2009 401k limits increase, IRA limits the same

[disneysteve]

I'd put $5k in ROTH first, the advantage is that I can take out my contributions penalty free. A flexibility people can utilize in tough financial situations.

Do others agree?

The standard advice is to first fund a 401k to get the full company match if there is one. It makes no sense to pass up a free and guaranteed 50% return on your investment. Then fund the Roth. Then go back to the 401k.

[MonkeyMama]

Here are two references

http://www.irs.gov/pub/irs-pdf/p560.pdf

(does section on common law employee fit what you do?)
Would a simple IRA work?

Small Business Retirement Plans - T. Rowe Price

Again I might refer you to section on Simple IRAs.

Um yeah, you'd have to be self-employed. Clearly Steve does not qualify for any of these.

I've already had this talk with Steve. I can not believe his employer does not take advantage of retirement plans, and I have told him so much. But we all make our choices. I am not offered health insurance but I get so much more from my job (large retirement benefits, good pay and lots of flexibility). I think he likes his job and is okay with it.

I agree from the standpoint of "What is his employer thinking?" Particularly since I am a CPA and small medical practices are my niche.

But I just had to add that I find it kind of funny just because Steve is a Doctor the perception that he can not just be a regular old employee. ???

I just had to chime in because the way this thread had turned struck me as funny, for that reason.

[disneysteve]

Unfortunately, doctors aren't reknowned for being good businessmen. It is a different skill set than being a good doctor. My employer certainly meets that description. He is fine taking care of the practice but in the personal finance department, he is the typical American - limited savings, living beyond his means, etc.

He is 4 years older than me, so has been in practice 4 years longer than me, and is still repaying student loans. He borrowed a similar amount to me but I repaid mine a few years ago. To be fair, his situation was complicated by a divorce along the way, but he hasn't done anything to make things better. I drive a Toyota Camry that I bought used just over 10 years ago. He leases his cars (I know there are business deductions he can take, but still) and not cheap ones either. During the 8 years I've worked for him, he's had 3 BMWs and currently has a Denali. He shops online constantly, often returning purchases or even giving things away if he gets them and finds he doesn't like them. New movie out on DVD - he buys it. He must have hundreds. When he gets tired of having them, he gives them away. He lives in an apartment, but owns a beach house and owns the building our practice is in. We only use the first floor. He could renovate and rent out the 2nd floor and the basement, but it's been years and he hasn't done it. So he's losing the potential income from those spaces.

As for a retirement plan, he's looked into it in the past and didn't want to pay the set-up and maintenance fees. In reality, I'm probably the only employee who would use the plan. He can afford to, but likely wouldn't. The non-physician employees all live paycheck to paycheck so they likely wouldn't either. I don't see him starting a plan just for my benefit.

[zetta]

Steve,
I'd be curious to hear why you prefer to stick with this employer instead of finding another one that offers better pay and benefits or opening your own practice.

[disneysteve]

Steve,
I'd be curious to hear why you prefer to stick with this employer instead of finding another one that offers better pay and benefits or opening your own practice.

I like my job. It is close to home. The hours are good and reasonably flexible when I need them to be. The pay is good and I'm treated very fairly, something that wasn't true at my old job. I like the people I work with. And other than the lack of retirement plan, the benefits are all I need. The practice covers my health insurance, all of my licensing fees, my malpractice insurance and my continuing education courses. There are periodic opportunites to make extra money from side businesses beyond the regular practice. And I get free use of the beach house based on availability .