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The Roth IRA: Why Doctors (Especially Residents and Fellows) Should Consider Contributing When Eligible

A Roth IRA is a powerful tax-advantaged retirement account that allows your money to grow tax free, potentially for decades, and then withdraw funds tax free at retirement age. The key to this retirement account is that (when you are eligible) you can make contributions with after-tax dollars, up to the annual contribution limit, and then that money and its growth are exempt from taxation forever. This makes it a great investment account for residents and fellows, who generally fall into low tax brackets during training, and have decades for their money to grow tax free. Therefore, we often see members of our physician communities responding to personal finance questions from trainees encouraging them to contribute and invest through a Roth IRA if they happen to be in a position where they can save money from their trainee income. It’s important to know that the IRS restricts eligibility on investing in a Roth IRA based on your income. This can limit many full-time practicing attending physicians from contributing directly to a Roth, though there is a completely legal tax loophole we’ll cover below to still get money into these accounts, as well as other options for attending physicians to contribute to Roth accounts. Below, we’ll cover the advantages to a Roth IRA, the contribution limits, and income restrictions. 

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The basics doctors should know about the Roth IRA

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What is a Roth IRA and how is it different than non-Roth retirement accounts? The basics for doctors

A Roth IRA (Individual Retirement Account) is a tax-advantaged retirement plan. However, unlike many retirement plans at work that don’t have a Roth option within them, contributions to a Roth accounts are made in after-tax dollars, which means you won’t lower your tax bill in the year of contribution. In other words, you will pay income taxes on that income that is contributed to the Roth for the year. Instead, the tax advantage to the Roth IRA (and all Roth accounts) is that all contributions you make grow tax free and can be withdrawn tax free. Once you reach the set retirement age determined by the IRS (currently 59 ½ as of 2024), you can withdraw funds without paying taxes in retirement once the account has been open for five years. Again, this is also unlike other non-Roth retirement accounts that were paid with pre-tax, or untaxed, dollars and for which you had received a reduction in taxable income in that year, but for which you have to pay taxes on money that is withdrawn or distributed later.

Note that with a Roth IRA, while you are able to withdraw your contributions that you’ve made without income tax or penalties, any growth withdrawn earlier than the allowable age is subject to your marginal income tax rate and an additional 10% early withdrawal penalty, so we don’t recommend this!

Learn more about marginal tax brackets in our physician’s guide to understanding taxes.

What are the advantages to contributing to a Roth IRA as an early career physician, especially as a resident or fellow?

We all know that for most physicians, money is tight during training. However, this is also one of the few times in a doctor’s life that they may get a tax refund. Since you’re not making much money, you are in a very low tax bracket relative to that which you will be during your attending life. Depending on how much wealth you accumulate and where tax brackets stand at the end of your career (we’re currently at historically low tax brackets in 2024), you are also potentially in a lower tax bracket than you will be in during retirement as your investments spit out gains.

Therefore, if you’re fortunate to be able to save enough money to contribute to your Roth IRA during training, in many cases you’d rather pay taxes on the money now, and then allow it to grow tax free, and not have to pay taxes when you take the money out. Given the time frame that this has to grow between training and retirement age, getting the power of that growth compounding tax free for several decades is incredibly powerful and will expedite your pathway to physician financial independence.

There are also more benefits to having money in Roth accounts. 

While traditional IRAs have required minimum distributions (RMDs) once you hit retirement that force you to draw down on your account balance so that Uncle Sam can get his taxes, you’ve already paid your taxes on a Roth IRA, so they don’t care as much. With a Roth IRA, there is no requirement to take withdrawals regularly from your account, except for inherited Roth IRA accounts. Therefore, you can continue to allow them to grow tax free until you need to access them.

If you have a comprehensive financial plan and don’t plan on needing all your Roth IRA contributions during retirement, it can be a great estate planning tool as well. If you pass your Roth IRA onto your heirs, their withdrawals from it will also be tax free, so long as the account is 5 years old. There are more specifics to these rules, such as that assuming someone passed away after 2020, the distributions have to be taken by the beneficiary within 10 years. If you are in this situation, please look up the specific rules as there are more nuances or specifications depending on your relationship to the account holder, your age, etc.

While not an ERISA (Employee Retirement Income Security Act) plan, in many states, Roth IRAs offer some protection from creditors, so they can also be a part of your physician asset protection planning as well. 

If you do need funds from your Roth IRA in retirement, you get them tax free. While your tax bracket may be lower in retirement and thus your tax obligations less, having tax-free funds in retirement can be a great way to balance withdrawals with your other taxable income sources to prevent climbing into higher marginal tax rates when your focus is on protecting your nest egg while you aren’t working.

The advantages of a Roth IRA for doctors

Why is having money in Roth accounts advantageous for many doctors, even outside of training?

In the prior section, we discussed why investing in Roth IRAs is a relatively straightforward decision for residents and fellows who are able to save extra cash and are looking to decide where to invest, assuming there are no other priorities or savings needed, or young attendings that can benefit from tax free growth for decades. But why is putting money into Roth accounts worth considering for other physicians as well? Presumably, these physicians are in higher tax brackets and are usually looking for tax deductions and tax relief in the moment. 

As we stated above, all growth in Roth accounts is earned and withdrawn tax free, unlike other accounts where growth is taxed when you withdraw funds. From a tax strategy and estate planning standpoint, Roth accounts can start to look very attractive for many high income earners because of the tax advantages and the lack of required minimum distributions. Some examples:

  • Physicians who have enough income from other sources in retirement (pensions, real estate, other income streams) that they don’t need the money from their retirement accounts in retirement to live comfortably and would prefer continued tax advantaged growth

  • Physicians who don’t want to be forced to take required minimum distributions such as those required in traditional retirement accounts, as this will result in taxable income on funds they don’t need.

  • Physicians afraid that tax brackets may be higher in the future, as current tax brackets are at historical lows, especially if anticipate income streams that continue into retirement that would keep them in the higher tax brackets. 

  • Physicians looking to pass on these accounts tax free to their heirs as they don’t anticipate needing access to the account balances.

Therefore, when you reach the stage in your career where you’re heavily considering long term tax strategy and estate planning, you’ll start hearing not just about the backdoor Roth, but also the mega backdoor Roth, and Roth conversions. We cover these in a separate article, and when you may want to consider these.

Remember, Roth contributions are not always mutually exclusive from your other tax advantaged retirement accounts unless you have to choose between a Roth 401k and a traditional 401k, and even then you can choose to split the contributions.  Read that article for how to make the choice between the two accounts in this situation. 

Regardless, being able to invest in these accounts is still tax advantaged over putting money in a normal taxable account, so when given the option to get money that you don’t need to access until retirement or later into Roth accounts, you should consider it.

How much can you contribute to a Roth IRA?

You can make contributions to your Roth IRA throughout the year or in one lump-sum, but there is a limit on how much you can contribute for each tax year. For 2024, that limit is $7,000. There is also a catch-up contribution for individuals 50 and older that allow them to contribute up to $8,000. Most physicians at this stage in their career, however, are above the annual income limit and don’t qualify unless they’re already retired and contributing with their side gig income.

Your Roth IRA contributions can typically be made up to your tax filing deadline for that year’s  personal tax return. Make sure you correctly select which year you are making the contribution for when putting it in your Roth IRA in contributing for the previous year. (For example, making a 2024 contribution in 2025.)

An individual retirement account means that both you and your spouse can have separate Roth IRAs and can contribute to them both up to the annual limit each ($7,000 for you and $7,000 for your spouse). You don’t both need to have earned income to qualify, though you do have to have a household earned income. Note that you cannot contribute more to a Roth IRA than you show in income

Physician Side Gig or Business Perk: Many physicians choose to employ their children in their small business or side gig so that their children can also contribute to Roth IRAs. With an earned income, even minors can open and contribute to a Roth IRA, and benefit from many decades of tax free growth. This could be one of the best possible gifts to give your children from a financial standpoint, assuming that they qualify to contribute.

If you work and your spouse stays at home, or vice versa, you can open what is called a spousal IRA and still contribute to both your and your spouse’s annual contribution max with a household income, so long as you qualify with your income.

Annual income limit for Roth IRAs

2024 Roth IRA contribution limits for doctors

In order to qualify for a Roth IRA through a traditional pathway, your annual household income after adjustments (known as the modified adjusted gross income or MAGI) must be below certain thresholds. The 2024 income limits are noted above.

Your tax filing status determines the income restriction. You’ll note that individuals that are married filing separately typically have a harder time contributing to a Roth IRA.

Many practicing doctors find themselves quickly ineligible for a Roth IRA due to their income as an attending. This is one of the reasons why we recommend, when at all possible, that residents and fellows contribute to their Roth IRA while their income is below the Roth income thresholds.

The good news is that if you are part of the majority of physicians who cannot directly contribute to a Roth IRA, there is a completely legal tax loophole that still allows you to have the Roth option with an IRA called the Backdoor Roth IRA.

This is a little more complex and requires additional reporting and recordkeeping with your tax return. There are also potential tax implications if you have pre-tax dollars in other IRA accounts, so make sure you understand the process before setting up a Backdoor Roth IRA.

Learn more about Backdoor Roth IRAs.

Roth IRA conversions are also a potential route to having a Roth IRA. With a Roth conversion, you move some or all of your traditional retirement savings into a Roth IRA. Note, though, that this will cause a tax bill in the process.

Investing within a Roth IRA

With an employer-sponsored plan like a 401(k) or 403(b), your employer picks the plan provider. That provider dictates the investing options available to you, and those funds have set fees and expenses. Not all employer-sponsored plans are created equal with their funds and fees.

With a Roth IRA, you’re able to select where you want to open your Roth IRA, such as companies like Fidelity or Vanguard. These companies often offer vastly larger options of investment securities for your contributions. Fees can be less too, especially if you avoid actively managed funds. While compounding interest works in your favor in terms of growth, it can work against you in terms of fees eroding your contributions and growth over time, so having a wide range of investing options can be another advantage of your self-guided Roth IRA.


The Roth IRA can be a great part of your retirement and financial planning, especially early in your career as a resident or fellow before you receive an attending salary that surpasses the income thresholds for contributions. Once you’ve transitioned to practice and cannot directly contribute to a Roth IRA, you still have a few options to have Roth IRA funds, including the Backdoor Roth IRA which is popular for doctors. Maxing out your Roth IRA or Backdoor Roth IRA every year can be a great financial strategy for most physicians.

If you need guidance on what to invest in within your Roth IRA, check out some of our retirement resources for physicians below. 

Additional retirement resources for physicians

Learn more about:

Visit our financial advisor database if you need help assessing your specific tax strategy and potential tax implications of a Backdoor Roth IRA.

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