W-2 hospital income, 1099 and locums work, a spouse's real estate, and the retirement vehicles that a side entity opens.
Most physicians are paid like executives and taxed like them: a large W-2, withholding that takes the money before it lands, and a hospital retirement plan that caps out long before the income does. The ones with 1099 shifts, locums work or a directorship on the side have the beginnings of a plan and usually do not know it.
The levers sit around the paycheck rather than inside it. Independent-contractor income routed through an entity opens a solo 401(k) or a defined benefit plan the hospital plan cannot match. Real estate held by the household, with a spouse who qualifies for Real Estate Professional Status or a short-term rental with material participation, turns depreciation into deductions against wages. Backdoor Roth contributions, HSA maximization and the timing of signing bonuses and deferred compensation fill in the rest.
We review three years of returns and every income source, model each lever in your bracket, and write the plan with the documentation each strategy needs.
What we typically see: 1099 income reported on a Schedule C with nothing planned around it. A 403(b) treated as the ceiling. Rental losses suspended. A signing bonus taxed in the worst possible year.
Each one is modeled against your numbers and written into the blueprint with the documentation it needs.
The locums income had been going on a Schedule C for four years. Moving it into an entity with a plan changed what the side work was for.
More than most physicians hear. Household real estate, deferral elections, a side entity for any 1099 work and charitable structures are the usual levers. The review shows which apply.
Usually once it is large enough for the payroll cost to be smaller than the self-employment tax saved, and always if you want a retirement plan attached to it.
If they spend more than 750 hours a year in real property trades in which they materially participate, and more time there than in any other work, documented as it happens.
It depends on age and the side income that funds it. Contributions well above the 401(k) limit are common for physicians in their forties and up. The actuary sets the number.
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