Money Mistakes Doctors Make in the First Five Years as Attendings

What money mistakes doctors make begin with timing

Your attending income can jump before your spending habits settle. Student loans, a first home, disability coverage, and a practice decision may all compete for the same monthly dollars. The order matters: a contribution that forces you to borrow for next month’s bills has not fixed the cash problem.

Write the monthly spending plan first. List take-home pay, loan payments, fixed costs, and the cash reserve you need; then decide what can go to retirement accounts. Annex Wealth Management starts with that sequence because a portfolio exists to fund spending, not to win a contest against the loan balance.

Most timing errors fall into three groups: acting before the numbers are known, acting after a deadline, or doing the right things in the wrong order. A practice purchase made before you know its monthly cost can tie up cash. A payroll election filed late can miss a plan deadline. A loan payment made ahead of a contribution can crowd out room that cannot be recreated after the plan year closes. Before any contribution, loan payment, or tax move with a deadline, put its cash cost and tax result on paper. Once the year ends, missed 2026 401(k) deferral room cannot be recovered.

Which age rules switch on while your income rises?

For 2026, the IRS employee deferral limit for eligible 401(k), 403(b), governmental 457, and TSP plans is $24,500; the age-50 catch-up adds $8,000, and ages 60 through 63 can use an $11,250 higher catch-up. The total defined contribution limit is $72,000, including employee and employer contributions. If prior-year FICA wages exceeded $150,000, the 2026 catch-up must be Roth, so confirm payroll treatment before setting the election.

Find your age row first, then check the wage row if you expect to make catch-up contributions. The table assumes an eligible defined contribution plan; employer rules can affect how contributions are calculated and when they must reach the account.

How much can waiting three years cost one doctor?

Farid, a hypothetical 51-year-old general dentist, sends $2,000 each month to his practice loan for 36 months before checking his retirement plan. He owns a four-chair practice set up as an S corporation; Siobhan, 49, runs the front office, and their child starts college in three years. They have $650,000 saved and a $400,000 practice loan.

The arithmetic is plain. Loan payments: $2,000 × 36 months = $72,000. Missed employee deferral room at the 2026 limit: $24,500 × three years = $73,500. Neither number includes investment growth or loan interest.

That comparison is not $73,500 of guaranteed growth versus $72,000 of loan savings. It is $73,500 of unused room in closed plan years versus $72,000 paid toward loan principal. Paying down the practice loan was not automatically wrong. Farid put a reversible debt payment ahead of an irreversible retirement opportunity without first checking the plan deadline, employer contribution, and practice cash reserve.

Three choices can fit different cash situations. Filling available salary-deferral room fits a physician with stable practice cash flow and a reserve that can cover bills. Splitting each month between deferral and loan reduction fits someone who wants to keep both moving, after confirming the plan’s payroll schedule. Preserving cash for college fits a household facing a tuition bill soon; it needs more paperwork before approval, including the tuition date, loan terms, plan rules, and monthly spending plan. Annex Wealth Management compares those same costs before treating the largest balance as the obvious priority.

Investments can lose value, and you may receive less than you invested. The account choice does not remove that risk.

What should you ask HR, the plan, or the custodian?

Ask HR whether the plan permits the full 2026 $24,500 deferral, the age-based catch-up, and Roth catch-up when prior-year FICA wages exceeded $150,000. Ask the plan administrator whether employer contributions depend on salary, each pay period, or year-end status, and whether a late start can be corrected.

Then check the custodian statement for any residency-era rollover IRA: is the money invested, is the beneficiary current, and could the account affect a planned IRA contribution? A vague “we do not know” about a deadline, employer formula, or correction process is a reason to request the official plan paperwork before moving money. Annex Wealth Management can review how those rules interact with your cash plan.

• Full 2026 deferral limit
• Age-based catch-up setting
• Roth catch-up payroll treatment
• Employer contribution formula
• Late-start correction process
• Rollover IRA investments and beneficiary

Which popular beliefs fail in the first five years?

“I’ll save once the loans are gone” sounds tidy, but three years of waiting can leave $73,500 of 2026-limit employee deferral room unused, even as the loan balance falls. Holding off until the practice loan is nearly paid has a price you can count: the contribution room for those closed years does not come back.

“The highest income year is the only year that matters” misses employer contributions, payroll limits, and tax elections that can apply during earlier attending years. Some choices have annual or pay-period deadlines, and the plan may not let you replace an election after the fact.

“The biggest account should get every new dollar” ignores the actual bills. Farid’s college date, practice-loan terms, monthly spending, and retirement rules all change the order. Annex Wealth Management checks the cash reserve and the plan terms before treating an account balance as a spending instruction.

When should two similar doctors choose differently?

Two physicians of similar age and savings can reasonably choose different next steps because their cash deadlines differ. Farid and a hypothetical hospital-employed anesthesiologist, both with $650,000 saved, may not have the same best use for this month’s income: Farid has a practice loan and a college bill three years away; the anesthesiologist may favor payroll deferrals if employment cash flow is steady and no tuition deadline is close.

Use age as a prompt, not a complete answer. Under age 50 brings no age catch-up; age 50 or older adds $8,000 in 2026; ages 60 through 63 can add $11,250. Required minimum distributions start at age 73, or at 75 for anyone born in 1960 or later, which covers Farid and most practicing physicians today. A required minimum distribution, or RMD, is an amount the IRS generally requires you to take from certain retirement accounts.

If more than one-fifth of your net worth sits in the practice or one stock, examine that concentration before adding more investment risk. If the cash reserve is thin, do not force a contribution that leads to new high-cost debt. A checklist cannot decide whether Farid should favor a cash balance contribution, college funding, or faster practice-loan repayment without the plan rules, tax return, and monthly spending plan.

What can you check alone, and where is a conversation useful?

Gather the year-end retirement statement, payroll election, rollover IRA statement, loan notice, tuition date, and monthly spending plan. Write down each deadline, then ask the plan administrator to confirm any rule that is not clear in the paperwork.

• Year-end retirement statement
• Payroll election and final pay stub
• Rollover IRA statement
• Practice-loan notice
• College tuition date
• Monthly spending plan
• Each deadline in writing

Put the next dollar against the deadline

Annex Wealth Management can compare the account rules, loan cash cost, college date, and tax effect in one sequence. You decide which trade-off fits your household.