Clear Aligners

As a resident you probably don’t have too much money to play around with. That being said, don’t forget that you should start saving for retirement if you haven’t done so already. After all, your college friends who went into finance and tech had a huge start ahead of you. But don’t sweat it! It’s not too late. Below are the major differences between the basic retirement accounts.

Roth IRA

Contributions: Post-tax
Grows: Tax-free
Distributions: Tax-free
Contribution Limit: Total between Roth IRA and Traditional cannot exceed $5,500/year ($6,500 if over the age of 50)
Required Minimum Distributions: None

Traditional IRA

Contributions: Pre-tax
Grows: Tax-deferred
Distributions: Principal and earnings are taxed
Contribution Limit: Total between Roth IRA and Traditional cannot exceed $5,500/year ($6,500 if over the age of 50)
Required Minimum Distributions: Starts at age 70½

401k/403b

Contributions: Pre-tax
Grows: Tax-deferred
Distributions: Principal and earnings are taxed
Contribution Limit: $18,000/year ($24,000 if over the age of 50)
Required Minimum Distributions: Starts at age 70 ½

Health Savings Account (HSA)

Contributions: Pre-tax
Grows: Tax-deferred
Distributions:  Tax-free (if spent on qualifying healthcare expenses)
Contribution Limit: $3,400/year ($4,400 if over the age of 55)
Required Minimum Distributions: None

When funding retirement accounts, there are a couple of rules to follow. First, if you are lucky enough to have an employer match for your 401k or 403b, contribute there up to the match. After all, an employer match is  free money that you should not pass up! Second, seeing as how dental and medical residents most likely don’t have an employer match, your next best bet is the Roth IRA. In my opinion, one of the smartest financial decisions you can make as a resident is to max out your Roth.  By doing so, you’ll be putting away after-tax money while in a low tax bracket as a resident. Chances are, you’ll probably never find yourself in this tax bracket again!

Have any tips on where to start with basic retirement accounts? Does your hospital have an employer match? Are you able to save anything for retirement as a resident? Comment below!

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