Posted on: October 24, 2018 by Chuck Krugh, CFP
Most mid-career physicians have a pleasant problem: They make too much money to make tax deductible contributions to IRAs, and may be ineligible to contribute to Roth IRAs altogether. That leaves your employers’ 401(k) or 403(b), if you’re a W-2 employee, and maybe a non-qualified retirement plan that is potentially subject to forfeiture.
What if you wanted to make extra income so you can fund your own real estate SEP IRA, self-directed SEP IRA or a possible 401(k)? This would be over and above your retirement contributions through your place of employment?
Well, you can. Physicians have a number of options for generating substantial additional income – which is then available to pay down medical school debt or fund a self-directed SEP IRA or solo 401(k) plan.
Furthermore, unlike your employer’s plan, you can control this one. You can select the investments. Your employer’s HR department isn’t going to tell you what you can and can’t invest in. You can take your self-directed SEP or solo 401(k) contributions and invest them in direct ownership of real estate, gold and silver, hedge funds, tax liens and certificates, private lending, financing equipment purchases at other doctors’ practices (just not your own, or your spouse’s, if either of you, your parents, grandparents, children or grandchildren control more than 50 percent of it) and many other alternative asset classes.
For doctors, you’re killing two birds with a single stone:
You can diversify your source of income as well as add diversification to your retirement portfolio.
Here are several lucrative income sources for doctors that can help generate money to invest within a self-directed SEP IRA or solo 401(k):
Telemedicine. With the modest investment of a few hundred dollars in AV equipment and some space in a home office, you can make yourself available for telemedicine consults and exams. You can do it on your schedule, and even expand your working hours by seeing patients in other time zones. About 60 percent of large employers now cover telemedicine under their employee medical plans, and this is a rapidly growing industry that is disrupting many traditional office practices.
Expert witness testimony. Doctors are in frequent demand by both plaintiff and defense attorneys, and are in constant demand in subrogation law for file reviews, sworn depositions and trial testimony. According to SEAK.com, the average fee for file review and reporting duties as an expert medical witness is around $350 per hour, and fees go up to $500 per hour, on average, for depositions and in-court testimony.
Independent Medical Examinations. Doctors are in frequent demand to conduct independent medical examinations as part of workers compensation or disability investigations, disputes or claim verification. Fees for an independent medical examination and report now average $830, according to SEAK.com, with fees for more complex cases running up to $1350.
File review. Doctors are also in high demand by a variety of organizations that simply need them to review files and provide a medical opinion. For example, disability insurance companies want to confirm or deny that a claimant genuinely meets their definition of disability to qualify for benefits. Medical insurance companies want a professional opinion on whether an expensive treatment is medically necessary. Workers compensation officials need a physician’s input on whether a claimant is genuinely unable to return to work as a result of an employment-related injury or illness.
Generally, files are delivered entirely electronically – meaning you can generate extra income from home, on your own time.
And the income will be noticeable. Many physicians make more than enough extra income from supplemental sources of income to fund their self-directed SEP IRAs or solo 401(k)s.
SEP IRAs allow you to set aside up to 25 percent of qualifying income, up to $52,000 per year, while 401(k)s potentially allow you to set aside up to $55,000 (or up to $61,000 if you are age 50 or older.
All that money grows tax-deferred, or if you set up a Roth solo 401(k) option for yourself, may grow tax-free.
About American IRA, LLC
American IRA is a prominent provider of third-party administration services for self-directed retirement accounts, including IRAs, 401(k)s, SEPs, SIMPLE IRAs and even health savings accounts and Coverdell education savings accounts. These exciting self-directed retirement accounts allow our clients to combine the advantages of tax-favored investment accounts with the diversification benefits and potential superior returns of alternative investment classes not normally offered by conventional 401(k) vendors and other investment companies.
For more information, or to get started setting up an account for you and start putting your supplemental and self-employment income to work, call us today at 866-7500-IRA(472), or visit us online at www.americanira.com.