401 contributions are completely dependent on the earnings of the person whose name is on the 401. 401s are never joined. Right. You can have a joint taxable account, but you can't have a joint retirement account. They always just have one person's name on them and then, you know, the other spouse is usually the beneficiary. So no, you can't put your earnings into her 401. So if she's only making $10,000, $10,000 is all she's going to be able to put in there as an employee contribution. She could put pretty much the whole thing in there, but you know, you can't put any more in there just because you make a lot of money. I'm sorry. It'd be great if it worked that way. It does not work that way, unfortunately. Now money's fungible. So technically she could spend her $10,000 and you know, you could put your 10k in there, but more than 10k can't be put in there if that's all she's earned. Technically what's happening is she's putting her $10,000 in there and she's spending your 10k from somewhere else. That's basically what happens with my kids is their money goes in the retirement account and I give them my money to spend on whatever they want. But the bottom line is it's limited by her earnings. And so the first $20,500, if you're under 50, basically can go in there as an employee contribution. After that, it can only go in there as an employer contribution, which is essentially 20% of earnings. Hope that's helpful to you. Did you know that the White Coat Investor not only has a podcast and a blog, but several books that will help you on your way to financial independence. These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help now, we've talked about a lot of things today on the podcast. We talked about our new CFE online course. That sale, 10% off, goes through March 7th. The link for that is whitecoatinvestor.com CFE2022 We've talked about Burnout Proof MD, our new coaching program that's whitecoatinvestor.com coaching. Also, if you are looking for a low commitment side gig, consider taking some physician online surveys. We've rounded up a few partners to help with that. Whitecoatinvestor.com mdsurveys we'll give you all the information you need to sort that out. If you're interested in earning a few hundred or a few thousand dollars a month as a side gig that takes very little commitment, check that out as well. Thanks for those who are leaving us five star reviews telling their friends, colleagues, trainees about the podcast, et cetera. Most recent review says awesome podcast. Dr. James, host of the podcast, highlights all investing and more in this can't miss podcast. The host and expert guests for insightful advice and information that's helpful to anyone that listens. That one actually came in from the Philippines, but Thanks for that 5 star review. Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast. 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.