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4 Actions Doctors Should Consider for Their 401Ks Now

By: Chris J. Roe, CPA/PFS


The past month has been very scary.  As a doctor, the disruption to your daily lives, careers and finances has been monumental. 

But what if someone said to you, “There is always a silver lining”.  How would you respond?  Opportunities generally present themselves when adversity hits.  Do you want to be the one that misses opportunities?

Market volatility increased, and a dramatic market decline ensued.  This decline was so rapid that even the most seasoned investors got a little scared.  A sharp decline can easily cause panic in our decision making around investments.  

As long-term focused financial planners for doctors, we have a very simple message for you.  If you have a road map to where you want to go, “stay the course”.  If you have no road map, you need one before taking any action.  Acting without a road map, may cause you harm.

The short term may continue to be rocky and unnerving.  But let’s talk positive and focus on actions you may take with your 401K that may benefit you in the long run.

  1. Increasing Your Contribution – If you are not maximizing your 401K contribution, now may be a good time to increase your contribution to get some more funds to invest. Remember, every little bit helps.
  2. Re-balancing Your 401K – Wait, seems a little counter intuitive but re-balancing back into stocks, especially the ones hardest hit, can be a great way to capture upside returns without changing your overall risk.   You now get to buy stocks at a discount from where they were just a few short months back.
  3. Addressing Your Overall Allocation – We have all been there.  Sometimes, it is easy to pick a target date fund, or you just took some advice for a colleague on which fund to pick.  Now is the time to review your allocation and investment choices.  Make sure they are right for you going forward.  May even make sense to increase your exposure to stocks if you were just too conservative in the past.
  4. Converting your 401K to a Roth 401K – Not all employer plans offer this option, but if your employer does it may work out great for you in the long run.  Given the value of your 401K is down, it may be the time to convert some of the account to a Roth 401K and get future tax-free grow on the converted assets.  Remember, set aside the money to pay the tax due.

The above may not apply to everyone, nor is it a comprehensive list of all planning opportunities around your 401K.  The most important thing you do now is to assess where you are and make sure you have a road map built to where you want to go.

If you want to chat about your situation, we are here to help.


2020 All Rights Reserved. This content is developed from sources believed to be providing accurate information, and provided by  Rx Wealth Advisors, LLC for general informational purposes only.  It may not be used for the purpose of avoiding any federal tax penalties and in no way is meant to provide specific tax, legal or financial advice.. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.