WCI #59: Is Dr. Mike Meru Crazy?

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dahli. Welcome to podcast number 59. Is Dr. Mike Maru crazy?

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Welcome back to the podcast. Thank you so much. To those of you who bought the online version of the conference, the feedback has been tremendous. Nearly 500 of you bought it. You always wonder the first time you do anything if anyone is going to be interested in it. We're leaning toward doing another conference probably in 2020. This time we gave attendees a huge discount on the online course, but got a few complaints for charging them at all. So I think next time we'll just charge more for the conference and roll that into the course for free. Is really a funny price though psychologically we prefer all inclusive pricing because it is less painful even if it were cheaper a la carte. So by rolling it in I guess we'll reduce your pain and we'll make more money. That's a win win if I ever heard of one. Thanks to all of you who follow us on social media. We're closing in on 10,000 Twitter followers and we're also looking at getting a Facebook group together at some point in the next few weeks. We know there's lots of you out there who prefer your information in ways other than a blog, newsletter or a book. Some like a forum, some like. Some like a podcast. So we're trying to adapt the WCI message to every medium we can find in hopes of reaching as many high income professionals as possible. Also remember that now it's summertime, that means we're giving money away. Here at WCI we're running our scholarship program again and it's bigger than ever. We'll be giving away over $60,000 in cash and prizes this year. So if you're a professional student, and by that I mean you're in a professional program like a PA or an NP or MD or DO or a pharmacist or a, you know, dentist, any type of professional. You are eligible for this. The deadline for Your applications is August 31st, and this isn't like getting into medical school. 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Well, today we're going to talk about the most famous orthodontist in all of Physician Finance. Dr. Mike Marux is an orthodontist who lives just a few miles away from me. It seems everyone has an opinion about Dr. Maru these days. Some feel pity, others contempt. Still others simply wonder. Mike led a Wall Street Journal reporter into his home along with a photographer and let him comb through all of his financial documents. The end result was an Article in the Wall Street Journal titled, Mike Maru has 1 million in student loans. How did that happen? That article will be one of the first hits every time one of his future patients googles his name for the rest of his career. At first I thought Mike must be crazy for talking to this reporter. But after thinking about it for a while, I think you might just be crazy like a fox. Let me tell you what I mean. Let's talk about the article. I think at least 20 of you sent it to me by email or on social media. And clearly people are talking about this. I was at a conference for orthodontists last week and everybody knew about this article. Everybody knew about this doc and what he was going through. But before we get into the article itself, I want you to know that I've already reached out to Dr. Marou. I sent him a copy of my book. I. I sent him free coupon codes for our two online courses. I offered to buy him and his wife dinner. And that offer also goes to any other docs out there who owe over a million dollars in student loans individually. Although you're gonna have to come to Utah to get your free dinner. Apparently there are a hundred other people out there besides Mike that owe over a million dollars in student loans. So let's get into this article. It's in the Wall Street Journal. It's, you know, obviously behind their paywall. But if you get there from Twitter or if you have a subscription, you can read it says, from Draper, Utah, just down the road from me. Mike Maru, a 37 year old orthodontist, made a big investment in his education. As of Thursday, he owed $1,060,945.42 in student loans. Mike Maru pays only 1,589, 97amonth, not enough to cover the interest. So his debt from seven years at the University of Southern California grows by $130 a day. In two decades, his loan balance will be 2 million. He and his wife Melissa have become numb to the burden, focused instead on raising their two daughters. If you thought about it every single day, Mrs. Maru said, you'd have a mental breakdown. Well, I can understand that. Due to escalating tuition and easy credit, the US has 101 people who owe at least a million dollars in federal student loans, according to the Education Department. Five years ago, only 14 people owed that much more could join that group. While the typical student borrower owes 17,000, I think that's probably a little low. The number of those who owe at least 100,000 has risen to around 2.5 million, nearly 6 of the borrowing pool. Well, that's pretty much all doctors, at least those who had to borrow for their education. For graduate school students especially, there's little incentive for universities to help put the brakes on big borrowing. The government essentially allows grad students to borrow any amount to cover tuition and living costs with few guardrails on how the final sum will be repaid. You can kind of see a little bit in that paragraph the angle that the journalist is taking with this. This is kind of a, you know, these people are taking advantage of the government, taking advantage of the taxpayer kind of bend to the article. More than a third of borrowers from one of the government's main graduate school lending programs have enrolled in some form of federal loan forgiveness plan. Okay, these are choices we're not coercing, said Avishai Satan, the dean of the USC Herman Ostro School of Dentistry, where Mr. Maru went to school and one of the most expensive in the us. You know exactly what you're getting into. Well, I'm not sure that's necessarily the case for most docs. I'm not sure they realize just what it means to borrow the entire cost of your education and your living expenses and then try to pay that back on a typical physician or dentist salary. Goes on to say even the best planners might not have anticipated the sharp increases in tuition and student loan interest rates from 2005 to 2012. I certainly didn't anticipate that while you could get a mortgage at 3%, your student loans were still at 8. While the federal Reserve was reducing interest rates to near zero to combat the recession, rates for grad students were as high as 8.5%. And I've seen them higher than that. I've seen them as high as 10%, especially as you get into the private world, particularly for physicians that attend Caribbean medical schools. Says dental school is the costliest higher education program in the US. I think that's true. Private nonprofit schools during the 2015-2016 school year charged an average of $71,820 a year. USC now costs 91,000 a year. 137,000 in living expenses are included. It turns out it's not that cheap to live in Southern California. For Mr. Maru, tuition at USC first went up during his second year. Interest rates followed. Halfway through dental school, he said he started to worry about the soaring cost of his education. I'm sitting here saying, holy crap, should I really be doing this? Should I drop out? I think That's a familiar sensation for most of the doctors listening to this podcast. His wife said she and her husband decided it was too late to turn back. Well, how are you going to pay him back unless you can get that high income at the end of the tunnel? His financial records that he provided to the Wall Street Journal show he borrowed a total of $601,506, a debt that swelled to more than 1 million by fees and interest. The USC education helped him earn $225,000 last year working for a corporate practice in Draper, Utah, 20 minutes from Salt Lake City. The that compares with 158,000 median income for dentists, according to the Labor Department. I have no idea why they're comparing that to other dentists. The average orthodontist, according to the data I recently looked up, is making $283,000. Obviously there's some making much more than that, but that really is the average that the ADA is reporting these days. Even so, he's making below average. It's kind of interesting here. Reporter says Mr. Maru and why they are so opposed to saying Dr. Maru is beyond me, but became so frustrated with the high interest rates that he helped start a national dental student movement to lobby Congress to lower rates on grad students. The effort went nowhere. And I think that's the paragraph that really gives you a Clue that maybe Dr. Maru is not clueless about this, that he's not crazy, that he's crazy like a fox. Clearly he has some interest this in helping other docs avoid this same issue. The article goes on to say Dr. Maru was the eldest of three boys raised in California, an affluent suburb west of Los Angeles. His father didn't finish college, owns a small construction business. His mother works mostly as a secretary. He found his calling while still a teenager. Says he was insecure over his crooked teeth and irregular jawline. I was embarrassed to talk to girls. Orthodontist changed my life. Spent two years on a Mormon mission, then got an undergrad degree at Brigham Young University, a very inexpensive undergraduate institution, by the way. Paid his college tuition with money from his parents and my waiting tables. So basically he got out of undergrad debt free. This million dollars is all dental school and orthodontics residency. His mother said helping pay for college was the agreement we made all our boys. Graduate school wasn't part of the deal. We couldn't afford it. We're middle class. He married his wife while at BYU. They graduated debt free in 2005. They picked USC for its prestige and to be close to his parents. The financial aid director estimated that the program would require 400 to $450,000 in student debt, including interest. They concluded it was a good investment given the salary that he expected to earn. Okay, that makes sense. You got to borrow 400,000, you're going to make at least 283,000. That makes sense. So they said, we can make this work, and felt like it was okay to go into debt for that education. Part of their issue was that their calculations and those of the financial aid guy were based on lower interest rates and what they ended up having to borrow the money at. And then, of course, the increases in tuition didn't help. They note the law that was passed in 01 took effect in 06 that severed the link between student loan interest rates and treasury rates. And I do recall that that is why tuition rates ended up being so high for a lot of us in the last decade or so. So the financial aid guys in 2007 emailed out a flyer to everybody that warned of large debt balances, encouraged students to cut back on rent and lattes. I'm not sure there's a lot you can do at that point once you're into the middle of it. I mean, it's tuition. That's the big thing. It's tuition. It's not the lattes that are killing you. But, you know, he got a few warnings, I suppose, in that respect from the school as well as from his lender. So he graduated in 2009, his loans were $340,000 at that time, and then graduated from dental residency and began orthodontist. Now, remember, for those of you who aren't aware of this, and the dentists certainly are, but a lot of physicians aren't. A physician in a medical residency not only doesn't pay tuition, but gets paid a reasonable salary. Yes, it doesn't work out too much when you consider you're working 80 hours a week, but you're getting paid about the median American household income of 50 or $60,000 in a dental residency. That is not the case. In fact, most of the time you're paying tuition in those residencies. So you're still taking out student loans not only to cover that tuition, but to cover your living expenses. And so the article says for the next three years, Maru continued his studies at USC and continued to borrow for tuition. Of his growing debt, he said, I just wouldn't look. The only thing looking did was create stress. I think we've all been in that situation. After finishing the orthodontics residency. In 2012 he went into forbearance because he earned little his first year out of school and needed all of it to support his family. Interest continued to accrue. They bought a home in Draper using a $400,000 mortgage in 2012. That was actually one of the smartest things he's done. Those homes have doubled in value since that time. She took it out in her name using an inheritance for the down payment and her mother co signed the loan. He then entered into a government sponsored repayment plan based on income. He this doesn't actually specify the program but he says any balance remaining after 25 years is forgiven, effectively covered by taxpayers and that he agreed to monthly payments at 10% of his discretionary income. What's being described is the revised pay as you earn program. So I'm assuming that's what he's in says without the government help the monthly payment would be $10,541.91. His current monthly income after taxes is roughly 13,333. You can imagine why somebody might not want to pay what is that 75% or more of their monthly net income toward their student loans. So since refinancing his debt with the federal government in 2015 lowering the rate to 7.25% the balance has grown by almost another 150,000. It'll keep growing throughout the 25 year life of the repayment plan until it reaches 2 million. That sum will be forgiven at current tax rates. Could cost Mr. Maru more than 700,000 in income tax payments. So this is the way these income based repayment the pay as you earn and the revised pay as you earn programs work. Remember, it's not like public service loan forgiveness. When you get that forgiveness it's totally taxable. So it says. By then Mr. Maru will have paid 1.6 million. That would be about the same as repaying 600,000 in student loans at a rate of 4% over 25 years. All right. That says the government repayment plan affords the Maru family a comfortable life. Their home is on a mountain with panoramic views of the snow capped peaks surrounding Salt Lake City. They take vacations including a recent trip to Havana. He drives a used Tesla. On a recent spring day he commuted to the suburb of Clinton working out of his one of his company's five offices with in a room with views of the mountains. In the strip mall parking lot he saw a procession of teenage patients and for lunch he went to the Panda Express next door. Now, there's been some ridiculous stuff going around on social media and the Internet about this. Blaming him for going to Panda Express for lunch. Give me a break. Going to Panda Express is neither the cause of this problem nor really keeping him from solving it. Have you been to Panda Express lately? It's not exactly an expensive place to eat. But let's talk about this article a little bit and really talk about the situation. Right. He's making $225,000. He owes $1,060,000. That is a debt to income ratio of 4.7. In general, I try to recommend to people to keep that student loan to gross income after school ratio to one or less. That can be difficult to do, especially for a dental specialist and especially as the cost of tuition continues to skyrocket and incomes don't keep pace. But as you get up to two, that's probably still doable, but will require you to live like a resident for about five years. In order to get on top of that. As you get out to a ratio of three of your student loans to your income, that starts requiring some extreme solutions. It requires you to live like a resident for more than five years, maybe as many as 10. Or it requires you to receive some forgiveness or. Or it requires you to do some other more extreme kind of solutions to get rid of it. As you get out to about 4x, it becomes basically impossible to pay back your student loans on your income. It just doesn't work. Dr. Maru is at 4.7x. He's well beyond that. I mean, basically, if you calculate out what he's got to be paying, it's just not going to happen. It's just not going to happen. And while his student loan burden is a huge problem, without a doubt, and his lifestyle may be a little bit of a problem, the main problem here is low income. If you double or triple his income, this all goes away. Then he's at less than a 2x ratio on the student loans. The home makes a ton of sense, the car is not a big deal, and he certainly doesn't need to worry about eating a Panda Express. And so that is one option. Many orthodontists do make. Double or triple his income. He's still below the average for his specialty. The average is 283,000 and that was a couple of years ago and he's making 225. Just getting back to average would improve that ratio significantly. So really there's two solutions to this problem. You know, he was featured on Dave Ramsey program. Really this article was featured. He didn't have Dr. Maru on there. And of course, Dave Ramsey gave his usual solution, right? Scorched earth, sell everything, sell the house, sell the Tesla, stop eating out of Panda Express and put everything you have toward the debt. But at these sorts of ratios, that kind of thing doesn't really work as well. So what is the other solution? Well, the other solution is exactly what Dr. Maru is doing. Enrolling in Pay or Repay or IBR, depending on what you qualify for and what makes the most sense for you, and eking it out for almost your whole career and then paying the tax bill at the end and being free of the loans. I hate to see somebody in debt for 20 or 25 years after medical or dental school. It really, I feel terrible about it because I know what having that debt hanging over your head does to you. But at a certain point, when you compare it to the alternative, it's hard to say that it doesn't make sense. It also, I think part of the reason that Mike did this, that he let this journalist write all about him and his family and his financial life and took all this flak on the Internet and on social media. I mean, the Wall Street Journal article itself had 1800 comments, which is huge, and a good portion of them were not particularly sympathetic. So I think part of the reason he did this is for the same reason he was trying to lobby to change things when he was a dental student. I think he's an advocate for change within the student loan system. And what better way to cause change than to get an article like this into the Wall Street Journal showing a real person with a million dollar student loan. I can't think of a better way to really get this issue out in front of people. Now. I'm not sure I would have the guts to do this with my financial situation if I was in there. And so in that respect, I think he's pretty brave. Mostly I just hope, and this is part of the reason I'm reached out to him, I just hope the rest of the financial life of his financial life is in order. You know, that this actually is the plan that he's planning to go through repay, that he's planning to go through pay and that he, you know, is saving toward that tax bill because he does have to save some money to get that tax bill paid off in 20 or 25 years and that he's saving for retirement on the side and has a plan to get the house paid for and all that kind of stuff. Assuming that's the case. I think he's just crazy like a fox. It's important to understand these forgiveness programs though, right? These are not public service loan forgiveness. In public service loan forgiveness, you get forgiveness after 10 years of payments, including those you make during residency and fellowship. And so it's really pretty awesome. If you do a long residency and fellowship, you might only make full payments for four years before everything's forgiven. The other great thing about public service loan forgiveness is the forgiveness is totally tax free. There's a couple of catches there. You have to work for a 501 or a non profit, you have to be directly employed and you have to work full time. Neither one of those applies to the other forgiveness programs. The IBR program that forgives loans after 25 years, the PAY program that forgives loans after 20 years, and, and the revised pay as you earn program which forgives loans for professional students after 25 years. None of those require you to work for a 501. None of them even require you to work full time. So you can actually game the system, have a relatively low income, make relatively low payments and the rest gets forgiven at the end. Now, of course that more you get forgiven, the higher the tax bill gets. And so you've got to be saving on the side. But for what they're anticipating his tax bill is going to be at the end of this, he's really only got to be putting away about 10 or $12,000 a year over that 25 years in order to be able to pay that tax bill. So long as he's doing that and he's making the payments, this is not a crazy way to deal with his student loan burden. We had a guest post on the blog a little while back written by Travis Hornsby at Student Loan Planner and he's finding more and more people with these high loan burdens that this sort of a strategy can make sense. Personally, I think I'd hate to be in debt for that long. But when you start getting to these really extreme debt to income ratios, maybe that's what it takes. At any rate, if you're hearing this, Dr. Maroo, the offer still stands. I'll come buy you and your wife lunch and we can chat about finances if you want. If you don't want to, I'm not going to hunt you down. All right, let's do some questions from readers. This one comes in from a 50 year old academic emergency physician who maxes out his 403B 457B in a backdoor. Roth says my spouse hasn't worked in two years. I moonlight at a hospital that provides a W2. I now have the option of working at another hospital which will provide a 1099. My group has been contracted to work at this other hospital for several years, but this relationship is now ending. I like working there and they're allowing interested attendees to continue to moonlight. There's malpractice is covered through my academic medical center. So I have two questions. Assuming I make 25k a year moonlighting, all other things being equal, which moonlighting job should I favor? The one that pays via W2 or this new one which will pay via 1099? Well, when evaluating a W2 versus a 1099 situation, you got to compare apples to apples. And remember, when you are an employee that is you're paid on a W2, your employer is paying half your payroll taxes. That's Social Security and that is Medicare tax. And so that's a very real benefit. So if it's the exact same amount that you're both being paid, but in one of those situations the employer is covering part of your taxes, well that makes sense for you to be the employee instead of the independent contractor. In order to compare apples to apples, they actually have to pay you more as an independent contractor to make up for that fact. That's even more the case. If being an employee would make you qualify for some benefits, then they also have to pay you enough to make up for the fact that they're not paying you benefits. That said, if all else truly is equal and they've made adjustments for that, so you're really comparing apples to apples. I like being self employed, especially when you've already got an employee gig on the side because it allows you to not only write off a lot of medicine related expenses, but it allows you to open an individual 401k and essentially have multiple 401ks. Granted this doc's only going to be able to do the employer contributions into that individual 401k, which would work out to be about 5,000 of his $25,000 that he made there. But it's better than a kick in the teeth. Whereas if he was an employee, he probably wouldn't qualify for their 401k at the other hospital and probably wouldn't have any other real option for for protecting that money from taxes. So if all else is equal and the adjustment is made for those payroll taxes and benefits, I like the idea of being an independent contractor and opening that individual 401. His second question was if I choose the 1099 hospital. Does that somehow allow me to contribute more retirement money like an additional 401 or IRA without jeopardizing the backdoor Roth pro rata rule? And the answer is yes, of course an individual 401 is not counted toward that pro rata calculation that you DO on form 8606 where you report the backdoor Roth IRA. All right, next question. I finished a specialty residency. This is a dentist. This past year. I'm now working, finally able to start building a portfolio. I want to start an HSA and I'm trying to figure out how to do a backdoor Roth ira. I'm a little confused on what you said on the website in terms of the ways to set one up. I'm self employed and my CPA had me start a SEP ira. Oh, there's problem number one. Due to my income, I'm ineligible for a Roth ira. So the way I understand is I need to move money from my SEP to a Roth ira. Sounds like he's a little confused about how this backdoor Roth IRA works and so he wants to know how he's supposed to do that, how I'm going to go back and pay the taxes on this money every year I should empty my SEP into a Roth. I'm just confused. Also in terms of the hsa, I was wondering if those top five are based on being an active trader or someone who just lets them money sit. People I've talked to most use HSA bank and love it, which after reading your article seems like good fit. But I just learned that you can no longer invest in Vanguard funds through them. Is that a deal breaker in your opinion? Well, let's do the last question first. HSA bank invests at TD Ameritrade and so TD Ameritrade made a change that you no longer can buy Vanguard ETFs commission free there. You can still buy them. You just got to pay five or six bucks in commission to do it. So I pay one commission every year to max out my HSA all in one fell swoop in January and it cost me five or six bucks. It's not that big a deal if you like the Vanguard funds. They also offer some other funds that are just fine if you want to use those other low cost index funds there. But I'm still buying the Vanguard ETFs there. Yes, HSA bank is a fine place for your hsa. There are other good places for your hsa. The differences between them are pretty minimal. But you can check out my article on the best HSAs, just search that on the website if you want to see what some of the options are. If you're an active trader, you really got to be careful, number one, because you're probably not making money without active trading. But number two, it can really increase the cost of your investing due to all those commissions. And so if you're actively trading, you may not want that particular hsa and you'll have to look with a little different criteria than what I was looking for. But his main question here is just an understanding of how a SEP IRA and a Roth IRA work together. Now, a SEP IRA is counted in the pro rata calculation. So that means on December 31st every year you need to have zero balance in that SEP IRA just like you would in a simple IRA or any other tax deferred IRA like a traditional ira. And so that's why I tell most people that are self employed, that are independent contractors, to use an individual 401k instead so they can continue to do that backdoor Roth IRA without any complications. Now, I suppose if you really wanted to do a big huge Roth conversion every year, you could put all that money into the SEP IRA and convert the whole thing to a Roth IRA every year. But in general, during your peak earnings years, you want that tax deferral, you want that tax break now while you're in a high bracket. And so you don't want to be doing a bunch of Roth conversions every year with your retirement contributions. And so in general, this doc needs to go and start using individual 401k instead of a SEP IRA. And that will likely clear up all those issues. This next question comes in from a second year Pulmonary Critical Care Fellow. I start looking for jobs next year. I owe $400,000 in student loans. I'm interested in doing research and taking a research year. I'm on public service loan forgiveness. I only have about 27 payments so far. I'm not sure the program will be around for that long. I think the better financial decision is probably going into private practice or high bid practice and trying to pay it off. But I just wanted to run it by you and see what you had to say. This sounds like a perfect person for public service loan forgiveness. Been in residency a long time, been in a long fellowship, going to do a research year. I mean, how much longer you got to stay in academics to get public service loan forgiveness? Three or four years. It doesn't seem like that big of a deal. Now. I'm kind of disappointed that the DOC is already a second year for fellow and only has 27 payments in. That means the DOC did not make a bunch of payments during residency. I mean, if you start making payments right away, in three year residency you got 36 by the time you're done. If you do a three year fellowship after that, that's another 36. You've already got 72 of your 120 payments made. And it gets you a lot closer to the time when you get public service loan forgiveness. So if you think this is your plan, start making those IBR pay or repay payments just as soon as you can during your residency to start counting up those tiny payments because that's really what ends up being forgiven. Now it sounds like this is another one of those people who is worried the program is going to change, there's going to be limited in how much you can have forgiven, or it's just going to go away completely. And while I think those who are currently enrolled would be grandfathered in to any changes, if this is a serious concern for you, I recommend what you do is rather than leave the program, refinance your loans and go work in a private setting if you're at all interested in doing academics, that you stay in academics, that you keep making these payments through the government programs and you make additional payments that would pay off your student loans over two to five years, but make them to yourself, make them into a side fund, a side investing account that you could then raid to pay off your student loans should something happen to the program and you can invest in aggressively because most likely you're going to get forgiveness. And this is really money you're just investing for retirement. And so if you're worried about the status of the program, just save the money on the side to pay off your loans and then worst case scenario, you just pay them off. Okay, next question. With the recent law allowing a longer time to repay a 401k loan in the event of separating from the company, I've been considering taking a 401 loan to pay down some of my student loans. I wanted to run my thinking by you and make sure my logic is on solid ground and there's nothing I'm overlooking. My thinking was to take $30,000 401 loan to pay the variable student loan off. And he notes his student loans are $240,000 at 2.75 fixed, $35,000 at 1.95 fixed and $30,000 at 3.4. Variables. And he lists some pros and cons that he sees of doing that. His 401k loan would be at 5.75% interest, which is higher than all of his student loans. So I'm not a big fan of 401k loans. It used to be that you had to pay them back within 60 days of separating from the employer. So they were really a tax time bomb. If you didn't pay them back in that time period, which is incredibly hard to do if you just lost your job, job right now you have more time to pay them back with the recent changes in the tax law. So they're slightly more attractive as a borrowing option. But I have no idea why it would be wise to borrow at 5.75% to pay off a loan that is 3.4%. More concerningly, I think, is the attitude behind the question. I mean, this is a doc that owes looks like a little over $300,000. We get this idea sometimes that if we refinance our loans or we restructure them with a mortgage or a home equity line of credit or 401k loan, that we're doing something about our student loans. And in reality, you're not doing much. You're making little changes around the edges. Maybe you lowered your interest a little bit, but the way you get rid of your student loans is by living like a resident, making a big difference between what you're earning, what you're living on, dropping these huge payments off to your lender every month. You know, when you're throwing $10,000 a month at your student loans, they go away very quickly unless you're in the situation like Dr. Maru. But for most of us, you can wipe out your loans in well, less than five years by throwing $10,000 a month at them. And so don't kid yourself that messing around with them, messing with the interest rates, or who you owe money to is really the solution, because the solution to take it out of your lifestyle and pay off those loans. All right, here's a question from another resident. I'm in my final year residency. Have a few questions about my retirement accounts. I had a traditional 403, which I recently switched to a Roth 403. Wish you'd done that a little earlier. The balance is just under 10,000. I have the ability to max out the 403 this year. Given some savings I have, I will be graduating a year and converting this 403 to my Roth IRA. Not sure if my switch to a Roth Midway complicates this. No, it really doesn't. You just won't have to pay taxes later on that part of the transfer. Any advice on this will be appreciated as it makes sense to max out my 403B this year, given I'll be converting soon. Okay, in general, if you're in residency, you should be contributing to Roth accounts. That means a Roth IRA and maybe a Roth 403 or 401k, especially if your employer is matching any of those contributions to the 403 or 401k. So if you've got a retirement account offered by your hospital and it has a Roth option, in general, you should be using that as a resident. There are a few exceptions, like if you're trying to minimize your income in order to maximize how much you can get forgiven under public service loan forgiveness, you might want to choose the tax deferred option. But in general, especially for anybody who expects to pay off their student loans themselves, they should be using the Roth options now. It's also a great idea in the year you leave the hospital, you leave the employer, you know, the year where you're a resident for half the year and you're an attorney for half the year to just convert anything that's tax deferred to a Roth account because you'll be in a higher tax bracket after that. You know, it's not quite as low as you were in in medical school or in those years where you were a resident for the entire year, but it's better than what you'll be in as an attending. So I'd just convert that whole thing to a Roth IRA the year I left if I were you. All right, that brings us to the end of these questions.

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