Without a traditional 401K, Locum Tenens physicians must create an alternate plan for retirement. Luckily, there are many options for physicians who want to save money for the future.

Unlike conventional employment in the medical profession, Locum Tenens workers must plan for retirement without a traditional 401K or pension plan. Much like self-employed individuals, Locum Tenens physicians should begin to save for life after retirement, even if they have just completed residency.

Fortunately, there are several well-regarded retirement plan options that Locum Tenens physicians can take advantage of. As more and more physicians choose Locum Tenens work, these options will help them plan for the future while they are enjoying a rewarding career in Locum Tenens work. Interested physicians should talk to a financial advisor and a recruiting agency about the following options.

1. Defined Benefit Plan

This type of Keogh retirement plan is arguably the most common among self-employed or Locum Tenens physicians because it is designed for individuals with higher incomes. This plan works much the same as a regular pension, however, physicians must fund the account themselves. Though there is a maximum cap for yearly contributions ($200,000) and lifetime holdings in these plans, it is typically set very high. As an added bonus, any contributions to this fund are tax deductible. Because of the complicated nature of these plans, however, they will require the assistance of a financial advisor. For the best results, choose a professional who has worked with these types of plans and other Locum Tenens physicians.


Locum Tenens physicians may also choose to fund their retirement using an IRA. Though there are several types of IRAs to consider, many Locum Tenens physicians use a Simplified Employee Pension, or SEP IRA. Like a Defined Benefit Plan, a SEP IRA allows Locum Tenens physicians to make yearly, tax-deductible contributions to their accounts. Unlike Defined Benefit Plans, however, the maximum cap for yearly contributions to SEP IRAs is much lower, coming in at $53,000.00 (though this is still a significant amount of funding). The amount of your contribution typically is set at a percentage of your annual income. Also unlike the aforementioned plans, SEP IRAs are comparatively simple to set up and have no yearly maintenance costs. Furthermore, there is no requirement for contributions. Despite the relatively low maintenance of a SEP IRA, it is still essential that Locum Tenens physicians speak with their financial advisors about this option.

3. Individual (or Solo) 401K Plans

Much like a SEP IRA, an Individual 401K is easy to set up and there are no requirements for minimum annual contributions. There is a low cost involved and some potential record keeping requirements, which a financial advisor can define according to your specific circumstances. Also similar to a SEP IRA, the maximum annual contributions are set at $53,000.00 (plus an additional $6,000.00 if the physician is over the age of 50). Just like a regular 401K from an employer, Individual plan contributions are pre-tax. Again, it is important that Locum Tenens physicians consult a financial advisor about their options.

Some other considerations to discuss with a financial advisor include tax benefits or consequences, the pros and cons of each type of retirement plan pursuant to your specific needs, and your current and future ability to contribute to these plans. Each physician’s situation is different, and therefore may require the assistance of a financial advisor. Once you have planned for your future after Locum Tenens work, you can sit back and enjoy your rewarding career path.

While there are many financial aspects to take into consideration, Locum Tenens work can allow you to take control of your income and career.  Being able to choose which contracts you take lets you have more control over how much you would like to make.  For physicians who are considering the rewarding career choice of Locum Tenens work, or who already have an established Locum Tenens career, please contact the professionals at Medstaff National Medical Staffing today. These individuals can connect you with healthcare organizations across the nation in this rewarding and lucrative area of practice. Our experts can also point you in the right direction when it comes to planning for the future and a comfortable retirement.