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Newbie - Seeking Advice
Hi all,
I've been a lurker here for the past 5 years and have learned a lot from everyone on this forum. I have a few questions I wanted to ask and I apologize in advance if this has already been addressed in another thread.
I'm (29) a physician-in-training (resident) and will be graduating on June 30, 2012. I will be an attending physician working in the same academic hospital I trained at starting on Sept 1, 2012. I love what I do and love the amazing things my coworkers have been able to do for patients, and lastly, I'm just glad I've survived training thus far. I'm also glad I've been lucky to read the discussions on this forum which has helped me with my financial planning. I don't know if I want to retire early but I do want to be financially independent so I can focus on my clinical research. I don't spend much and don't plan to. I rent a hospital-subsidized, single bedroom apartment in NYC for $1300/mo including utilities except for electricity ~$35/mo. My hospital will continue to let me stay in this apartment as an attending physician. During residency training, I've contributed to my Roth IRA and my hospital's 403b. I was wondering if, after I max out the 2012 403b limit ($17k) by June 30 2012, it would be a good idea to convert 100% of the 403b that I've contributed in residency training into a Roth IRA this year. (My residency 403b plan is separate from my attending physician 403b plan and because they are considered separate plans and jobs I am eligible to rollover the residency 403b plan into a Roth IRA once I graduate.) I understand I will be paying upfront taxes on this conversion, but I feel that this year will likely be the only time where my tax bracket is lower than my future tax bracket for awhile because I will soon no longer be paid a resident salary. I think conversion to Roth IRA in my situation may be smarter thing to do but I would love to get feedback. I can pay for the upfront tax but want to know if this is a smart move, financially speaking.
Current:
Single (29), No spouse, No kids
Chief Resident annual salary ($62k) - Graduate June 30, 2012.
Asset:
Roth IRA $60k (I began contributing to my Roth IRA ($5k) since 2007. In my first year as an intern in 2007/8, I was at a different hospital for which I maxed out my 403b contribution for 2007 ($15.5k) and 2008 (15.5k) and subsequently fully converted that into Roth IRA before moving on to my current hospital for my specialty residency training) AA: VTIAX 30% VTSAX 60% VBMFX 10%
403b: $50k AA: VTIVX 100%
Cash: $350k (I received an inheritance)
Taxable Stocks/Bonds Accounts: $0
Liabilities:
Debt: $0 (I went to a public state school for college and medical school and was fortunate to have my parents help me out with school tuition)
I don't own a car. I love the NYC subway. Ok, maybe not love but it's convenient and public transportation is better for the environment.
I don't own property but plan to look for an apartment to buy in NYC in a few years. A single bedroom in upper west or midtown can be around $700k and then there's the monthly common charge which can be more than the rent I currently pay.
Expense:
Hospital-subsidized 1 bedroom apt: Rent is $1300/mo including utilities except elect. (I live 5 minutes walking from my hospital and plan on staying where I live after I graduate to become an attending physician)
Electricity: ~$35/mo
Cellphone: ~$80/mo
Cable/Internet: ~$80/mo
Transit: $125/mo subway credit (I get transit tax credit)
Food: ~$100-200/mo?? Not sure. As a resident, I don't eat much but we do get free food when we're on-call or if we have morning conference or noon conference.
Disability and Life Insurance: I sought out specialty-specific disability insurance and 20/30-year premium term-life insurance policies last month because I hear it is cheaper to get this while you are young and are a resident, but I have a chronic medical condition that I acquired perinatally and no insurance companies are willing to cover me. Or if they do, it is double or triple the premium. My hospital offers group disability and life insurance which aren't that great but it's better than nothing. Not sure what I can do about this, but I feel like I tried my best and I am at peace with this.
Malpractice insurance: My hospital provides it for me free.
Attending starting salary ($255k) - Starting Sept 1, 2012.
My other question is, as an attending, my hospital offers me a couple benefits, a 403b plan ($17k) and a 457 plan ($17k). My hospital will also contribute to my 403b plan:
5% of my salary up to the Social Security wage base ($110,100 for 2012), then
10% of my salary above the Social Security wage base.
They also offer a high deductible health insurance plan for which I can contribute money to a HSA ($3100). I plan to max all this out (403b, 457, HSA) as well as a backdoor IRA since I will no longer be eligible to contribute to a Roth IRA directly this year. Ok.. so my question is, are there any other tax advantaged accounts I am eligible for but that I am missing? Are the only options I have to save in taxable accounts?
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