For many doctors who evaluate their employment opportunities, one of the most important benefits they consider their pension accounts. While independent doctors often open Solo 401 (K) S or SEP-Iras for spacious pension savings space ($ 70,000 in 2025), doctors are often left with a 401 (K) or 403 (B) and the smaller annual annual $ 23,500 limit for employee contributions [2025 — visit our annual numbers page to get the most up-to-date figures]. What many doctors may not consider is whether their contributions are mandatory and what this does with their potential for pension savings.
Why make a pension account mandatory?
If your employer offers a 403 (B), it can choose to make a certain level of contribution mandatory for all its employees. This is usually combined with a level of employer match. In my own institution, 5% of the salary of each employee must be saved within our 403 (B), and in turn the employer corresponds to 200%, essentially another 10% in the same 403 (B). After three years of employment, the matching amount is ‘established’.
You can be skeptical that every company (even a non -profit organization) would do this from the friendliness of his heart. Like any advantage, it is provided to recruit and retain its employees. In the case of the matching retirement, it also functions as a few “golden handcuffs” that help employees retain for at least the fortress period.
My mandatory 403 (B) is a victory for both my employer and me. I (and all other full -time employees) are strongly encouraged to stay employed for at least three years. When I was considering my employment for the first time, I was planning to participate in the 10% corresponding contribution, regardless of whether it was mandatory (it is “free money!”). Only when I made a phone call to Human Resources and the benefit office did I fully understand the benefit that I could harvest the matching pension that was mandatory. Once I found out that my 403 (B) also came low costs and cheap index fund from Fidelity, I could not wait to participate.
The other big advantage that compulsory contributions serve is to have the plan run by ensuring that the non -discrimination tests (NDT) achieve. The position of NDT is to ensure that a pension plan functions for the benefit of all its employees and not only the most compensated employees of a certain company. Mandatory pension contributions help ensure that, during the actual contribution rate (ACP) test, there is no greater share of highly compensated employees (such as doctors) who participate in pension plans than all other employees.
More information here:
Comparison of 14 types of pension accounts
Why you should maximize your pension accounts
Why does this matter?
An easily missed piece of information about the annual limit for employee contribution to a 401 (K) or 403 (B) is that it is the elective limit for employee contribution. Let us consider two jobs in service – one with and one without a mandatory contribution.
Consider a doctor who earns $ 300,000 a year. Their employer offers an optional course 403 (B) with a 100% match up to 5%. The doctor can choose to save the 5% ($ 15,000) and his employer will match ($ 15,000). They then decide that they want to save more, to the limit of $ 23,500. They have already chosen to contribute $ 15,000 so that they can save $ 8,500 extra. In total they can save $ 38,500 a year in their 403 (B).
Consider now the other doctor also earns $ 300,000 a year. Their employer has a mandatory 403 (B) with a 100% match to 5%. The doctor must save 5% ($ 15,000), and their employer will match it ($ 15,000). They then decide that they want to save more. They have not saved any money in a voluntary 403 (B), so they can choose to save $ 23,500 extra in their voluntary 403 (B). In total, this doctor can save $ 53,500 in their 403 (B).
That’s right. Mandatory 403 (B) contributions and the competitions of your employer do not count for the limit of $ 23,500 of 2025.
It is not difficult to see how a 403 (B) plan for an even more compensated employee or with an even more generous employer competition could reach the maximum limit for all employers ‘and employees’ sources together-$ 70,000 in 2025. Finding this much deferred compensation space is typically the purification of the purification of the purification of the purification of the purification of the purification of the purification of the purification.
What about 401 (K) S?
There is a debate on the move about whether an employer can oblige 401 (K) contributions in a similar way to a 403 (B). At least one WCI reader has indicated that he is in a usual situation in which this is the case, but the new guidelines of 2025 by the IRS on the automatic registration of employees in 401 (K) indicate that these are still elective contributions. Anyway, most hospitals in the US function as non -profit organizations, making the 403 (B) the most common plant type for used doctors.
Voerto -motive employees may have even more space
Not only non-profit employees may have access to mandatory 403 (B) s and their deceptively deep wells, but they often also offer non-governmental 457 (B) plans. Although WCI has already been extensively written in the past on non-governmental 457 (B) plans, it is worth remembering that these contributions are subject to your employer creditors, and the financial health of your institution must be carefully considered before it contributes. In addition, your employer may demand that you will distribute your 457 (B) after separating them, which ensures a messy tax situation that you need to navigate. It is worthwhile to make a phone call to Human Resources to explore your options if you have to separate from your employer.
That said, many non -profit health systems are supported by national governments and are probably just as stable as every non -profit organization to contribute to a 457 (B). For doctors who work for a trusted non-profit (after determining your distribution options after separation of employment), this would offer an extra $ 23,500 to tax-proposed space to invest for pension. Because the annual contribution limit for a 457 (B) is not shared with the 403 (B), you don’t have to worry about the $ 23,500 voluntary employer’s contribution limit or $ 70,000 total limit for 403 (B).
More information here:
Woman versus husband: a confrontation with pension account
Best pension savings plans for self -employed persons
What should I do with this information?
It is of course to wonder why we are discussing the concept of a mandatory pension account. After all, you cannot decide whether the program exists or whether you can participate. There are two primary applications:
- Evaluating potential jobs
- Plead for your work
For number 1 we have already undergone a hypothetical situation in which a job with a mandatory contribution can be more optimal for a doctor who is looking for extra tax -proposed space to invest. Equally relevant is when comparing jobs with very different employment structures. For my own career I started as an independent doctor and a big ‘benefit’ that I considered was access to my own Solo 401 (K). I thought: “Certainly, I can certainly save more for retirement as a self -employed doctor than as an employee.” Imagine my surprise when I took a job at the University of Kentucky and discovered that I could save almost an identical amount in my 403 (B) S plus access to a 457 (B). I was in the unexpected position to save even more for retirement as a work doctor than as a self -employed person.
For No. 2 I think that every financial doctor who works at a non -profit must consider doing volunteer work for the employee committee of their organization. This is the space to argue for important benefits-such as access to cheap index funds and to prevent expensive annuity options, often sold to make commissions for sellers. This is also the room to argue for the advantage of compulsory contributions for all employees. Although it is not a simple political agenda, we have already outlined how compulsory accounts an entire organization can benefit. You can just be the person to help you.
As more attention is paid to the role of tax-deferred pension accounts in the US and the growing movement to contribute the “standard” instead of an “opt-in”, it is more important than ever to understand which pension accounts are available to you and how you can benefit from them. More information about the accounts offered at your own workplace and argue for a hidden advantage that you may not have realized that is available.
Have you or have you ever had a mandatory pension contribution? Did you find that you could save more money? Are there any disadvantages to making a contribution?
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