Independent medical professionals maximize retirement assets using DB plans.
Rick has found the locum tenens life to work better for himself. A DB plan will work well, too.
Rick is a medical doctor who wasn’t ready to retire but was tired of running a practice, so he crafted his mid-life career as a medical “temp,” which in that profession (unsurprisingly) gets a Latin name: Locum Tenens.
Rather than look for patients and pay for an office and employees, he hires himself out through a staffing company. Many agencies specialize in matching doctors with hospitals and other health services providers that need temporary staffing to cover for doctors who take vacation or leave.
The assignments can last two weeks or multiple months, depending on the hospital’s need, and there is steady work for doctors who don’t mind traveling to new cities for each assignment.
Locum tenens doctors can be well paid, with some specialties like radiology and orthopedics earning $1,500 a day.
Why are locum tenens doctors great candidates for DB Plans?
- They are independent contractors with no employees
- They are high-income earners
- They have few expenses or overhead, and so cannot shield as much current income as a doctor running a formal practice may
- They are in demand, and can rely on steady work to meet their annual DB plan contribution commitments
So our doctor, Rick, can accelerate his accumulation of retirement assets by making $100,000 annual deductible contributions based on his locum tenens income. After five years, he would have contributed more than $500,000 and deferred an estimated $200,000 in taxes. If he wants, he can add a one person 401(K) and put away as much as an additional $35,000 each year.
Here are some examples of doctors who may be earning locum tenens income, and who would be excellent candidates for DB plans:
| Average Annual Compensation | Currently work as locum tenens or independent contractor | Have worked as locum tenens doctor | Have not yet but may consider it | |
| Emergency Medical Specialists | $290,000 | 41% | 33% | 55% |
| Psychiatrists | $220,000 | 27% | 29% | 64% |
| Radiologists | $349,000 | 24% | 37% | 53% |
| Orthopedists | $401,000 | 20% | 21% | 68% |
| Anesthesiologists | $353,000 | 20% | 37% | 53% |
| Surgeons | $301,000 | 16% | 32% | 62% |
| OB/GYN | $266,000 | 15% | 23% | 69% |
Source: 2013 salary survey; locumtenens.com
These doctors are prime candidates for DB plans as high-income self-employed people, and they all need financial advice to connect them to all the available retirement and tax saving tools their locum tenens status provides them.
Get out and find these doctors. Finding a local placement agency that matches hospitals and locum tenens doctors would be a great place to start.
Be the advisor that helps these doctors make the most of their disposable income, converting a good percentage of it into retirement assets!