How a Doctor Could Save More Than the Standard 401(k) Limit

How to Save $170,500 per year into Retirement.

You have likely heard the maximum contribution you can make into a 401k or 403b is $23,500/year for 2025. What may be less known is your 401k plan has an overall limit of $70,000 per year. You can take advantage of this higher limit if the plan also allows for after-tax contributions.

Step 1: Normal employee contributions

Step 2: After-tax contributions

If you and your employer have contributed $35,000 you can put another $35,000 as an after-tax contribution into the 401k.

IMPORTANT:

Make sure your plan has automatic in-service distributions to the Roth 401k plan. You don't want to leave your money in the after-tax account, you want to transfer it to your Roth 401k so that you can get tax-free distributions in retirement.

Step 3: 457 Plan

It's possible you work for an employer who offers a 457 plan.

You can contribute $23,500/year to a 457

Step 4: Independent Contractor Income + Solo 401k Plan

While not always common, we do have clients who have a W2 job and work as an independent contractor or 1099.

For 1099 income, you can set up a Solo 401k Plan.

It's important to note if you maxed out your employee contributions ($23,500) to your 401k plan through your W2 job, you can not make any employee contributions to your Solo 401k Plan.

However, you can make EMPLOYER contributions to your Solo 401k plan which is roughly 20% of profit AND you can make after-tax contributions as well.

This plan has it's own separate limit of $70,000 per year in addition to the $70,000 limit of your regular 401k plan.

Example:

IMPORTANT - your plan needs to be designed so that your after-tax contributions can be rolled into your Roth IRA - again this is to benefit from those dollars being tax-free when withdrawn in the future.

Step 5: Roth IRA contribution

Last but not least, you can do a back door Roth IRA contribution of $7,000.

Summary:

$170,500 Total

Now here is the beauty of this:

By making these contributions you are lowering your taxable income by $67,000 per year, getting $78,500 per year into pre-tax retirement accounts (including employer match), PLUS you are getting $92,000/year going away into Roth which will NEVER be taxed again.

While you may not have ALL of these options available to you it is likely you work for a company that has an after-tax component to their 401k or 403b plan. And if you thought previously you could only contribute $23,500 to a 401k plan, hopefully this shed some light on your ability to do much more than that.