Tax Conscious Investing

While they do exist, it is rare to find physicians who are also tax professionals. The nature of the progressive income tax system requires physicians to be extra careful on how they save and file their tax returns. Mistakes can be subject to a 50% penalty for up to three years where income is not reported correctly.

Take a look at the list below and see if any of them would be applicable to you. They may signal the need for an income tax assessment to address your tax burden and verify you are not overly exposed to an income tax audit.

• You have excess cash flow that could be sheltered from additional taxation
• Your employer-sponsored retirement plans are limiting how much you can save each year
• Your retirement plan is primarily comprised of contributing toward the employer-sponsored program and you may not have much additional funding available to save for retirement.
• You have a significant amount already accumulated within a pre-tax retirement plan or down the road you will. Therefore, you’ll need to minimize the impact of 100% of your distributions being subject to the ordinary income tax which is the highest rate.

Tax-deductible contributions

Tax-deferred earnings

Tax-advantage withdrawals and/or income

No required withdrawals

No IRS penalties for early withdrawals

No contribution limits

No administrative fees

Potential competitive rate of return

Ideal Investment

Non Existent

Taxable

Brokerage Account

Pre Tax

401(k), 403(b),
457(b), Traditional IRAs

Post Tax

Roth 401(k), Roth 403(b),
Roth 457(b), Roth IRA

Tax Efficient

Private Pension