How to set up withholding, handle signing bonuses, and maximize retirement contributions in your first year as an attending.
You spent the better part of a decade earning less than a first-year teacher. Now, almost overnight, your income has tripled—or more. That transition from residency to attending physician is one of the most financially significant moments of your career, and the tax implications arrive before most people are ready for them.
Year one as an attending is not just a pay raise, it is an entirely new tax situation. Your withholding needs to change, your bonus income will be taxed differently than you expect, and for the first time, many of the tax-advantaged retirement accounts you barely used in residency are now genuinely powerful tools.
This article walks through what new attending physicians need to know about setting up their taxes correctly in year one—before the IRS surprises them.
Most residents come out of training with a relatively simple tax picture. One employer, one W-2, modest income. The W-4 on file probably worked fine.
As a new attending, that simplicity is gone. You may be earning $250,000 to $400,000 or more. If you are a 1099 contractor, you are now responsible for your own withholding. If you received a signing bonus, that payment was likely taxed at a flat supplemental rate that does not reflect your actual bracket. And if you are at a hospital system with a 401(k), 403(b), or 457(b), your contribution limits have jumped significantly.
Getting these pieces wrong does not just mean an unexpected tax bill in April. It means penalties for underpayment, missed compounding on retirement contributions, and financial stress that could have been avoided with a clear plan in place from day one.
Your W-4 is the form that tells your employer how much federal income tax to withhold from each paycheck. The default settings on many W-4s are designed for people earning far less than a typical attending physician salary.
The standard W-4 setup often withholds too little for high earners because it does not account for:
Request a new W-4 from your employer’s HR department as soon as your employment begins. Use the IRS Tax Withholding Estimator (available at IRS.gov) to calculate the correct withholding amount based on your projected annual income. If you started your attending position partway through the year, be especially careful; you have residency income from earlier in the year stacking on top of your new salary.
Signing bonuses are common in physician employment agreements, particularly for new attendings joining hospitals, health systems, or private practices. If you received one, you may have noticed the withholding on that check looked surprisingly high.
That is because supplemental wages—which include bonuses, commissions, and certain one-time payments—are subject to federal supplemental withholding. As of 2026, the flat supplemental rate is 22% for amounts up to $1 million. For high earners whose effective rate is higher than 22%, this means the signing bonus was actually under-withheld relative to your true tax liability.
If your signing bonus was $20,000 to $50,000 or more, and your marginal rate as a new attending places you in the 32% or 35% federal bracket, you may owe additional taxes on that bonus income when you file. This catches many new physicians off guard in their first April as an attending.
The solution is proactive: when you know you are receiving a signing bonus, adjust your ongoing withholding to account for the tax shortfall on that lump sum. Alternatively, make an estimated tax payment if your situation allows.
Many signing bonuses come with repayment clauses that require you to return the money if you leave within one to three years. If you do leave and repay the bonus, the tax treatment of that repayment is complex. You may be able to deduct the repaid amount or claim a credit, depending on the amount and tax year. This is worth discussing with a tax professional before making any employment decisions.
One of the clearest financial advantages of becoming an attending is your ability to take full advantage of tax-advantaged retirement accounts. In residency, the contribution limits existed, but low income made it difficult to hit them. Now you can—and should.
For 2026, the employee contribution limit for 401(k) and 403(b) plans is $24,500 (up from $23,500 in 2025). If you are age 50 or older, you may contribute an additional $8,000 in catch-up contributions, for a total of $32,500.
Physicians employed by hospitals, health systems, or academic medical centers often have access to a 457(b) deferred compensation plan in addition to a 403(b). What makes this particularly valuable: the contribution limits are separate.
In 2026, you can contribute up to $24,500 to a 457(b) (up from $23,500 in 2025) plan in addition to your 403(b) or 401(k) contributions. For an attending earning $300,000 or more, this represents an additional $24,500 in pre-tax income shielded from your current-year tax bill. If you are age 50 or older, governmental 457(b) plans allow an $8,000 catch-up contribution, bringing your total to $32,500.
Governmental 457(b) plans also offer a unique “special catch-up” provision in the three years prior to your plan’s normal retirement age. During that period, you may be able to contribute up to double the annual limit (up to $49,000 in 2026), depending on prior unused deferrals. You cannot use both the age-50 catch-up and the special catch-up in the same year; you must choose the greater of the two.
It’s important to note that non-governmental 457(b) plans (common in certain hospital systems and private nonprofits) carry different risks. These plans remain subject to the employer’s creditors, meaning your assets are not held in trust the way they are in a governmental plan.
Not every employer offers a 457(b), but if yours does, ask HR about it in your first week. Many physicians are not aware this option exists.
As a new attending, your income will almost certainly exceed the IRS income limits for direct Roth IRA contributions ($165,000 for single filers and $246,000 for married filing jointly in 2026). The backdoor Roth strategy allows high-income earners to contribute to a Roth IRA through a two-step process:
The conversion is generally not taxable if the traditional IRA had no pre-tax funds. The result is tax-free growth and tax-free withdrawals in retirement—a powerful outcome for someone decades from needing the money.
One important caveat: the pro-rata rule means existing pre-tax IRA balances can complicate the math. If you have a rollover IRA from residency or prior employment, consult with a physician-focused wealth advisor before executing the conversion.
If you are a W-2 employee at a hospital or health system, your employer handles your federal and state tax withholding. As long as your W-4 is set up correctly, you generally do not need to make quarterly estimated tax payments.
However, if any of the following apply to you, you may need to make quarterly estimated tax payments:
The IRS requires quarterly estimated tax payments if you expect to owe at least $1,000 in federal taxes after withholding and credits. The due dates for the 2025 tax year are April 15, June 16, September 15, and January 15, 2026.
The underpayment penalty is relatively modest but avoidable. If you have any side income—even occasional locum shifts—work with a tax professional to determine whether estimated payments are necessary.
This situation applies to the majority of new attendings, since most residency programs graduate physicians on June 30. If you begin your attending position on July 1 and earn $300,000 annualized for the second half of the year, your total first-year income looks roughly like this:
That $187,500, concentrated in the second half of the year, still places many new attendings in the 32% federal bracket. Meanwhile, residency-era withholding during the first half of the year under-withheld for that total income level.
The fix is simple: when you start your new position, immediately set your W-4 to reflect your annualized attending income, not your blended year-one income. The difference in withholding during the second half of the year will compensate for the shortfall.
Tax setup and retirement contributions get most of the attention in year one. But there is a benefit decision that quietly carries more financial risk than almost anything else on this list: disability insurance.
Your income is your most valuable financial asset. A physician earning $300,000 per year for 30 years represents $9 million in future earnings. Disability insurance exists to protect that asset if an injury, illness, or mental health condition prevents you from practicing your specialty.
What many new attendings do not realize is that the window for securing the best rates—with residency discounts of 20–30% off premiums—closes quickly after graduation. Most insurers allow new graduates to claim these discounts within 60 days to 6 months of finishing residency. After that, the savings are gone, and any new health conditions developed since training could affect your coverage or cost.
Check out Attend’s Ultimate Guide to Disability Insurance for Doctors: From Residency to Attending. It covers the key policy features, common mistakes, and a full checklist for evaluating coverage. Click here to download the guide.
Tax planning is most effective when done proactively during the year. Changes to withholding, retirement contributions, and estimated payments only help going forward; they cannot fix what has already passed.
HR onboarding walks you through benefits enrollment, not financial strategy. The retirement plan your employer offers may be excellent, but no one at the benefits desk is giving you personalized advice on the backdoor Roth, your specific withholding needs, or whether a 457(b) fits your situation.
Marriage, a new dependent, a spouse returning to work, or a change from W-2 to 1099 status all warrant a fresh look at your W-4 or estimated payment calculations.
At higher income levels, the student loan interest deduction phases out. For 2026, the deduction phases out completely for single filers with modified adjusted gross income above $100,000 and married filing jointly above $205,000. Many new attendings are phased out of this deduction in their first full year. Factor this into your plan.
Your $300,000 attending salary is not $300,000 take-home. After federal taxes, state taxes, FICA, retirement contributions, and benefits premiums, many attending physicians take home 55–65 cents of each gross dollar. Running your financial plan on gross income leads to overconfident spending and underestimated savings targets.
At Attend Wealth, we work exclusively with physicians, which means we have walked through this transition with dozens of new attendings across specialties, compensation structures, and employment models. We help you build the financial foundation that makes year one the beginning of something strong, not a year you are still correcting two years later.
Schedule a no-pressure consultation to talk through your year-one tax situation with a physician-focused wealth advisor.
Signing bonuses are usually taxed at a flat federal supplemental rate of 22%. However, most attendings fall into the 32% or 35% marginal bracket. This creates a “tax gap” of roughly 10%–13% on the lump sum, which must be covered through additional withholding or estimated payments to avoid a surprise tax bill.
Yes. Physicians at hospital systems often have access to both, and the contribution limits are separate. In 2026, you can contribute up to $24,500 to a 403(b) (up from $23,500 in 2025) and an additional $24,500 to a 457(b) plan ($23,500 in 2025), allowing you to shield up to $49,000 of pre-tax income from your current tax bill.
COMPLIANCE NOTE: This article is for educational purposes only and does not constitute personalized tax, legal, or investment advice. Tax laws and contribution limits change annually. Readers should consult a licensed tax professional and/or financial advisor for guidance specific to their situation. References to tax rates, contribution limits, and income thresholds are based on 2025–2026 IRS guidelines and are subject to change. Attend Wealth is a fee-based RIA; insurance solutions are offered with disclosed commissions.
Further reading
Authoritative resources to dig deeper. Links open in a new tab.
Written by
Tony Colunga
CEO & Founder, Attend Wealth
After more than two decades at Morgan Stanley, Wells Fargo, and BBVA managing hundreds of millions for high-net-worth clients, Tony built Attend specifically for physicians — with the same level of specialization they bring to medicine.
Attend Insights
No spam. No sales pitch. Just practical guidance for doctors — delivered free.
Keep Reading
6 min readPSLF rules are changing in 2026. What doctors need to know about residency credit, the SAVE-to-RAP shift, and what to do right now.
Tony Colunga
Jun 25, 2026
7 min readThe eight most common and costly financial mistakes new physicians make after training, and how to sidestep each one.
Tony Colunga
May 27, 2026
Ready to Apply This?
Schedule 30 minutes with an Attend advisor and apply what you have learned to your specific numbers and situation.