How to maximize retirement with the one regular job and one locum tenens job?

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doctorpilgrim

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I was late to start investing in retirement and now in my forties.
I now work two jobs, one is a salaried position where I maximize my retirement investment as it has a 403B plan along with 457 plan and so I invest the maximum of 53k in retirement plan at the salaried job.

Now I do 1099 job at another place. What are the best ways to add another retirement investment option.
I shall be grateful for guidance.


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SEP contributions are the lesser of 20% of 1099 net profit or $54k. Individual 401k contribution is up to $18k as employee (and can be Roth) and 20% of net profit from 1099. Easier to increase contributions in an Individual 401k and can contribute to a Roth.
 
You can open up a solo 401k through your 1099 work and add EMPLOYER (not employee) contributions so that you can put away even more than 53k per year. You can search for this on WhiteCoatInvestor.com, which I highly recommend.
 
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If you've maxed out your 401k contributions on the W2 side, the 1099 investments should go into a SEP. From the SEP, you always have an option of rolling that into something else down the road.
 
SEP contributions are the lesser of 20% of 1099 net profit or $54k. Individual 401k contribution is up to $18k as employee (and can be Roth) and 20% of net profit from 1099. Easier to increase contributions in an Individual 401k and can contribute to a Roth.
You can't double dip employee contributions for the W2 job and the 1099 job.
 
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So if I max out my contribution to the 401k I can still put in 25% of my PRN money into a SEP?

PRN is 1099 money.
 
Indeed. Even though you've maxed out your 401k, the SEP is still an option with 1099 income. There are limits on how much you can put into the SEP, but if it's just "prn money," I doubt you'll reach the limits.
 
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Thank you. It seems that sep is a good idea.

From what I understand, I can put up to $54000 in an SEP, although I have maxed out my 403b and 457 with a total of 53000 in my regular job. And that it can only be 20% of the 1099 earnings.


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Thank you. It seems that sep is a good idea.

From what I understand, I can put up to $54000 in an SEP, although I have maxed out my 403b and 457 with a total of 53000 in my regular job. And that it can only be 20% of the 1099 earnings.


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Yeah, even though a lot of places quote 25% as the limit, I do believe in your current situation you would be limited to 20%. It's best to wait until the end of the year to find out exactly how much 1099 income you have and then have your accountant advise you just how much you can put into the SEP when it comes to tax time.
 
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Thank you. It seems that sep is a good idea.

From what I understand, I can put up to $54000 in an SEP, although I have maxed out my 403b and 457 with a total of 53000 in my regular job. And that it can only be 20% of the 1099 earnings.


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If you have a solo 401k, you have still put in the employer contributions (20% of net earnings) even with your 403b/457 contributions. And you still have the ability to put $5500 into your backdoor roth IRA.
 
W2 401k
- 18k employee contributions
- 36k employer contributions

1099 Solo 401k
- 20% net earnings pre-tax

I believe this is the best that you can do..
 
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W2 401k
- 18k employee contributions
- 36k employer contributions

1099 Solo 401k
- 20% net earnings pre-tax

I believe this is the best that you can do..
Agreed, though the Solo 401k could also be in the form of a SEP-IRA.
 
And with a 401k, you don't have to pay to convert it.
Just curious; if you invest into a 401k pretax then convert it to a Roth without paying taxes, when would you pay taxes? Surely, you can't invest pretax, let it grow tax free and then take it out tax free? If you can, then I've missed something for sure.
 
Just curious; if you invest into a 401k pretax then convert it to a Roth without paying taxes, when would you pay taxes? Surely, you can't invest pretax, let it grow tax free and then take it out tax free? If you can, then I've missed something for sure.

Why convert to a Roth? Some 401k plans have Roth options and some will allow for in plan conversion, but at your current tax rate as an attending, why would you want to do that?
 
Why convert to a Roth? Some 401k plans have Roth options and some will allow for in plan conversion, but at your current tax rate as an attending, why would you want to do that?
I agree, I wouldn't. Unless you could somehow convert it pretax, let it grow without taxes and take it out with no taxes which I thought you were alluding to. I don't think you can do that.
 
I agree, I wouldn't. Unless you could somehow convert it pretax, let it grow without taxes and take it out with no taxes which I thought you were alluding to. I don't think you can do that.

No, I was just recommending not doing a SEP and just doing the solo 401k. That preserves the backdoor Roth option. Plus if you select the right company, you can move any traditional ira, Sep, or other similar funds there to protect against the pro rata rule.

I don't know of any way to put pretax money and convert it tax free for tax free withdrawals later.
 
Or you could just start with a 401k and leave it there. No need to convert to a Roth.
The only advantage the SEP offers is simplicity. I'd say go 401k all the way, because you can maximize contributions more easily, it's easier to roll over, and they tend to have more legal protection, but if you're lazy you can do SEP>401k down the line when you're feeling more motivated>Roth
 
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No, I was just recommending not doing a SEP and just doing the solo 401k. That preserves the backdoor Roth option. Plus if you select the right company, you can move any traditional ira, Sep, or other similar funds there to protect against the pro rata rule.

I don't know of any way to put pretax money and convert it tax free for tax free withdrawals later.
Got it, I think we're on the same page. When you said, "And with a 401k, you don't have to pay to convert it" I thought you were implying that you don't have to pay to convert it to a Roth when you were actually saying, "Keep it in the 401k, no need to convert it to a Roth." My fault there.

My thought on the whole Roth thing was if you're in the highest tax bracket, then maximize pretax contributions. If you still have money to put away, then do the Roth. If you are not in the top tax bracket, then I'd consider the Roth option.
 
Just curious; if you invest into a 401k pretax then convert it to a Roth without paying taxes, when would you pay taxes? Surely, you can't invest pretax, let it grow tax free and then take it out tax free? If you can, then I've missed something for sure.
You leave the 401k money alone and do backdoor Roth with other money.
 
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The only advantage the SEP offers is simplicity. I'd say go 401k all the way, because you can maximize contributions more easily, it's easier to roll over, and they tend to have more legal protection, but if you're lazy you can do SEP>401k down the line when you're feeling more motivated>Roth

When I set up the solo 401k at Fidelity, it really was not difficult at all. Only a small amount more work than setting up an IRA.
 
So the best way to retire fast is to get a W2 job with good retirement benefits but fewer hours for somewhat less pay, and use the rest of the time to do locum?
 
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