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You spent more than a decade getting here. Medical school, residency, maybe a fellowship, and countless nights on call. For many physicians, the real income doesn't start until their mid-30s. Now it's finally here.
Over the years, I've had the privilege of working with a few physicians and their families. Here is a pattern I see often: the income grows fast, but the plan does not keep up. Taxes take a bigger bite every year. Extra cash sits in checking. Disability and life insurance were set up during residency and never reviewed. And between clinic hours and call schedules, nobody has time to look at the whole picture.
The good news is that a few smart moves can make a real difference. Below are seven planning ideas every high-income physician should understand, especially with the tax changes that took effect in 2026.
1. Get more from your retirement plan (and know the new Roth rule)
Your workplace retirement plan is still one of the simplest ways to lower taxes and build wealth. For 2026, you can put up to $24,500 into a 401(k) or 403(b). If you are 50 or older, you can add an $8,000 catch-up contribution. If you are between 60 and 63, that catch-up goes up to $11,250.
Many hospital-employed physicians also have a 457(b) plan. It has its own separate limit of $24,500, so you may be able to save twice as much before tax. One thing to know: if your hospital is a nonprofit rather than a government employer, the money in that 457(b) technically belongs to the hospital until it is paid out to you. Understand the payout rules before you enroll.
There is a new twist this year. Starting in 2026, if you earned more than $150,000 in wages from your employer last year, your catch-up contributions must go into the Roth side of the plan. You lose the tax deduction on that money today, but it can grow and come out tax-free in retirement if you follow the rules.
This is not necessarily bad news. Many high earners have almost all of their savings in pre-tax accounts. Adding some Roth money gives you more control over your tax bill later. Just make sure your plan offers a Roth option. If it does not, high earners may not be able to make catch-up contributions at all.
What to do: Check your contribution elections before December 31 and confirm how your plan handles the new rule.
2. Private practice owners and partners: look at a cash balance plan
If you own your practice or are a partner in a physician group, a 401(k) alone may not be enough. The total that can go into a 401(k) from all sources, you plus the business, is capped at $72,000 for 2026.
A cash balance plan is a type of pension that can sit alongside your 401(k). It allows much larger tax-deductible contributions, and the amount generally rises with age. For an owner in their late 40s or 50s, the combined deduction can be several times what a 401(k) alone allows.
These plans are not for everyone. They work best with steady income, a commitment of several years, and a budget to contribute for eligible staff. But for a profitable practice where the doctors feel behind on retirement savings, they can be one of the most powerful tools available.
What to do: Ask for an illustration showing your contribution, the estimated tax savings, and the cost for your team.
3. Use the backdoor Roth and your HSA
Once your income passes a certain level, you can no longer contribute directly to a Roth IRA. Many physicians assume that door is closed. It is not.
A backdoor Roth is a simple two-step process. You put money into a traditional IRA without taking a deduction, then convert it to a Roth IRA. For 2026, the IRA limit is $7,500 per person, so a married couple could move up to $15,000 a year into Roth accounts this way.
One warning: if you already have money in pre-tax IRAs, a rule called the pro-rata rule can create a surprise tax bill. This is one of the most common mistakes I see, so check with your advisor or CPA before you start.
If you have a high-deductible health plan, a Health Savings Account (HSA) is another hidden gem. Money goes in tax-deductible, grows tax-free, and comes out tax-free for qualified medical costs. Many of my clients invest their HSA and pay today's medical bills out of pocket, letting the account grow for health costs in retirement.
4. California practice owners: don't overlook the PTET
If you live in a high-tax state like California, the federal cap on state and local tax (SALT) deductions matters to you. The new tax law raised that cap to $40,400 for 2026. Here is the catch: the cap starts shrinking once your income passes $505,000, and many top earners end up back at $10,000.
If your practice is a medical corporation taxed as an S corporation, or a partnership, California's Pass-Through Entity Elective Tax (PTET) may help. The business pays a 9.3% state tax at the entity level and deducts it on its federal return. You then receive a credit on your personal California return. California extended this option through 2030.
Timing matters. The first payment for each tax year is due by June 15, and missing it can shrink the credit you receive.
What to do: Ask your CPA whether the election makes sense for your practice, and put next year's June 15 payment on the calendar now.
5. Protect your biggest asset: your ability to earn
For most professionals, the most valuable asset is not a home or a portfolio. It is the next 20 or 30 years of income.
A surgeon who injures a hand, or an anesthesiologist who develops a tremor, may still be able to work in some job but not in their specialty. That is why the definition of disability in your policy matters so much. An "own-occupation" policy pays benefits if you cannot do the work of your specific specialty, even if you could earn money doing something else.
Group disability coverage through your hospital or medical group is a good start. But it often caps the monthly benefit well below what a high earner needs, and those benefits may be taxable. A personal policy can fill the gap and stays with you if you change jobs. The same thinking applies to life insurance: if your family depends on your income, term life coverage is usually an affordable way to protect them while you build wealth.
6. Build a wall around your wealth
Medicine is a field where lawsuits are a real risk, even for the most careful doctors. Malpractice insurance covers your professional work, but it does not protect you from everything, like a car accident or an injury on your property.
A few layers worth reviewing:
Umbrella liability coverage that sits on top of your home and auto policies.
The right business structure for your practice.
Where you save for retirement. In California, employer plans like 401(k)s generally receive strong protection from creditors, while IRAs are protected to a more limited degree. One more reason to make full use of your workplace plan.
How your accounts and property are titled.
What to do: Review your coverage limits and talk with an attorney who focuses on asset protection about your structure.
7. Update your estate plan for the new rules
Starting in 2026, the federal estate and gift tax exemption is $15 million per person, or $30 million for a married couple. The new law made this higher amount permanent, at least until Congress decides to change it.
That is good news, but it can also create problems. Many trusts were written years ago, when the exemption was much lower. Some of those older documents may now divide assets in ways that no longer match your wishes, or miss tax benefits your heirs could have received.
For physicians, estate planning is about more than taxes. It means naming guardians for your children, keeping beneficiaries on your accounts current, and choosing who makes decisions for you if you cannot.
What to do: Pull out your will and trust. If they are more than five years old, or you have had a new child, a move, a divorce, or a big jump in net worth, it is time for a review.
Bringing it all together
Each of these ideas helps on its own. The real value comes when they work together. Your retirement contributions affect your SALT deduction. Your practice structure affects your PTET options and your asset protection. Your insurance and estate plan need to keep pace with the wealth you are building.
You already know the value of a good care team. A primary care doctor coordinates the specialists so the patient gets one clear plan. As a CFP® professional, I play that role for your finances, working alongside your CPA and estate attorney so nothing falls through the cracks. Having worked with physicians and their families, I understand how little free time you have, so I keep the process simple and focused.
With year-end just weeks away, now is a smart time to act. Many of these moves work best when they are planned before December 31.
Ready for a second opinion? If you are a physician with $250,000 or more in investable assets, I would welcome a conversation. Our first meeting is a relaxed discovery call. We talk about your goals, what is working, and what may be missing, and we both decide whether working together makes sense.
Call or text (925) 298-5269, or email abiscardi@pacificfp.com to schedule your complimentary discovery meeting.
Argenis David Biscardi, CFP® MS · Pacific Financial Partners · Lafayette, CA
This article is for educational purposes only and is not tax, legal, or investment advice. Tax laws are complex and change often. Figures shown are for the 2026 tax year. Please consult your tax and legal professionals about your situation before acting. Insurance products are subject to underwriting and policy terms.
