Physician Financial Glossary

The distribution of your investment portfolio across different asset classes such as stocks, bonds, and cash. For physicians with a long time horizon and high income, equity-heavy allocations (80-90% stocks) are often appropriate during peak earning years.

Legal strategies used to shield your wealth from creditor claims, lawsuits, and judgments. For physicians, this includes maximizing ERISA-protected retirement accounts, using professional entities, and considering domestic asset protection trusts (DAPTs).

A two-step strategy that allows high-income physicians to contribute to a Roth IRA despite exceeding the income limits. You contribute to a non-deductible traditional IRA and then convert it to Roth. Watch out for the pro-rata rule if you hold other pre-tax IRA balances.

A legal directive on financial accounts, retirement plans, and life insurance policies that names who receives the assets upon your death. Beneficiary designations override your will. Stale or incorrect designations are one of the most common and costly estate planning mistakes.

A debt instrument issued by a government or corporation. When you buy a bond, you lend money to the issuer in exchange for regular interest payments and return of principal at maturity. Bonds provide stability and income but historically lower long-term returns than equities.

Tax on the profit from selling an asset. Short-term capital gains (assets held under one year) are taxed as ordinary income. Long-term capital gains (held over one year) are taxed at 0%, 15%, or 20% depending on your income. Physicians in the top bracket pay 20% on long-term gains plus the 3.8% Net Investment Income Tax.

Earning interest on your interest, creating exponential rather than linear growth over time. The most important financial concept for physicians, whose compressed earning timeline makes early and consistent investing especially valuable.

In RVU-based physician compensation, the dollar amount paid per work RVU. Multiplied by your total annual RVUs to determine your productivity-based compensation. The conversion factor and productivity threshold are the two most negotiable elements of an RVU compensation contract.

An irrevocable trust allowed in certain states (Nevada, Delaware, South Dakota) that lets you be a discretionary beneficiary of your own trust while maintaining protection from future creditors. Must be established before any claim arises. A sophisticated strategy for physicians with substantial wealth.

For income-driven student loan repayment purposes, the amount by which your adjusted gross income exceeds 150% (or 225% under SAVE) of the federal poverty level for your family size. Your monthly IDR payment is calculated as a percentage of this amount.

The most important insurance for physicians. Pays benefits if you become unable to perform the material duties of your own medical specialty, even if you can work in another capacity. The gold standard for physicians is a true own-occupation definition with a specialty-specific rider.

A liquid cash reserve covering 3-6 months of living expenses held in a high-yield savings account. For physicians, the recommended buffer is closer to 6 months due to income volatility from call pay, potential job changes, and malpractice deductibles.

Federal law governing employer-sponsored retirement plans (401(k), 403(b), pension). ERISA-qualified plan assets receive unlimited protection from bankruptcy creditors at the federal level, making maximizing these accounts one of the most powerful physician asset protection strategies.

The legal and financial process of arranging for the transfer of your assets upon death or incapacity. A complete estate plan includes a will, revocable living trust, durable power of attorney, healthcare directive, and updated beneficiary designations on all financial accounts.

A financial advisor compensated primarily through transparent fees paid directly by clients rather than commissions on product sales. Attend Wealth operates on a fee-based model: our advisory services are fee-based and fiduciary, and where we place insurance through our independent agency we may also earn a disclosed commission, so you always know exactly how we are paid.

A legal standard requiring an advisor to act in the client's best interest at all times. Not all financial advisors are fiduciaries. Registered Investment Advisors (RIAs) like Attend Wealth are legally required to act as fiduciaries.

The point at which your investment portfolio generates enough income to cover your living expenses indefinitely, without requiring active employment. Commonly defined as a portfolio equal to 25x your annual spending. Most physicians can achieve financial independence in their 50s with a 20-30% savings rate.

A health insurance plan with a higher deductible and lower premium than traditional plans. In 2025, a plan qualifies as an HDHP with a minimum individual deductible of $1,650. HDHPs make you eligible to contribute to an HSA.

A tax-advantaged savings account available to those with HDHPs. The only account with three tax advantages: pre-tax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. After age 65, withdrawals for any purpose are taxed as ordinary income, making the HSA function like a traditional IRA.

Federal student loan repayment plans that cap monthly payments at a percentage of your discretionary income. The main plans are SAVE, PAYE, IBR (original and new), and ICR. IDR plans are prerequisite for PSLF qualification.

A mutual fund or ETF designed to track a market index such as the S&P 500 or total US stock market. Index funds offer broad diversification, low costs, and tax efficiency. Decades of evidence show that most actively managed funds underperform their benchmark index after fees over long periods.

The tendency for spending to increase proportionally with income. The income jump from residency to attending salary is the most dangerous lifestyle inflation moment for physicians. Maintaining close to resident-level spending for 2-3 years after becoming an attending can significantly accelerate wealth building.

Insurance that covers claims filed after a claims-made malpractice policy ends. If you leave an employer with claims-made coverage, you need tail coverage or your prior incidents are uninsured. Tail premiums commonly run $30,000-$80,000. Negotiate who pays at contract signing.

Total assets minus total liabilities. The single most important snapshot of your financial health. A negative net worth early in a physician career due to student loans is normal; the trajectory of change is more meaningful than the absolute number at any given point.

An IRS rule that determines how backdoor Roth IRA conversions are taxed when you hold pre-tax IRA balances. If you have $90,000 in a rollover IRA and $10,000 in a non-deductible IRA, 90% of any conversion is taxable. To avoid this, roll pre-tax IRA balances into your employer plan before executing the backdoor Roth.

A federal program that forgives remaining federal Direct Loan balances after 120 qualifying monthly payments while working full-time for a qualifying non-profit or government employer. Tax-free forgiveness. Requires enrollment in an income-driven repayment plan and annual Employment Certification Form submission.

A 20% deduction on qualified business income available to certain pass-through business owners. Physicians in private practice may qualify, but medicine is a Specified Service Trade or Business (SSTB), meaning the deduction phases out at higher income levels. Requires careful tax planning to maximize.

The process of returning your investment portfolio to its target asset allocation by selling overweighted assets and buying underweighted ones. Typically done annually or when allocations drift more than 5% from targets. Maintains your intended risk level and can improve long-term returns.

Mandatory annual withdrawals from pre-tax retirement accounts (traditional IRA, 401(k), 403(b)) beginning at age 73. RMDs are taxed as ordinary income. Large pre-tax balances can create significant RMD-driven tax exposure in retirement, which Roth conversion strategies can mitigate.

An individual retirement account funded with after-tax dollars. Investments grow tax-free and qualified withdrawals in retirement are completely tax-free. Income limits prevent most attendings from contributing directly, making the backdoor Roth IRA the standard approach for physician Roth accumulation.

A standardized measure of physician work used by Medicare and most private insurers to determine reimbursement. Work RVUs reflect the time, skill, and intensity of clinical services. RVU-based compensation multiplies your total work RVUs by a dollar conversion factor to determine your productivity pay.

The newest income-driven repayment plan, replacing REPAYE. Payments are 5% of discretionary income for undergraduate loans and 10% for graduate loans. Key benefit: if your payment does not cover accruing interest, the government covers the difference, preventing balance growth.

A retirement plan for self-employed individuals with no full-time employees. Allows combined employee and employer contributions up to $70,000 in 2025. The most powerful retirement savings vehicle for private-practice physicians because it allows significantly larger deductible contributions than a SEP-IRA at the same income level.

Replacing federal student loans with a new private loan at a lower interest rate. Permanently eliminates access to income-driven repayment, PSLF, deferment, forbearance, and federal forgiveness programs. Only appropriate for physicians on a clear private-practice or for-profit career path with no PSLF eligibility.

Selling securities at a loss to offset capital gains elsewhere in your portfolio, then immediately repurchasing a similar investment to maintain market exposure. The wash-sale rule prohibits repurchasing the same or substantially identical security within 30 days. Reduces current-year tax liability without changing your long-term investment exposure.

Life insurance providing a death benefit for a defined period (10, 20, or 30 years). Pure protection with no savings component. The right tool for most physicians: affordable, straightforward, and sized to replace your income during your peak earning and family-formation years.

Liability insurance providing coverage above the limits of your auto and homeowner policies. Typically $1-$5 million in additional liability protection for $150-$600 per year. Essential for physicians who combine high net worth, high-liability profession, and everyday personal activities that create liability exposure.

An IRS rule prohibiting you from claiming a tax loss on a security if you purchase the same or substantially identical security within 30 days before or after the sale. Relevant for tax-loss harvesting: you must replace a sold fund with a different but similar fund to avoid triggering the wash-sale rule.

Permanent life insurance with a savings component (cash value) that grows over time at a guaranteed rate. More expensive than term insurance. Frequently pitched to physicians as an investment vehicle. Appropriate for a narrow set of use cases including certain estate planning strategies; not a substitute for dedicated investment accounts for most physicians.