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Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
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For most physicians, the retirement savings advice is simple: you're in a high bracket, so max out your pre-tax accounts. Your 403(b), 457(b), 401(k), and maybe a cash balance plan all get funded, year after year, for two or three decades.
It's good advice. But it comes with a bill that doesn't arrive until your 70s. Once required minimum distributions begin, the IRS forces money out of those accounts every year, and every dollar is taxed as ordinary income. For physicians with large pre-tax balances, that can mean paying as much tax in retirement as you did while working. We call it the RMD tax bomb.
The good news: it's one of the most plannable problems in retirement. This guide covers how RMDs work, how to tell whether you have a problem, and five pre-retirement planning moves that can shrink the bill, including Roth conversions for physicians and protecting yourself from sequence of returns risk.
A required minimum distribution (RMD) is the minimum amount the IRS requires you to withdraw each year from pre-tax retirement accounts once you reach a certain age. You got a tax break when the money went in. RMDs are how the IRS eventually collects its share.
Roth IRAs have no RMDs for the original owner, and since 2024, Roth 401(k) and Roth 403(b) accounts no longer require them either.
Under the SECURE 2.0 Act, your RMD starting age depends on your birth year:
For most physicians currently in mid-career or late career, that means age 75.
Your RMD is based on two factors: your prior year-end pre-tax balance and your age. The IRS divides your balance by a life expectancy factor, so the required percentage climbs every year.
So a physician with $3 million in pre-tax accounts at age 75 would need to withdraw roughly $122,000 that year, all of it taxed as ordinary income. For more examples by account size, Kiplinger breaks down the RMDs on a $2.5 million balance at 73, 75, 80, and 85.
Pre-tax contributions don't save taxes. They defer them. That deferral is a great deal when you contribute at 35% and withdraw at 22%. It's a much worse deal when large balances force you to withdraw at the same rate you contributed.
Physicians are especially exposed for three reasons:
Consider a hypothetical married physician couple. They retire at 65 with $4 million in pre-tax accounts, a modest taxable account, and very little in Roth. They live on taxable savings for a few years and leave the pre-tax money alone.
Now look at the years between 65 and 75. While they lived on taxable savings, their taxable income was low, often in the 12% or 22% bracket. That stretch is the retirement tax valley: low taxes after you stop working, then a steep climb once RMDs begin. Those low-bracket years are the single biggest opportunity in this entire plan, and most physicians let them pass without acting.
Example is hypothetical, rounded, and based on 2026 tax brackets for illustration only.
Not every physician needs to worry. RMDs start at roughly 4% of your balance, which is close to a common sustainable withdrawal rate. If your planned spending already requires that much income, your RMD may simply fund the retirement you intended.
You're more likely to face an RMD tax bomb if any of these apply:
If you checked two or more, the rest of this guide is worth a careful read.
These moves build on each other. A projection tells you whether you have a problem. Roth conversions are the main fix. Flexible savings buckets make conversions possible. Smart sequencing protects the plan from bad market timing. And an updated estate plan makes sure the strategy carries through to your family.
You can't fix a problem you haven't measured. A good retirement projection estimates your pre-tax balance at RMD age, the resulting distributions, and your tax bracket every year from retirement through your 90s.
A useful projection includes:
This is the one area where even confident DIY physicians benefit from a second set of eyes. The math isn't hard, but the number of moving parts is, and errors compound over decades. On the podcast, Tyler, an Enrolled Agent who works in this world daily, said he plans to hire help for his own decumulation planning. A one-time or hourly review can be enough.
The same caution applies to AI tools. They're great for learning concepts and preparing questions. But if you can't independently verify a projection's output, you shouldn't make irreversible decisions based on it.
A Roth conversion moves money from a pre-tax account into a Roth IRA. You pay income tax on the converted amount that year, and the money then grows tax-free with no RMDs.
The goal is to pay tax at today's lower rate instead of tomorrow's higher one. As Tyler put it on the show: we don't time the market, but we do time Roth conversions.
The best conversion windows for physicians include:
How to size a conversion: Most strategies convert just enough each year to "fill up" a target bracket, such as the top of the 22% or 24% bracket, without spilling into the next. Spreading conversions across several years usually beats one large conversion.
Watch for these side effects:
For more on why Roth dollars become so valuable later in life, see this guide on why Roth accounts matter even more in retirement.
A Roth conversion creates a tax bill on purpose, so you need a way to pay it. The best source is cash or a taxable brokerage account.
Avoid withholding the tax from the conversion itself. That shrinks the amount that reaches the Roth and undercuts the strategy. Paying from another IRA adds more taxable income, and pulling from a Roth defeats the purpose.
That's why tax diversification matters throughout your career:
An advanced tactic: Taxable accounts generate long-term capital gains (taxed at 0%, 15%, or 20%) and potentially the 3.8% Net Investment Income Tax. If you have a multi-year conversion runway, consider alternating years: convert in some years and realize capital gains in others. You can also convert late in the year and sell taxable assets in January to pay the bill, keeping the gains out of the high-income conversion year.
Tax-loss harvesting during your working years helps here too. Banked losses can offset gains you'll realize later. For more ideas like these, see these year-end tax strategies for high-income households.
Sequence of returns risk is the danger that a major market drop just before or after you retire permanently reduces how long your savings last. A 30% decline is far more damaging when you're withdrawing than when you're still contributing.
The highest-risk window is roughly three to five years on either side of your retirement date. To manage it:
Your RMD strategy is also an estate strategy. Before retirement, review:
Be honest about your legacy goals. If you plan to leave significant assets to your children, Roth conversions do double duty. They reduce your own RMDs and give your heirs tax-free money instead of a 10-year tax bill.
RMD planning isn't only for physicians nearing retirement. The earlier you start, the more options you have.
RMDs start at age 73 if you were born between 1951 and 1959, and at age 75 if you were born in 1960 or later.
Yes. Governmental 457(b) plans are subject to RMDs, just like 403(b) and 401(k) plans.
The most effective strategy is converting pre-tax money to Roth during lower-income years before RMDs begin. Building Roth and taxable savings during your career also helps. Once eligible, qualified charitable distributions (QCDs) can satisfy RMDs without adding to taxable income.
Generally, no. Paying from cash or a taxable account keeps more money growing tax-free in the Roth.
It's the risk that poor market returns early in retirement permanently reduce how long your savings last, because you're withdrawing while values are down.
This post is based on Part 1 of our pre-retirement mailbag series, where we answer a listener's question about the late-career playbook. In Part 2, we cover drawdown strategies like QCDs and QLACs, which accounts to pull from first, and the most common pitfalls we see. Looking for more tools and recommendations? Check out our Best of the Best resources page.
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
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