Retirement Fund Options for Locum Tenens Clinicians
Locum tenens doctors are self-employed contractors who may or may not work through staffing agencies like TIVA. As such, it is not uncommon for locums to be responsible for their own retirement plans. Visit: https://www.tivahealthcare.com/locum-tenens/
Locum tenens doctors are self-employed contractors who may or may not work through staffing agencies like TIVA. As such, it is not uncommon for locums to be responsible for their own retirement plans. Visit: https://www.tivahealthcare.com/locum-tenens/
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<strong>Retirement</strong> <strong>Fund</strong> <strong>Options</strong> <strong>for</strong> <strong>Locum</strong> <strong>Tenens</strong> <strong>Clinicians</strong><br />
<strong>Locum</strong> tenens doctors are self-employed contractors who may or may not work through staffing agencies like TIVA. As<br />
such, it is not uncommon <strong>for</strong> locums to be responsible <strong>for</strong> their own retirement plans. The good news is that there are<br />
options. If you are a locum tenens clinician planning to make a career of locum work, you should start thinking about<br />
retirement options as early in your career as possible.<br />
This post will discuss several different retirement fund options. As always, locums should make a point of consulting<br />
financial professionals be<strong>for</strong>e making any retirement decisions. A certified financial planner, estate planner, or other<br />
recognized financial expert is the most qualified to give sound advice.<br />
Individual <strong>Retirement</strong> Accounts (IRAs)<br />
The most common retirement fund <strong>for</strong> self-employed individuals is the individual retirement account (IRA). The federal<br />
government introduced IRAs to the general public by way of the Employee <strong>Retirement</strong> Income Security Act of 1974. The<br />
purpose of the legislation was specifically to give people a way to save <strong>for</strong> retirement outside of traditional pensions.<br />
Among locums, the three most common IRA choices are:<br />
<br />
<br />
<br />
Traditional – A traditional IRA is a tax-deductible savings vehicle that allows people to put away a certain<br />
amount of money every year out of pretax income. Traditional accounts earn a certain rate of return. At<br />
retirement, the recipient pays income tax on all money withdrawn.<br />
Roth – The Roth IRA is similar to the traditional with one notable exception: money contributed is still counted<br />
as taxable income in the year it is earned. The advantage here is that withdrawals are not taxed.<br />
SEP – The SEP IRA is a specialized kind of IRA that acts more like a pension than a savings account. It normally<br />
allows <strong>for</strong> more generous contributions and lower setup and maintenance costs.
Solo 401(k) Plans<br />
A second option <strong>for</strong> locums is the solo 401(k) plan. These plans are similar to SEP IRAs in that they are simple and easy to<br />
set up and come with low overhead costs. The advantage of this sort of account is that it gives locums a broader range<br />
of investments to work with. The downside is that investing in a solo 401(k) requires locums to be a bit more involved in<br />
making investment decisions.<br />
Defined Benefit Plan<br />
The third option is the defined benefit plan, known as a Keogh plan, which was designed <strong>for</strong> self-employed individuals. It<br />
is not all that common among locum clinicians because there are restrictions involved. For example, a locum could not<br />
use the defined benefit plan if his or her legal status is that of independent contractor. He or she would have to set up<br />
and register a small business and then employ him/herself be<strong>for</strong>e a defined benefit plan would be allowed.<br />
Those locums who do go to the ef<strong>for</strong>t of establishing a legally recognized company may find the defined benefit plan a<br />
lot more attractive than the other option. That’s because a defined benefit plan is essentially a pension. The doctor’s<br />
company contributes a certain amount to the plan along with the doctor, generating benefits that are guaranteed at<br />
retirement.<br />
Start Saving Now<br />
Regardless of the choices individual locums make, the main take away from this post is that locum doctors and should<br />
start saving now. Putting off retirement saving until a future date makes it too easy to never save at all. You’ll also<br />
capitalize on compound interest, which will add more to your account each year. <strong>Locum</strong>s need to commit to saving<br />
retirement from the start, in the knowledge that they are self-employed workers with no other retirement option<br />
available.