Nate Reineke (00:01)
Hello, physician moms and dads. I'm Nate Renneke, certified financial planner and primary advisor.
Kyle Hoelzle (00:08)
And I'm Kyle Helsley, certified financial planner and retirement investment specialist.
Nate Reineke (00:14)
So Kyle, it's not New Year's Eve for us quite yet, because we're a little early on this episode, but when this episode comes out, it will be New Year's Eve. I'm always interested in if people are kind of resolution type people. I don't think I've ever asked you that. We've worked together for eight years. Are you a New Year's resolution type of person?
Kyle Hoelzle (00:38)
Yes and no. I think that resolutions are usually about like self-improvement or things you want to do better, right? Well, I don't see why you need to wait until the end of the year to do these things. Like, what's wrong with June? What's wrong with any time that the idea strikes you, right? But I will say I've started something new actually recently, probably in the last couple of weeks here, is I've started
Nate Reineke (00:46)
Mm-hmm.
Yeah.
Kyle Hoelzle (01:05)
Vitamins. Vitamins is like my new thing right now. ⁓ If you look over here at my desk, you'll see I have my multivitamin. I have my omega fish oil vitamin. I have my magnesium. I have my i vitamins. I have my fiber. I mean, I've been taking all of it and I'm liking it. I think it's good. And my other main focus is sleep. I'm trying not to get more sleep, but better sleep.
Nate Reineke (01:17)
Mm-hmm.
Nice.
Kyle Hoelzle (01:35)
And so I've been figuring out ways to do that. And think that'll continue into 2026 for me. How about you?
Nate Reineke (01:40)
Yeah.
man, those are good ones. I actually had, I went through my, well, I wouldn't call it a phase. I started vitamins a few years ago and I have all those same staples. Those are the good ones. A lot of vitamins I've heard are no good, but I think the ones you found are the good ones. ⁓ And sleep too, Young children makes it hard to have control over that, but you and I are finally kind of getting to the point where I think.
We have more control there. I do like New Year's resolutions, but I'm with you. It's more of just a ⁓ time of reflection, like, I know I wanted to improve these things. Did I do it? If I didn't do it, what do I have to do to make it happen? And I'm always trying to improve, whether it's fitness or things at work or things with my family, it's always improvement around my house.
But I feel like I went, I was so focused for like many, many years about improvement to where I got to the point I just thought this is a lot of pressure to have to like improve by so much every single year when I feel like I'm already doing the things that are really meaningful in my life. Like, so maybe one year was like, I need to spend more quality time with my children. And I'm like, well, how much more quality time can I give them? I got to work and I got to, you know, it's just a lot of pressure.
So I have a funny one. I used to have big New Year's resolutions. Last year, New Year's resolution was to order from DoorDash less. It wasn't very profound, but it was a money resolution because, man, they just get you at that convenience. It's expensive. You live out in the country. They probably don't even DoorDash to your house.
Kyle Hoelzle (03:33)
No, no, we don't
get any of that. Surprisingly though, ⁓ Instacart actually comes out to my house, which I thought was surprising. So we do get Costco orders. ⁓ If we get behind and we don't have time, sports are pulling us left and right, then maybe we'll splurge and we'll do a little Instacart. yeah, none of the food deliveries. ⁓ There's one...
Nate Reineke (03:39)
Ugh.
Yeah.
Kyle Hoelzle (03:59)
or two local pizza places that will deliver pizza because they're kind of in the backyard, but that's it. mean.
Nate Reineke (04:04)
That's really all it should be. That's all it was when I was a kid. It was just pizza. And if they had some wings, you were lucky. But other than that, go get your own takeout. And you know, the worst part is it's really that it feels like I'm being lied to. Like I just can't stand for that because on these DoorDash apps or whatever, Uber Eats or whatever it is, it's like they charge you certain fee and you tip the delivery driver and you're like, okay.
Kyle Hoelzle (04:07)
Yeah, right.
Nate Reineke (04:31)
It's costing me $10 to get this delivered. Is it worth it? But then I found out it was terrible. I'm gonna ruin the party for everybody that the food just costs more too. So it's like if you're ordering for four people or something and each item costs like $3 more on the app or even a couple dollars more, you're like, I didn't pay $10, I just paid $20. And that just made me so upset. I'm like, they are just getting me in every angle and I can't stand for this.
So that's really why I stopped doing it. But ⁓ yeah, I think this year it's good. I go on our anniversary trip and we do some thinking about this stuff. We reset and I do like New Year's resolutions. It's also been a couple times in my life where I've made really big changes and it did come off of kind of a New Year's thing. So it worked for me. ⁓ But I take them really seriously. I write them down. It's just like our true goal.
Kyle Hoelzle (05:03)
Yeah.
I think all of us have fallen victim to the, what I call the New Year's intentions that never are fulfilled. And so I think what you're doing is kind of the right way to do it, right? Write it down, keep it in front of mind. And also what's the first step? What's the first small step I can take, right?
Nate Reineke (05:37)
Yes.
Yeah. Yep. And I actually...
Yes,
that's right. Yeah. Okay. Well, it is, I had one more sort of New Year's type question for you, but it's financial. Okay. So it's New Year's Eve. People are hearing this. It's New Year's Eve. Physicians out there. you know, Chelsea and I just recorded an episode of like, what can you do? It's, you know, there's a week left for the whole year, but
Really, what do you have time to do if you fell behind on contributions or anything like that? I want to know. It's 12 31 right now. Right. What do you have time for now? I mean, like you have hours, right? But really, truly, that's what it feels like. What do you actually have time to do with contributions before it's too late for 2025?
Kyle Hoelzle (06:42)
So assuming that you don't have this magic ability to make a quick online electronic contribution in that waking hour, then really you're going to be beholden to things that you're allowed to do up until your tax filing deadline, April 15th. And so things that are eligible for those types of contributions for what we call the prior tax year. So you're in 2026, whether it's January, February, March, April, and you're funding for 2025.
Nate Reineke (06:49)
Uh-huh.
Yes.
Kyle Hoelzle (07:11)
You can make ⁓ IRA contributions. All right. You can make HSA contributions. Now, the caveat on that is if you make your typical HSA contribution through payroll deferral at work, that's not going to work. This would be an after-tax HSA contribution that you make from your bank account that you then have to put on your tax return that you made this HSA contribution so that then you then get the deduction. But you have to remember to report that to your tax preparer or on your tax software.
Nate Reineke (07:32)
Mmm.
Kyle Hoelzle (07:40)
So that's just a little asterisk on the HSA, but you can make those HSA contributions up until you file your taxes. ⁓ 401k profit sharing. So as an employer, let's say you're self-employed, for example, you have a solo 401k, you can make those profit sharing contributions as an employer to your solo 401k plan up until your tax return. ⁓ You can make SEP contributions if you're self-employed with a SEP.
And you can make simple employer contributions as well. You have ⁓ the ability to do that for those plans. And ⁓ those are the ones that are coming to mind for me.
Nate Reineke (08:20)
Good.
Yeah. So I think the key there is it has to be a deadline that is tax filing deadline. And a lot of people just don't even think about that. But it makes sense. Right. The IRA is always the one that gets me. You are allowed to do that, which is cool. HSA, a little more complicated, allowed to do that. But some of these make sense. They have to do with ⁓ being self-employed.
a lot of times for our ⁓ for physicians, they know they're going to max these things out. So it feels like they missed the boat. But for a lot of people, the average person may be that self employed, they might not make enough money to max it out. So what what needs to happen? You need to know how much money you actually made throughout the whole year. So makes a ton of sense to that you have to give you until you file your taxes. So the quick ⁓ tip
here is if you missed any of these, don't file your taxes before you make them. Sometimes people will jump the gun and file their taxes and then they're.
Okay, good. It's 12 31, people. There's no more time. Get on it and we're on to 2026. All right, I'm gonna get to our questions for the day. First question is from an infectious disease doctor in New York. Does it make more sense for us to have separate HSA eligible plans or one family plan? ⁓
I hear this a lot and I actually, think deep down people know there's something missing here. Like why would I have two plans? ⁓ There's two things to consider. ⁓ One is if your employer contributes to your HSA, right? Here at Physician Family, we love HSAs and at the employer, Physician Family funds the employee's HSAs. So why would you go get an HSA with your spouse if your employer is going to fund your plan for you?
So that's something to consider. ⁓ And then the other thing is a lot of times as a physician, your employer covers your premium or at least a big chunk of your premium just on your healthcare in general. So you have to base, you're basically looking at two things. One is the HSA being funded by your employer, at least at some small amount. A lot of times it's a thousand dollars a year. And then two, what's the overall cost of having two separate plans versus one big family plan?
Usually if your employer wasn't covering anything, it would be more expensive to have two plans. But if your employer is covering something, then it'd be better to have, it can be better to have two.
So that's what you have to consider. ⁓ And that's a different for everybody.
Next question is from a surgeon in Illinois. I have an HSA. Can I just leave the old one where it's currently at? I have a new HSA. think it's what it. yeah, a new HSA. So Kyle, can they just leave the old one where it was before or should they combine them?
Kyle Hoelzle (11:27)
Yeah, mean, there's, you can certainly leave the old one where it's at and begin funding the new one. There's no problem with that. ⁓ But here's what I like to point out that people should consider is, know, majority of these HSA plans out here, they have this minimum cash hold. So if you're planning on basically saving your HSA for retirement and you're investing it for your retirement, then
most of these HSAs you can't invest every dollar. There's usually some sort of minimal cash hold you have to hold and you can invest everything above that cash hold. So let's just say for simplicity sake, you have two HSAs, your old one and your new one, and they both have a $2,000 cash hold. So together you have a $4,000 cash hold with the two plants. If you were to consolidate the old one by transferring it directly into the new HSA, you eliminate the cash hold on the one and then you have just the one cash hold at your new plan.
Nate Reineke (12:02)
Mm-hmm.
Right.
Kyle Hoelzle (12:23)
of 2000. So effectively, effectively you get to invest that other additional $2,000 that otherwise wouldn't have been invested by doing the consolidation. Now, of course, like any of our frequent listeners would know, not all plans are created equal. So you do want to do some due diligence. You want to look at the plans and go, well, what are the fees at each plan? What are the investments? Maybe it's worth
keeping the double cash hold because maybe your new HSA just doesn't have as favorable of an investment or maybe the administrative fees are really high. ⁓ So definitely consider those things, but all things being equal, ⁓ eliminating one of those cash holds allows you to invest more of your HSA dollars. So most of the time that's the route that people will take.
Nate Reineke (13:05)
Yeah.
I think most of the time is right. I'm used to some HSAs. I've had a bunch of HSAs in the past. And a lot of times that administrative fee and HSAs is a flat fee. So you're just paying two flat fees. And then a lot of times people change jobs again. Now they're three flat fees. And it's kind of like, you should just keep this up, cleanliness. And on top of that, that cash hold, while it may not be an enormous amount of money, HSA growth is really powerful.
I mean, imagine you just ⁓ had $4,000 in money in your Roth that you could just never invest. That'd be crazy. Well, that's the case with HSAs. So I'm with you. I think most of the time consolidate, but do your due diligence.
Okay, ⁓ psychiatrist in New York, right? Two New York docs. ⁓ My new employer is letting me choose between being a W2 employee or a 1099 contractor, which should I choose? Kyle, I'm not kidding. I got this question an hour ago and I got this question from a different doctor 24 hours ago. It was crazy.
I'm normally, I'm actually not used to seeing this. I'm used to seeing, ⁓ I'm going 1099 or I'm considering going to a new job. What should I be considering? So this is ⁓ interesting. It's impossible to answer this question directly. ⁓ So I wanna give what people should be considering as you're making this choice. And this really comes down to a couple big things. ⁓
And it doesn't need to be more complicated than that. then once you have, you know, once you have each situation laid out, you can pin them against each other. But it's really two things. A 1099 contractor, you're responsible for paying the entire amount for payroll taxes. Okay, so self-employed, you pay payroll taxes and it's 15.3 % payroll tax. It's a pretty hefty bill.
As a W-2 employee, ⁓ your employer pays half of that. And the reason that this works out is as a 1099 contractor, you are the employer and the employee. So it's not a different amount of taxes being paid to the government. It's difference in that you're paying it versus a different employer paying it. And this is a big reason why you should probably be making more
on an hourly rate as a 1099 contractor. You know, people will look at 1099 contractors and just they don't really think through exactly why they get paid more as a 1099 contractor. Everyone wants to be they say, my friend went 1099, my colleague did 1099. They make, you know, however much more than me, 10 % more than me, 20 % more than me. Well, this is one big reason why, because the employer directly saved almost 8%.
and hourly wages to you. So the other big piece is just benefits. It is expensive to have an employee. So the easiest one to look at, or these is two to look at, is health insurance and retirement benefits. A lot of the other benefits do come at a cost to the employer, but they're sort of grouped up into group plans. And it's not really much more expensive to add one more unit to the life insurance pool. It's like,
But health insurance and 401k, 403b come with big matches. So let's say it's a big hospital system. And I was just looking at one yesterday that they were getting a 10 % match. 10 % of physician salaries, a ton of money. OK. And then health insurance, obviously, we were just talking about those HSAs. A lot of times your employer will just pay a big chunk of it. So the question you have to ask yourself is,
Why on earth would I go 1099? Because I've just laid out all the reasons why you should be an employee. Well, the reason to go 1099 is a lot of times you get paid more money just flat out. And then on top of that, you can set up your own self-employed ⁓ retirement plan and you can defer more money. Quite a bit more, right? You can get the full max into your 401k, let's say. So instead of
deferring 23,000, you'd defer, I think it's 70,000. Okay, now, that always sounds really good to doctors. my gosh, it's as if they got gifted 70,000. You still have to save the money. I mean, it's your money, you're saving it. So really, the difference is the deferral, the amount you can defer, but remember that quote unquote free money you're getting from your employer is not there.
It's all you. So these are, you know, basically it's paying all your own benefits, saving all your own money, but getting paid more as a 1099 versus, you know, being an employee, true employee, harder to fire probably, harder to like, you know, if they're making cuts, people drop contractors first ⁓ and, you know, get benefits paid for and everything. This is, ⁓
VA pension versus private practice. VA, you might make it little bit less, but you're getting a pension. So you just want to look at the whole package along with payroll tax. And that's how you make the decision.
So that was a really big picture and didn't give a direct answer, but if you have questions that are specific, you guys can email me.
All right, next question is a family medicine doc in Minnesota. When opening a Solo 401k as a sole proprietor, should we use our social security number or get an EIN?
What do you think?
Kyle Hoelzle (19:10)
Yeah, this is an interesting one because it's technically allowable by the IRS to open a solo 401k using your social security number, but it is not the best practice. And there's some reasons for that. One is, is, you know, the 401k, the solo 401k that you open, it's like its own legal entity. It's a retirement trust, you know? And so it really should have its own tax ID number. there's using your social security number,
blurs that legal separation between you, the sole proprietor and it, the 401k plan. So having those distinct tax ID numbers is, is important for that. Um, down the road, when your sole 401k gets large enough, uh, 250 K or more, there's a form 5,500 filing that's required by the IRS. Um, that really should have its own tax ID number on there for, for reporting the form 5,500. It doesn't really make sense to have your social security number.
on this form 5500 filing. So there's some compliance and reporting issues that may arise down the road. So that is to say using your Social Security number today might not be an issue, but as the 401k grows, there could be some issues with doing so. ⁓ And then flat out, some custodians, when you go to open up your Solo 401k, they won't accept your Social Security number. They require an EIN, an Employer Identification Number. So you might...
Nate Reineke (20:22)
Hmm.
Mm-hmm.
Kyle Hoelzle (20:37)
go into it thinking you're gonna use your social and go to open the account up and it gets denied or there's an error online trying to open the account and you're forced to get an EIN anyways. So ⁓ best practice is just, you know, when you're in that situation, go get the EIN for the 401k and use that moving forward. And there is a way to get an EIN online through the irs.gov website. ⁓
And be careful because when you search on the internet to do so, there are some services that pop up that ⁓ look like they have the letters IRS in it, but you'll see it's a dot com URL and that's not the route you want to take. You want to go directly to IRS dot gov and look on their website for the EIN application online. And if you have any questions about that, certainly contact your financial advisor or your tax preparer ⁓ and they can
most likely help you get on the right path.
Nate Reineke (21:38)
Good. Okay, that's good. Last question for you, Kyle, nephrologist in Iowa. What are the changes I'm hearing about with the 401k catch up contributions?
Kyle Hoelzle (21:49)
Yeah, this is interesting. During my visits with physicians in the last couple of months, I've been asking if they've heard about this and it's surprising a lot of people haven't, which is okay. But I mean, it's going to impact people who are over 50, 50 or over in the year that you turn 50 or older. You are allowed to make these catch up contributions to your 401k. And that could be
a self-employed 401k, this could be a workplace 401k through your employer. It's an additional amount for 2026, it's going to be $8,000 as the catch-up amount that you can do on top of your base employee contributions, which in 2026 is going to be 24,500. So effectively, if you're turning 50 in 2026 or you're older than 50 in 2026, you can do a total of 32,500 with that catch-up amount. Now, in the past,
2025 and prior, you could choose whether to put that catch up 8,000 in a traditional pre-tax and take the deduction or fund it to a Roth 401k after tax if a Roth 401k was available to you. Starting in 2026 with the new rule, ⁓ the catch up amount of 8,000 is required to go into the Roth 401k. There's no choice anymore. It has to go into the Roth 401k. And so,
Nate Reineke (23:14)
Mm-hmm.
Kyle Hoelzle (23:15)
What you'll see is I've gotten this question from our physician clients is, hey, I noticed that my employer opened me a Roth 401k when I didn't have one before. What's with this? Well, that's for your catch up. When you get hit age 50, that's the catch for you to fund your catch up into. Same with solo 401k providers. I know some of the places I've seen that we work with, they preemptively during early 2025 have opened a Roth 401k.
Nate Reineke (23:32)
Mm-hmm.
Kyle Hoelzle (23:45)
uh, in anticipation of this. So, uh, that's something that's important to note because, uh, if you go to make your catch up and you're self-employed and you have the, the control of making your contributions throughout the year, if you're intending for those contributions to be part of that $8,000 catch up, you need to make sure that's getting funded in the Roth. Otherwise it'll be coded in the traditional and it'll just be going towards that base contribution max of 24, five and
you get towards the end of the year and you might max out early because you thought you're making 32.5, but really it's going to calculate the 24.5 because that other eight should have been going on the Roth and then you would need to hurry up and get that done before the end of the year. So if you're aware of it now, you can make your contributions accordingly in the new year to make sure that you're making those contributions into the right buckets throughout the year and not scrambling at the end of the year.
Nate Reineke (24:23)
Mm-hmm.
Yeah.
Yeah, that's good. I have heard at least three or four times in the last month about this. And I'm getting a little bit different question. I think you're getting like, how does this work? And is this real? Or you're telling people about it. I'm getting questions like, should I do this? Or ⁓ I got another one that said, does this does this change my Roth at betterment? Right? Because we have these back we do backdoor Roths. And
The answer is yes, you should do it. And no, it doesn't change your backdoor Roth. You can still do your backdoor Roth. But I think the reason people are asking, should I do this, is we're always talking about doing pre-tax contributions. It is always, for high income physicians, it's better to max out your pre-tax. But that still doesn't mean Roth is a bad choice. It's just not as good as pre-tax.
Absolutely, you should do it. actually, ⁓ it's interesting to be forced to do it because you're to get more money in Roth. And, you know, of course, we don't know exactly what's going to happen with the tax code in 20 years from now. Maybe it'll be nice to have more money in Roth. All we can do is control what we can control now. And right now we know it's a good idea to do pre-tax contributions, but you'll have a nice amount in Roth and you'll have your Roth IRAs and you should still do it. Absolutely.
You should absolutely do it before you do taxable accounts because with taxable accounts, you pay the taxes, you invest the money and then the growth is still taxed when you pull it out. And with Roth's, it's not taxed when you pull it out. So order of operations would be pre-tax Roth and then taxable or brokerage accounts contributions. But this is real and you should do it. It's the bottom line.
Okay, that is it for today. Thank you everybody for listening and listening all year. I know every once in while I'll get an email from a listener that says they've been listening for a long time and it's really good to hear. Just really grateful for the year of 2025. Hope everybody has a good new year. Be safe out there. If you liked this episode, don't forget to subscribe, like, leave a comment, anything you can to help us.
get ⁓ this episode out to your colleagues. And if you'd like to work with us, you can go to physicianfamily.com, schedule an interview. If you're not ready for that, you can email us a question at podcast at physicianfamily.com and we'll answer that question even if it doesn't make it on the podcast. Until next time, remember, you're not just making a living, you're making a life.
