Case Study: A Physician's Retirement Account Stacking Plan
Client snapshot (illustrative composite)
- Profession
- W-2 hospital physician + 1099 locum tenens shifts
- Household income
- ~$540,000/year combined
- Age
- 47
- Starting savings
- Maxing hospital 401(k) only, nothing else structured
The situation
Dr. Alvarez earned a W-2 salary from her hospital employer plus a steady stream of 1099 income from weekend locum tenens shifts at a second facility. She was maxing her hospital's 401(k) and assumed that was the extent of what was available to her — she'd never set up a structure around the 1099 income at all, and it was simply landing on her Schedule C every year with a large tax bill attached.
What we did
- Set up an S-corp for the locum tenens income and elected a reasonable salary, converting the rest to distributions not subject to self-employment tax
- Opened a Solo 401(k) for the S-corp and layered a mega backdoor Roth contribution on top of the standard employee deferral
- Continued annual backdoor Roth IRA contributions for both spouses, since their combined income was well above the direct Roth contribution limit
- Layered a cash balance plan on top of the Solo 401(k) once she confirmed the locum income alone could support the actuarially required contribution
The numbers
Dr. Alvarez's illustrative annual retirement contributions
The result
The locum tenens income, which had felt like "extra income that just gets taxed hard," turned out to be the exact income that unlocked the most retirement capacity, because it was 1099 and could be run through its own S-corp and plan structure independent of her hospital job. The cash balance plan contribution was sized to what the locum income alone could reasonably support for several years running — not backed into as a one-time maximum.
Have both W-2 and 1099 income and only using one retirement account?
We'll map out how much additional capacity your 1099 income could unlock before you leave it on the table another year.
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