The Deceptive Income of Physicians

[crb]

http://benbrownmd.wordpress.com/

In healthcare conversions it has been mentioned that cutting payments, or price controls, are the way to go to control costs. People seem to have it out for greedy doctors. I am biased here, there are 4 doctors in my immediate family, including my wife. I also have a brother who is a nurse. This link above is really quite good, he really gets into the weeds in his statistics, and it is a long read, but it really underlines how doctors aren't as rich as people tend to think, considering they don't really start work until well until their 30s and accumulate a mountain of debt getting there. The opportunity cost of not working earlier in your 20s in huge thanks to the miracle of compounding interest. They also have long hours, lots of stress, etc, which is not unique to their profession, but certainly should be considered.

My wife is currently a chief resident and in a fellowship, she makes $45,000 a year salary. Thankfully for us I've paid off most of her loans, the average resident isn't married to me, and student loan payments end up being around 1500 a month, minimum, more if you need to take out a lot for living expenses. To get to this point it has been 13 years of education. My brother, the nurse, is a 2 year RN, he did a 2 year RN program, he works fewer hours than my wife (3 12's a week) and makes around $55k a year. Just to put things in perspective. Of course, she will eventually make more, but is it worth all that extra time?

Anyways, it is a good link, Doctors, when finally done, make good money, but when you account for hours worked, the opportunity cost of starting your profession so late in life, the cost of the education, etc. It doesn't end up actually being that good. The lifetime earnings per hour worked.



The median gross income among internal medicine physicians is $205,441.7 The median net income for an internist who is married with two children living in California is then $140,939. Internal medicine is a three-year residency, so throughout residency they will earn a total net income of about $120,000 and spend about 35,000 hours training after high school. The total cost of training including interest, forbeared for three years and paid off over 20 years as explained above is $687,260. One study reported that the average hours worked per week by practicing Internal Medicine physicians was 57 hours per week.8 Another study reported the mean to be 55.5 hours per week.9 We will use 56 hours per week and assume they work 48 weeks per year. If they finish residency at 29 years old and retire at 65 years old they will work for 36 years at that median income.

[(140,939 x 36) + (120,000) – (687,260)] / [(56 x 48 x 36) + (34,000)] = $34.46

The adjusted net hourly wage for an internal medicine physician is then $34.46

The median gross income among high school teachers, including the value of benefits but excluding their pension, is about $50,000.10 The median net income for a high school teacher who is married with two children living in California is then $42,791. This is assuming a federal Income tax rate of 15%, California state income tax rate of 6.6%, Social Security tax rate of 6.2% and Medicare tax rate of 1.45%. You can go to www.paycheckcity.com to get an idea of what one’s net pay would be for different incomes, states of residence, marital status, number of children, etc. Teachers spend about 6,400 hours training after high school, the amount of time it takes to get a bachelor’s degree. The total cost of training if one attends an averaged priced institution and pay off their debt over 20 years at a 7% interest rate is $186,072. At this income one would be able to deduct the interest on their student loans from their income taxes; however, those savings are not accounted for in the calculation below. High school teachers have about 10 weeks off each summer, 2 weeks off during Christmas, 1 week off for spring break and 1 week of personal paid time off. Therefore, high school teachers who work full time average of 40 hours per week for 38 weeks each year. Yes, teachers spend time “off the clock” preparing for class, correcting papers, etc. However physicians also spend time “off the clock” reading charts, studying, going to conferences, etc. If a high school teacher finishes college at 22 years old and retires at 65 years old, they will work for 43 years. Most teachers also receive a pension. We will assume their gross annual pension including the value of benefits is $40,000 which is a net pension of $35,507. If they die at 80 years old they will receive this pension for 15 years.

[(42,791 x 43) + (35,507 x 15) – (186,072)] / [(40 x 38 x 43) + (6,400)] = $30.47

The adjusted net hourly wage for a high school teacher is then $30.47

The median gross income among internal medicine physicians is $205,441.7 The median gross income among high school teachers, including the value of benefits but excluding their pension, is about $50,000 per year.10 Accounting for time spent training, student loan debt, years worked, hours worked per year and disproportionate income taxes – the net adjusted hourly wage of an internist is $34.46 per hour, while that of a high school teacher is $30.47 per hour. Though the gross income of an internal medicine physician is 4 times that of a high school teacher, the adjusted net hourly wage of an internal medicine physician is only 1.13 times that of a high school teacher. Most people would argue that high school teachers are not paid enough, yet for some reason most people would also argue that physicians are paid too much.

We need more doctors in this country, everyone knows we have a shortage, especially with Obamacare bringing (supposedly) so many more people into the system, and yet at the same time you hear calls about cuts to reimbursement rates. Well, maybe we can look at all the regulation and trim some administrative costs, but do you honestly think you'll attract more people into the field by reducing the pay? Most family practice people I know already tell people not to go into medicine, they wish they had chosen a different career.

Anyways, flame on.

[Keller]

Don't go into internal medicine.

These stats are well known in the medical community.

Four of the guys I lived with in college are doctors. Three are done with residency (two in Detroit suburbs, one in Fargo). One is in his last year (Portland) and has a job offer at a hospital in the Portland suburbs. All four are emergency doctors and will work less than 40 hours per week and start at over 200k.

I'm not saying they make too much, but I don't think they'd trade places with any HS teacher in the nation.

[Bobmuhthol]

Retardedly stupid and simplified analysis. I can change one number by a small amount and get totally different answers.

[ClydeR]

$30 an hour! That would be sweet. I would be either a teacher -- at a private school only -- or a doctor, except that I don't like this generation of children and I don't want to get weird people's blood on me.

[Suppa Hobbit Mage]

I thought people became doctors because they wanted to help people?

[crb]

Don't go into internal medicine.

These stats are well known in the medical community.

Four of the guys I lived with in college are doctors. Three are done with residency (two in Detroit suburbs, one in Fargo). One is in his last year (Portland) and has a job offer at a hospital in the Portland suburbs. All four are emergency doctors and will work less than 40 hours per week and start at over 200k.

I'm not saying they make too much, but I don't think they'd trade places with any HS teacher in the nation.

rofl @40 hours per week.

[Warriorbird]

The number of hilarious notions about teaching is tremendous too.

[Archigeek]

rofl at 35,000 hours of training vs 6400.

[Stretch]

Was there a point to this thread aside from patting yourself on the back?

[Archigeek]

My favorite line:


the average resident isn't married to me

For which they daily offer up a silent prayer of thanks.

[diethx]

My favorite line:



For which they daily offer up a silent prayer of thanks.

What he said.

[ClydeR]

The number of hilarious notions about teaching is tremendous too.

I don't think so. Just drive around an affluent neighborhood some time. You can bet that half the big houses and fancy cars are owned by doctors and the other half are owned by teachers.

[Bobmuhthol]

Oh my God, I just looked at this again and the guy gives no consideration to retirement savings (in the form of better tax treatment, at the very least) for doctors, yet he tacks on $532,605 of pension to the end of a teacher's career. Unsurprisingly, removing the pension reduces his shitheaded formula to an hourly wage of $23.05.

[BriarFox]

Nice correction, Alex.

[Archigeek]

Generally speaking, I think our healthcare system is pretty messed up, but I don't really blame doctors. Insurance companies, a flawed patent protection system for pharmaceuticals, a system that rewards unnecessary procedures and ginormous craptons of paperwork, but not so much the doctors and nurses.

This guy's analysis is messed up in a lot of ways, but basically it boils down to this: he minimizes everything on one side of the scale and maximizes it on the other to get the end result he's looking for. Not surprisingly he succeeds, but the overwhelming evidence points out that the disparity of reward between doctors and teachers is a lot more than the few bucks per hour that he implies. Whether and how much it's deserved is an entirely different question. I'm happy we have good medical professionals in this country and happy we have good teachers as well.

Interestingly, he picked two areas of our economy where costs are outstripping inflation: medical care and education, though I think the education side is much more of an issue at the university level.

[crb]

Oh my God, I just looked at this again and the guy gives no consideration to retirement savings (in the form of better tax treatment, at the very least) for doctors, yet he tacks on $532,605 of pension to the end of a teacher's career. Unsurprisingly, removing the pension reduces his shitheaded formula to an hourly wage of $23.05.

How does that work now? I'm puzzled. Do doctors have access to a retirement savings method teachers do not? The average doctor is not allowed to use a Roth account. Any money he saves does not grow tax free, and comes out of his income. Suppose he puts the max each year into a traditional ira, that lowers his yearly income, and that money does not grow tax free like it would in a Roth. Pension benefits are on top of wages, they are, in fact, benefits. When calculating someone's true earnings you always add in the value of benefits. I've never seen a comparison that doesn't do this. Also, the teacher can use a traditional IRA if he wants to as well, or a Roth IRA.

Do you really not understand how a pension and other benefits are earnings on top of wages, whereas retirement savings you fund out of your wages aren't?

[crb]

Was there a point to this thread aside from patting yourself on the back?

Pointing out that doctors really don't make that much when you factor in the cost of education, hours worked, and the opportunity cost of delaying the start of your career for so many years. Which is related related to calls by some to save our healthcare system by reducing physician reimbursement rates, while at the same time complaining about a shortage of providers. Then, to point out, that you aren't going to attract more people to the profession by reducing the remuneration. I could have appended it to the other healthcare thread, but I thought it was a sufficient enough tangent to have its own thread.

[Bobmuhthol]

Doctors receive 401(k) matches and profit-sharing contributions to retirement accounts. Those are not ordinary income, so they are not included in Ben Brown, MD's retarded calculation. Let's pretend that the doctor will receive an additional 10% per year in 401(k) matching and profit sharing, all of which sits in a retirement account. I don't even know why you bothered to waste your time claiming that they can't put money into an IRA. Who gives a fuck? They have 401(k)s, and those are absolutely tax deferred.

So anyway, this doctor is going to receive $20,544.17 every year because according to Ben Brown, MD, everyone earns the median income all the time forever. The doctor works for 36 years, apparently, sure, fine. So he's earning $739,590.12 that is not accounted for. This assumes he puts all of his money in TIPS with a 0% real rate. Yes, that is a fucking stupid assumption, but it's the Ben Brown, MD way of handling things, and it puts a minimum threshold on the effect of this unaccounted income (since, as we know, retirement plans are current wages, after all).

Let's add $739,590.12 to the lifetime earnings of this doctor. Now he makes $40.12 per hour.

The deceptive income of physicians.

[Catts]

not sure how this is deceptive. specialists like doctors/lawyers have been in a higher tax bracket for a while now. 401ks are shit right now and taxed heavily on sale. most doctors spend the first 10 years paying off their debt, but they know that going in.

[Bobmuhthol]

I can't begin to understand what the sentence "401ks are shit right now" means.

[Catts]

I can't begin to understand what the sentence "401ks are shit right now" means.

That they're shit. mmk?

[msconstrew]

This whole calculus ignores the fact that, even though doctors and other similar professionals defer income production for many years, doctors not only reap the benefit of higher gross salaries than teachers/nurses/whatever ... they also have the ability to increase their income through consulting work (expert witnesses, for example). And you would not believe how much money doctors can make by acting as expert witnesses, by the way.

That's just the tip of the iceberg - doctors can be clinical professors at local medical schools, they can teach in other contexts, they can engage in concierge medicine, and the list goes on. Teachers, by contrast, do not have that breadth of options to produce extra income and are therefore stymied more than doctors in that respect (though of course they can tutor, as our own BriarFox can attest).

[Bobmuhthol]

Yeah, I guess that makes sense if you hate money.

[Catts]

I think this surgeon(in training) said it best


Regarding "greedy doctors:" As a surgeon in training about to enter the work-force I ask people to consider my greed: 4 years undergrad, 4 years medical school, 5 years general surgery training, 2 years fellowship, $250,000 education debt about to be unleashed onto me as soon as I graduate.

Has anyone considered what physicians in other countries sacrifice to become doctors? In many countries education is free and in others it requires less training time, and in some instances with better clinical outcomes. The system is broken on many levels, and is influenced by many factors. Though I gave my late teens and all of my twenties up for this (and yes it was my choice), I shall spend the next ten years paying for it with my "excessive" salary. All this only to be criticized that I am not trying to save someone's life for free and to be demonized as being greedy.

If anyone else wants to make this investment of time, energy, finance, sweat, tears and 15 years of training, and is willing to keep being called names go ahead...... I bet you won't. However, if you need an operation to save your life in this country, I bet you'll be glad someone made this absurd sacrifice.

I don't know many teachers who go through this.

[msconstrew]

I think this surgeon(in training) said it best



I don't know many teachers who go through this.

Those poor maligned doctors. So persecuted.

I hear this shit from lawyers all the time and it is just so much privileged BS. You know what? You wanted to go to medical school/law school. You did it maybe for altruistic reasons and maybe with financial considerations in mind, but you also did it mindfully with full knowledge that you would be in school for a long time and that your decision to pursue private education (vs. public) would put you deeper in the debt hole. So stop fucking complaining about it; that $200k/year salary must be so staggeringly difficult to handle.

I understand the arguments here about additional time and education and cost of education. I just think it's a bunch of privileged people crying into their Blue Mountain coffee. Teachers spend four years in school, maybe six if they get a Masters. And for that they are rewarded by going into jobs where they are accused of sucking the public teat for their entire careers, accused of being incompetent, accused of being overpaid (which: LOL), accused of working "only" nine months per year, and their wages are capped by the state. And crb's quoted doctor is giving them a hard time because they have a pension? Just ... give me a break.

Meanwhile: doctors - when they finally do get into private practice or begin working with hospitals - DO make six figure salaries (which I think they deserve, make no mistake) and they are able to pay off their loans a lot more quickly than teachers making 1/4 of that total gross salary. They are also able to save a lot more because their gross salaries are so high. They are also able to make forays into other areas of income production like consulting work (which they can do on top of their regular jobs). crb's quoted doctor mentions NONE of this; instead he just assumes that the doctor in question (who went into internal medicine instead of emergency medicine, orthopedics, dermatology, plastics, or any other specialty that earns more money) has no other option for income production than his regular job.

[Fallen]

Are we also discounting the academic requirements for entering into Med school versus getting a teaching degree?

[diethx]

Those poor maligned doctors. So persecuted.

I hear this shit from lawyers all the time and it is just so much privileged BS. You know what? You wanted to go to medical school/law school. You did it maybe for altruistic reasons and maybe with financial considerations in mind, but you also did it mindfully with full knowledge that you would be in school for a long time and that your decision to pursue private education (vs. public) would put you deeper in the debt hole. So stop fucking complaining about it; that $200k/year salary must be so staggeringly difficult to handle.

I understand the arguments here about additional time and education and cost of education. I just think it's a bunch of privileged people crying into their Blue Mountain coffee. Teachers spend four years in school, maybe six if they get a Masters. And for that they are rewarded by going into jobs where they are accused of sucking the public teat for their entire careers, accused of being incompetent, accused of being overpaid (which: LOL), accused of working "only" nine months per year, and their wages are capped by the state. And crb's quoted doctor is giving them a hard time because they have a pension? Just ... give me a break.

Meanwhile: doctors - when they finally do get into private practice or begin working with hospitals - DO make six figure salaries (which I think they deserve, make no mistake) and they are able to pay off their loans a lot more quickly than teachers making 1/4 of that total gross salary. They are also able to save a lot more because their gross salaries are so high. They are also able to make forays into other areas of income production like consulting work (which they can do on top of their regular jobs). crb's quoted doctor mentions NONE of this; instead he just assumes that the doctor in question (who went into internal medicine instead of emergency medicine, orthopedics, dermatology, plastics, or any other specialty that earns more money) has no other option for income production than his regular job.

Well said.

[crb]

Doctors receive 401(k) matches and profit-sharing contributions to retirement accounts. Those are not ordinary income, so they are not included in Ben Brown, MD's retarded calculation. Let's pretend that the doctor will receive an additional 10% per year in 401(k) matching and profit sharing, all of which sits in a retirement account. I don't even know why you bothered to waste your time claiming that they can't put money into an IRA. Who gives a fuck? They have 401(k)s, and those are absolutely tax deferred.

So anyway, this doctor is going to receive $20,544.17 every year because according to Ben Brown, MD, everyone earns the median income all the time forever. The doctor works for 36 years, apparently, sure, fine. So he's earning $739,590.12 that is not accounted for. This assumes he puts all of his money in TIPS with a 0% real rate. Yes, that is a fucking stupid assumption, but it's the Ben Brown, MD way of handling things, and it puts a minimum threshold on the effect of this unaccounted income (since, as we know, retirement plans are current wages, after all).

Let's add $739,590.12 to the lifetime earnings of this doctor. Now he makes $40.12 per hour.

The deceptive income of physicians.

Uhhh... first of all. 401ks do not have tax exempt growth. ROTH 401ks do, but most 401ks are traditional 401ks which do not. A traditional 401k reduces your AGI in years in which you make contributions, and then you pay taxes on principal and any capital appreciation when you make withdrawals.

Second of all, I must have missed the law that mandated doctors receive 401ks with profit sharing and employer matches. A large number of physicians are self employed. That is quite an assumption you carry there. You're assuming the doctor is not self employed in private practice. You're assuming his employer offers a 401k plan, you're assuming that his employer offers a contribution match, and you're assuming the contribution match is generous. And by the way, if you really did want to make all of those assumptions, you could only consider the employer match portion to be additional income, not the original contribution, which comes out of wages. Assuming the employer offered a very generous 100% unlimited match, the individual 401k contribution limit is $17,500. The most common match, when a match is even offered, is 50%, capped at a percentage of the employee's wages, such as 5%. So, for the sake of easy math, if you make $200k a year, your employer will match 50% of your contributions until you contribute 5% of your pay. So, if you contribute $10k, your employer will match $5k, max. So, in this situation, the maximum unaccounted for income is $5k per year, assuming all your above other assumptions are accurate.

Of course, maybe it was unfair to assume the teacher would have a pension, you could argue that, though I think doing so would be silly, considering the status of unionization in the teaching profession.

If you're going to assume the doctor puts 10% of his salary into a 401k plan provided by his employer, then you can just as easily assume the teacher puts 10% of his salary into an IRA.

I think I know why you love Obama, just like him, when proven wrong, you dig in. Just admit your error that you forgot that pensions are on top of wages and 401ks/IRAs are funded out of wages.

Of course, even if you were right, You come up with $40 an hour, a mere 33% more than your teacher example. Not that teachers are bad, as that page said most people think teachers are underpaid. Personally, I think good teachers are underpaid and bad teachers are overemployed. The point is not to pick on teachers, it is to illustrate that the medical profession is as lucrative as sometimes people think it is from the outside looking in. Although, every person I know who went into teaching, if you ask them why, they don't say anything about wanting to shape the minds of tommorow, they say "Summers off."

[Bobmuhthol]

Uhhh... first of all. 401ks do not have tax exempt growth.Uhhh... first of all. I said tax deferred.

I'm not really going to read your post carefully because I can, at a glance, see that you are using the phrase "you're assuming..." a lot. Have you taken a fucking look at Ben Brown, MD's use of assumptions? Give me a break.


If you're going to assume the doctor puts 10% of his salary into a 401k plan provided by his employer, then you can just as easily assume the teacher puts 10% of his salary into an IRA.I would never make that assumption, because the doctor is not putting 10% of his salary into a 401(k). He is receiving an additional 10% of his salary as a 401(k) contribution from his employer, in the form of a contribution match and profit sharing, as I very explicitly stated. He can invest his own money with the ~$140k that Ben Brown, MD assigned to him, just like the teacher can invest his own money. I haven't touched that. I'm saying the doctor is going to receive retirement account contributions that are not part of his $140k income, so you either have to compare retirement benefits for both (smarter) or for neither (stupider), but you definitely can't do it only for one simply because one is a pension.

[crb]

Just in case I'm accused of making things up (I guess that'd make me a bob?)...

One example from the real world:
http://www.boston.com/business/personalfinance/articles/2009/05/31/end_of_the_401k_match_leaves_workers_in_the_lurch/



At Beth Israel, about 5,000 employees lost their 401(k) matches in April. The hospital had matched 50 percent of what they contributed, up to 2 percent of their pay.

So, for our 200k a year doctor at this hospital, he lost his contribution entirely, but had he not... the max would have been a match of $2k if he contributed $4k. The total benefit over 36 years would be $64k, not the $700k Bob came up with.

[Bobmuhthol]

lol, at Beth Israel, those 5,000 employees were not $200k income doctors, unless you think Beth Israel's wage expense is in excess of $1 billion. And why do you think that Beth Israel represents the median doctor in California?



The cut is meant to be temporary - more palatable than cutting pay because workers don't feel the pain right away - but it will continue at least through 2010, the hospital's chief executive, Paul Levy, has said.That's some real crb shit. Take an article from 2009 about a temporary, staff-wide 401(k) match cut that has probably expired by now, and then claim that the median doctor in California can only expect to receive $2,000 in retirement contributions in good years.

[msconstrew]

No, no, it's just that we should feel bad for all those poor doctors out there who get accused of making too much money. I bet they're all in therapy for it. Frankly, I don't even understand why a doctor would give a shit if someone accuses them of making too much money. You could all call me overpaid and I would just laugh my way to the bank to deposit my paycheck.

[Gelston]

You physically deposit checks at the bank?

[msconstrew]

Heh, I knew someone was going to ask me that. Not anymore, but I did for years because my previous firm was anti-direct deposit for some reason.

[Archigeek]

You physically deposit checks at the bank?

She lives in Wisconsin. It's an excuse to stop and pick up some cheese curds on the way home.

[msconstrew]

She lives in Wisconsin. It's an excuse to stop and pick up some cheese curds on the way home.

You're just jealous.

[crb]

Uhhh... first of all. I said tax deferred.

I'm not really going to read your post carefully because I can, at a glance, see that you are using the phrase "you're assuming..." a lot. Have you taken a fucking look at Ben Brown, MD's use of assumptions? Give me a break.

I would never make that assumption, because the doctor is not putting 10% of his salary into a 401(k). He is receiving an additional 10% of his salary as a 401(k) contribution from his employer, in the form of a contribution match and profit sharing, as I very explicitly stated. He can invest his own money with the ~$140k that Ben Brown, MD assigned to him, just like the teacher can invest his own money. I haven't touched that. I'm saying the doctor is going to receive retirement account contributions that are not part of his $140k income, so you either have to compare retirement benefits for both (smarter) or for neither (stupider), but you definitely can't do it only for one simply because one is a pension.

Use Google and see if you can find a single hospital in the entire country that will match 100% of an employer's 401k contributions up to 10% of his income.

I understand you're 23 years old and recently got a bachelor's degree, but that impressive credential aside, sometimes the real world doesn't work like you theoretically think it do. Ignoring, again, the fact that so many doctors are self employed, or that even when employed by a hospital are often under a contract different from other employees (usually less of this sort of benefit), we'll assume if a doctor is employed by a hospital he gets the normal 401k benefits that you can find on hospital websites all over the Internet.

So take a moment, use Google, and find this unicorn you're so enamored with, this glorious 100%/10% match. I've looked, I can't find it. The best I can find is 50% at 6% or 100% at 3%.

Now Bob, the statistics I can find indicate only about two thirds of employers who offer 401ks even offer matches period. I can also find statistics that 40% of doctors are self employed, down sharply over the last decade. If I did you a favor and assumed 100% of employers offered 401ks, we can then combine the two statistics to find that only 39.6% of doctors are likely going to have access to a 401k plan that offers any matching contribution.... and again those are usually capped at low levels.

Let me know how the search goes.

[Catts]

wow not sure if that's directed at me but the purpose isn't to fuckin pity doctors, it's to get another perspective on it. They make more but the amount they keep (cashflow) on average is not that much higher than any other proffession. They're still in the rat race with the rest of us. I just think if you're trying to make money or get rich there's ways that are much much easier.

[Warriorbird]

Use Google and see if you can find a single hospital in the entire country that will match 100% of an employer's 401k contributions up to 10% of his income.

I understand you're 23 years old and recently got a bachelor's degree, but that impressive credential aside, sometimes the real world doesn't work like you theoretically think it do. Ignoring, again, the fact that so many doctors are self employed, or that even when employed by a hospital are often under a contract different from other employees (usually less of this sort of benefit), we'll assume if a doctor is employed by a hospital he gets the normal 401k benefits that you can find on hospital websites all over the Internet.

So take a moment, use Google, and find this unicorn you're so enamored with, this glorious 100%/10% match. I've looked, I can't find it. The best I can find is 50% at 6% or 100% at 3%.

Now Bob, the statistics I can find indicate only about two thirds of employers who offer 401ks even offer matches period. I can also find statistics that 40% of doctors are self employed, down sharply over the last decade. If I did you a favor and assumed 100% of employers offered 401ks, we can then combine the two statistics to find that only 39.6% of doctors are likely going to have access to a 401k plan that offers any matching contribution.... and again those are usually capped at low levels.

Let me know how the search goes.

This cutely neglects all the errors with the teacher section.


wow not sure if that's directed at me but the purpose isn't to fuckin pity doctors, it's to get another perspective on it. They make more but the amount they keep (cashflow) on average is not that much higher than any other proffession. They're still in the rat race with the rest of us. I just think if you're trying to make money or get rich there's ways that are much much easier.

This article is hilariously ridiculous and clearly weighted for the ego of folks like crb.

[Bobmuhthol]

Use Google and see if you can find a single hospital in the entire country that will match 100% of an employer's 401k contributions up to 10% of his income.I love it when you attack someone's argument like the arrogant motherfucker you are, but you neglect to mention that it's not the argument the person made. Yeah, good for you, you can sit there and smugly say shit like this because we both know it's not true, and it's not something I ever said.

[Catts]

Hilariously ridiculous and clearly weighted for the ego of folks like crb.
gotcha*

[crb]

lol, at Beth Israel, those 5,000 employees were not $200k income doctors, unless you think Beth Israel's wage expense is in excess of $1 billion. And why do you think that Beth Israel represents the median doctor in California?

[/FONT][/COLOR][/LEFT]That's some real crb shit. Take an article from 2009 about a temporary, staff-wide 401(k) match cut that has probably expired by now, and then claim that the median doctor in California can only expect to receive $2,000 in retirement contributions in good years.

Uh... it was a hospital 401k plan, an example of a real 401k plan offered by a real hospital. You have invented this 401k plan that offers a 100% match at 10% of salary. This does not exist in the real world. Nevermind that 10% of 200k exceeds the annual contribution limit, no hospital offers that. If they do, by all means, post the link. I'm waiting. Otherwise why bother using actual statistics on teacher pensions? Why not pull something out of my ass like a $150k yearly pension? There wouldn't be any evidence to support that pension existing, but I could use it to argue with you.

[Bobmuhthol]

THE DECEPTIVE INCOME OF PHYSICIANS.

Anyone with a brain understands both sides at this point. It's not worth it for me to argue with crb, who has historically demonstrated a need to provide long-winded rebuttals to nobody and about nothing. I'm not wasting the effort to disprove made up shit.

[Archigeek]

Self employed doesn't mean "can't offer a 401k." For most doctors, it just means they own the company they work for, and in that case, they are actually more likely to offer a generous 401k to themselves. And if we're going to get into retirement funds, let's not assume that all teachers have pensions either. That assumption is not true.

The idea that the lifetime income of the average teacher is only slightly less than the lifetime income of the average doctor is laughable.

[crb]

Use Google and see if you can find a single hospital in the entire country that will match 100% of an employer's 401k contributions up to 10% of his income.I love it when you attack someone's argument like the arrogant motherfucker you are, but you neglect to mention that it's not the argument the person made. Yeah, good for you, you can sit there and smugly say shit like this because we both know it's not true, and it's not something I ever said.
[/COLOR]

Uhhh... what now... did you go back and edit your posts?



He is receiving an additional 10% of his salary as a 401(k) contribution from his employer



Let's pretend that the doctor will receive an additional 10% per year in 401(k) matching

No Bob, you certainly did make that claim.

[msconstrew]

Self employed doesn't mean "can't offer a 401k." For most doctors, it just means they own the company they work for, and in that case, they are actually more likely to offer a generous 401k to themselves. And if we're going to get into retirement funds, let's not assume that all teachers have pensions either. That assumption is not true.

The idea that the lifetime income of the average teacher is only slightly less than the lifetime income of the average doctor is laughable.

Yes, of course. For self-employed people there is the ever-poplar SEP. There is also the Keogh. There is also the IRA. There are any number of retirement vehicles for the self-employed, all of which are available to doctors if they so choose.

[Warriorbird]

no.

To start with it clearly underestimates the hours a teacher actually works and the fact that most end up with a Masters degree as well as recertification courses. Then it pretends that every teacher is in a choice union job in the highest paying states. Then it pretends that every teacher is in a public school. It also curiously doesn't mention all the tax benefits of being a perpetual student. Alex has pointed out other errors. I imagine there's others even he hasn't seen.

It's a joke.

[Bobmuhthol]

What you claim I said:

Let's pretend that the doctor will receive an additional 10% per year in 401(k) matching
What I actually said:

Let's pretend that the doctor will receive an additional 10% per year in 401(k) matching and profit sharing, all of which sits in a retirement account.I can't even believe you think you're getting away with this. Fucking Christ.

[crb]

Self employed doesn't mean "can't offer a 401k." For most doctors, it just means they own the company they work for, and in that case, they are actually more likely to offer a generous 401k to themselves. And if we're going to get into retirement funds, let's not assume that all teachers have pensions either. That assumption is not true.

The idea that the lifetime income of the average teacher is only slightly less than the lifetime income of the average doctor is laughable.

First of all, 401k laws prohibit employers from providing more generous benefits to the boss than to the rank and file. You can, I guess, argue that a self employed doctor could have his own 401k, though ones I've known have not had it, but it doesn't change the public statistics on match levels and how many employers even offer matching contributions.

Secondly, you made an accounting fail, because if the doctor owns the business, the employer match comes out of his pocket. Remember.. if you own the business, business expenses come out of your pocket. Funny thing that. He is reducing the income of the business, which reduces his income, income which is accounted for in the various statistical services that provide compensation estimates for various professions.

Thirdly, it isn't "lifetime income" it is hourlyincome. A big reason for the closeness, and probably why he picked teachers, is because of the the large amount of vacation time teachers get. Doctors will have more life time income, and they will have worked many more hours to reach it.

[crb]

What you claim I said:
[/I]
What I actually said:
I can't even believe you think you're getting away with this. Fucking Christ.


Like I said Bob, show me the 401k plan that is so generous and I'll admit you have proof. Most large employers put plan data on the internet, go find it. Show me this generous plan.

[crb]

Yes, of course. For self-employed people there is the ever-poplar SEP. There is also the Keogh. There is also the IRA. There are any number of retirement vehicles for the self-employed, all of which are available to doctors if they so choose.

... which are funded out of earnings. You're like Obama trying to count savings twice. You can only count money once.

Someone with a pension gets their salary + the pension benefit.

Someone who funds a retirement account gets their salary, and carves off a portion of their salary to put into their retirement account.

You obviously have to account for them different. This is not rocket science. It isn't even crop science, it is barely mathematics.

The exception, which Bob rightfully noted, is 401ks where the employer offers a match, this except, which Bob failed to note, is only used in about two thirds of 401k plans, and is typically no more than a 50% match, typically capped at a percentage of your salary in the low single digits.

[Bobmuhthol]

First of all, 401k laws prohibit employers from providing more generous benefits to the boss than to the rank and file.Nothing prevents profit sharing contributions into a 401(k), and secretaries are not required to participate in profit sharing, so your argument is false.
You can, I guess, argue that a self employed doctor could have his own 401k, though ones I've known have not had it, but it doesn't change the public statistics on match levels and how many employers even offer matching contributions.Yeah, I guess it makes sense to use national retirement plan statistics and project them onto $200k income doctors. Or maybe it makes absolutely zero fucking sense. Whatever.
Secondly, you made an accounting fail, because if the doctor owns the business, the employer match comes out of his pocket. Remember.. if you own the business, business expenses come out of your pocket. Funny thing that. He is reducing the income of the business, which reduces his income, income which is accounted for in the various statistical services that provide compensation estimates for various professions.Reducing the income of the business does not reduce his income if he is being paid a salary and receives additional 401(k) contributions from the business he owns. The business's cash simply goes down. He didn't own that cash. His business did. And profit sharing lets him do it.
Thirdly, it isn't "lifetime income" it is hourlyincome. A big reason for the closeness, and probably why he picked teachers, is because of the the large amount of vacation time teachers get. Doctors will have more life time income, and they will have worked many more hours to reach it.Ben Brown, MD, the fucking moron that he is, really calculated lifetime earnings (or attempted to, anyway), and then divided that by some ridiculous estimate of lifetime "effort" to produce a lifetime hourly wage. It's stupid to do.

As far as "YOU CAN'T MATCH THAT!":

The IRS maximum 401K contribution is how much you can personally contribute to your 401K during the year. Your employer 401K contribution limit is entirely up to them – but the max on total contributions (employee plus employer) to your 401K in 2012 is $51,000 (or 100% of your salary, whichever is less). Technically, this means that your employer could contribute up to $33,500, if they wanted to, and it would not count against your $17,500 personal contribution maximum
http://20somethingfinance.com/maximum-employer-401k-contribution/

[Bobmuhthol]

Like I said Bob, show me the 401k plan that is so generous and I'll admit you have proof. Most large employers put plan data on the internet, go find it. Show me this generous plan.You're a fucking idiot. You're a fucking idiot. You're a fucking idiot. You're a fucking idiot.
The exception, which Bob rightfully noted, is 401ks where the employer offers a match, this except, which Bob failed to note, is only used in about two thirds of 401k plans, and is typically no more than a 50% match, typically capped at a percentage of your salary in the low single digits.Doctors *do not* receive national average salaries and benefits. Accounting fail.

[msconstrew]

... which are funded out of earnings. You're like Obama trying to count savings twice. You can only count money once.

Someone with a pension gets their salary + the pension benefit.

Someone who funds a retirement account gets their salary, and carves off a portion of their salary to put into their retirement account.

You obviously have to account for them different. This is not rocket science. It isn't even crop science, it is barely mathematics.

The exception, which Bob rightfully noted, is 401ks where the employer offers a match, this except, which Bob failed to note, is only used in about two thirds of 401k plans, and is typically no more than a 50% match, typically capped at a percentage of your salary in the low single digits.

I'm not like Obama anything. I realize you think I am simple. I have several doctors in my family, three of whom are self employed, oh my lands. I was a partner in a law firm, which means that I have been a partial owner in a business! I have paid benefits for other people!

So what, it's funded out of earnings? It's still a retirement vehicle. Of course it's funded out of earnings; where else would the money come from? The sky? The point is that you're berating Bob for using the example of a 401(k) for a doctor employed by a hospital (which is a reasonable example, I think), but even if a doctor was self-employed they would still have retirement vehicles available. And further, you're completely obfuscating the fact that contributing to retirement accounts gives business owners and individuals tax benefits.

[crb]

I don't get where you're coming from, regarding 401(k)s. High-end employers typically don't resort to "matching," since people above a certain income thresh-hold will definitely max out their yearly contribution. While individual contribution is capped (15k/year?), an employer can contribute more than that. One of my parents makes about 300k a year salary, contributes the 15k max to a 401(k), and the company puts in about 50k on their own.

Compared to my company, that matches 100% of my contributions, up until 4% of my yearly salary. So generous.

While obviously not based on any data or documents I've found from hospitals (funny how companies don't advertise their benefits), it's hard to believe that no doctor in the US ever gets anything similar to my parent's retirement plan. I fully concede the possibility I may be wrong, though.

That is very generous of your parent's company. What do they do?

Not only of course is it anecdotal, but it is an anecdote from a completely different field or work isn't it?

Also hospitals aren't "high end employers", they employ doctors, nurses, administrative staff, receptionists, orderlies, etc. In fact, many doctors contract with hospitals and aren't true employees they're self employed, get a 1099 from the hospital, pay their own fica taxes, etc. 401k laws prohibit giving special treatment to different employees in regards to funding or matches. Doctors, also, not being unionized, if they were governed by a different benefit package, probably would not have a better package than unionized staff. Though, to be fair, that is an assumption on my part (though I don't feel like I'm out on a limb).

[Bobmuhthol]

Not only of course is it anecdotal, but it is an anecdote from a completely different field or work isn't it? What the fuck? You are using national averages and saying that they apply to doctors, but then saying "this evidence is not similar to doctors, so it must be nonsense!" Oh my fucking God.
401k laws prohibit giving special treatment to different employees in regards to funding or matches.Whether this is true or not in a general sense, it is definitely not applicable to doctors receiving profit sharing contributions, which are 100% legal.

[crb]

I'm not like Obama anything. I realize you think I am simple. I have several doctors in my family, three of whom are self employed, oh my lands. I was a partner in a law firm, which means that I have been a partial owner in a business! I have paid benefits for other people!

So what, it's funded out of earnings? It's still a retirement vehicle. Of course it's funded out of earnings; where else would the money come from? The sky? The point is that you're berating Bob for using the example of a 401(k) for a doctor employed by a hospital (which is a reasonable example, I think), but even if a doctor was self-employed they would still have retirement vehicles available. And further, you're completely obfuscating the fact that contributing to retirement accounts gives business owners and individuals tax benefits.

Maybe you haven't been paying attention to the entire thread.

If you're comparing INCOME of two people. You need consider all of their income, wages/salary AND benefits.

A retirement account you fund out of your wages is NOT INCOME. A pension given to you on top of your wages IS INCOME.

Do you understand the difference? That is what we're arguing about. Bob made that mistake and now is digging in and trying to weasel his way out of the error.

[msconstrew]

Not only of course is it anecdotal, but it is an anecdote from a completely different field or work isn't it?


Just, you know, for another interesting anecdote from a different field - my old firm used to contribute 15% to its employees' retirement funds, period. So even if the employee contributed nothing, they contributed 15% of gross salary to a Keogh. Of course, this was to benefit themselves because that maximized the amount they could contribute as business owners, but it is not impossible to find an employer that still offers very generous retirement benefits.

[Bobmuhthol]

Do you understand the difference? That is what we're arguing about. Bob made that mistake and now is digging in and trying to weasel his way out of the error.I would gladly invite anyone else in the world to side with you on this.

[crb]

What the fuck? You are using national averages and saying that they apply to doctors, but then saying "this evidence is not similar to doctors, so it must be nonsense!" Oh my fucking God.Whether this is true or not in a general sense, it is definitely not applicable to doctors receiving profit sharing contributions, which are 100% legal.

Seriously, dude. I've provided you with a statistic on the number of 401k plans nationwide that offer matches. I've provided you real world examples of hospital plans doctors would be covered under.

You have provided a match program out of your ass which does not exist, and if it did, would not be legal.

Why do you think national statistics on 401k matches would not apply to the percentage of doctors having access to a 401k match? Do you think that medical employers are more likely than average employers to offer matches? You haven't said that, you haven't provided any evidence to back up such a claim. If you have such evidence, present it.

Otherwise, admit you were wrong finally, and move on.

[Bobmuhthol]

You have provided a match program out of your ass which does not exist, and if it did, would not be legal.Profit sharing. Not a match. I never said it was a match. I said profit sharing the whole time. Suck a dick, my friend.

[Archigeek]

Secondly, you made an accounting fail, because if the doctor owns the business, the employer match comes out of his pocket. Remember.. if you own the business, business expenses come out of your pocket. Funny thing that. He is reducing the income of the business, which reduces his income, income which is accounted for in the various statistical services that provide compensation estimates for various professions.

Not really an accounting fail. You're the one pushing the claim that teachers have retirement benefits that doctors don't. I'm pointing out that doctors have retirement savings opportunities that Dr Brown's analysis fail to represent.

As a self-employed individual, I'm well aware of the tax advantage of a business expense vs personal income. If he has the revenue stream, he would be a fool to not reduce his income by making a portion of it a business expense instead. Additionally, depending on his profit level and corporation/non-corporation business status, he'd take as much cash off the table as possible as a distribution instead of as income, buy himself a company car and a new lap top every year, write off trips to the Bahamas for continuing ed seminars etc etc... all for tax purposes that aren't likely to be available to a teacher. There are limits to this, as the IRS keeps an eye out for overly-large distributions to S-corp owners. LLC's work differently with fewer opportunities for tax savings, but potentially easier book keeping and more flexible distribution options.

[crb]

Government contracting, consulting work. Retired after 25 years working for the government, went right back to the same place as a contractor making twice as much. Wee..

It's just hard to believe that no employers of doctors (especially specialists) would offer generous retirement packages. Granted, they employ a bunch of lower-skilled employees. My own company gives everyone crappy 401(k) compensation, and rewards the top employees with stock options, bonuses, etc., so it's fully possible that's what hospitals do, too. Anyway, just a thought.

I figured it was government.

Hospitals have CEOs too, and all the other C suite fellows, who I'm sure get bonuses and whatnot, doctors, while highly compensated, at at the level of corporate officers for big hospital chains or groups, and small groups don't have stock to give options in.

Publicly traded companies of course have to disclose such information, so you could probably go poking around something like HCA's annual report to see if there are any clinical employees getting bonuses and stock options.

[crb]

Not really an accounting fail. You're the one pushing the claim that teachers have retirement benefits that doctors don't. I'm pointing out that doctors have retirement savings opportunities that Dr Brown's analysis fail to represent.

As a self-employed individual, I'm well aware of the tax advantage of a business expense vs personal income. If he has the revenue stream, he would be a fool to not reduce his income by making a portion of it a business expense instead. Additionally, depending on his profit level and corporation/non-corporation business status, he'd take as much cash off the table as possible as a distribution instead of as income, buy himself a company car and a new lap top every year, write off trips to the Bahamas for continuing ed seminars etc etc... all for tax purposes that aren't likely to be available to a teacher. There are limits to this, as the IRS keeps an eye out for overly-large distributions to S-corp owners. LLC's work differently with fewer opportunities for tax savings, but potentially easier book keeping and more flexible distribution options.

Again... I'll just quote myself so I don't have to retype it.



If you're comparing INCOME of two people. You need consider all of their income, wages/salary AND benefits.

A retirement account you fund out of your wages is NOT INCOME. A pension given to you on top of your wages IS INCOME.

Secondly, deductions aren't free. As you know, but for the benefit of Bob who likely does not. S-Corp and LLC income flows through to the personal tax return of the business owner and is taxed at the personal rate. Meaning any profit to the business automatically accrues to the business owner.

What is the benefit of a higher business expense? You lower the pass through income you have reported on Schedule C of your 1040. If you're in a 35% tax bracket you're saving 35 cents on the dollar.

If you spend $10,000 going to the bahamas (and as you know, travel expenses are really looked over by the IRS), you reduce your business income by $10,000, woohoo.... that money isn't free, you SPENT money, that would have gone in your pocket, and the IRS rebated you 35% of it, not something to celebrate. You still took an income hit. Had you not spent that money you would have had an additional $10,000 in income, had to pay the IRS 3500, and would have $6500 in your pocket.

Personally I'm a fucking miser with my business expenses because every dime the business spends comes out of my pocket.

[Bobmuhthol]

If you spend $10,000 going to the bahamas (and as you know, travel expenses are really looked over by the IRS), you reduce your business income by $10,000, woohoo.... that money isn't free, you SPENT money, that would have gone in your pocket, and the IRS rebated you 35% of it, not something to celebrate. You still took an income hit.Is this seriously your argument? What happens when a teacher spends $10,000 going to the Bahamas? It costs them $10,000, not $6,500.

Again, it's still cute that you say shit about all the things I "don't know," like taxes and organizational structures. Never heard of any of that stuff in 5 years of business school.

[crb]

Those poor maligned doctors. So persecuted.

I hear this shit from lawyers all the time and it is just so much privileged BS. You know what? You wanted to go to medical school/law school. You did it maybe for altruistic reasons and maybe with financial considerations in mind, but you also did it mindfully with full knowledge that you would be in school for a long time and that your decision to pursue private education (vs. public) would put you deeper in the debt hole. So stop fucking complaining about it; that $200k/year salary must be so staggeringly difficult to handle.

I understand the arguments here about additional time and education and cost of education. I just think it's a bunch of privileged people crying into their Blue Mountain coffee. Teachers spend four years in school, maybe six if they get a Masters. And for that they are rewarded by going into jobs where they are accused of sucking the public teat for their entire careers, accused of being incompetent, accused of being overpaid (which: LOL), accused of working "only" nine months per year, and their wages are capped by the state. And crb's quoted doctor is giving them a hard time because they have a pension? Just ... give me a break.

Meanwhile: doctors - when they finally do get into private practice or begin working with hospitals - DO make six figure salaries (which I think they deserve, make no mistake) and they are able to pay off their loans a lot more quickly than teachers making 1/4 of that total gross salary. They are also able to save a lot more because their gross salaries are so high. They are also able to make forays into other areas of income production like consulting work (which they can do on top of their regular jobs). crb's quoted doctor mentions NONE of this; instead he just assumes that the doctor in question (who went into internal medicine instead of emergency medicine, orthopedics, dermatology, plastics, or any other specialty that earns more money) has no other option for income production than his regular job.

To be fair, teachers can also get second jobs during the summer. And if a doctor works more hours doing other things to make more money does that really increase his hourly wage, which was the basis for the comparison? The comparison did not include any extra work by either profession because working more hours for more money wouldn't increase or decrease the hourly earnings.

[Archigeek]

I figured it was government.

Hospitals have CEOs too, and all the other C suite fellows, who I'm sure get bonuses and whatnot, doctors, while highly compensated, at at the level of corporate officers for big hospital chains or groups, and small groups don't have stock to give options in.

Publicly traded companies of course have to disclose such information, so you could probably go poking around something like HCA's annual report to see if there are any clinical employees getting bonuses and stock options.

Anyone who incorporates a company has stock and can distribute profit to their share holders, so long as it is not overly disproportional to pay.

[crb]

Is this seriously your argument? What happens when a teacher spends $10,000 going to the Bahamas? It costs them $10,000, not $6,500.[/COLOR]

Unless it is a conference for continuing education credits paid for by the school district?

If it is just a vacation, of course, the doctor might pay 5-10 for it, years I mean. It isn't as if you can write off a family vacation you know, right?

We're getting really into the weeds here.

[crb]

Anyone who incorporates a company has stock and can distribute profit to their share holders, so long as it is not overly disproportional to pay.

Uh huh, actually, they have to. For an S Corp all profits have to go to shareholders.

You know though the benefit of stock options is in publicly traded companies where your option is at a price lower than the market price. There is no market for shares in an S-corp. It isn't the same thing.

[Bobmuhthol]

You know though the benefit of stock options is in publicly traded companies where your option is at a price lower than the market price. There is no market for shares in an S-corp. It isn't the same thing.Jesus Christ you're dense and know absolutely nothing about stock options.

[Archigeek]

If you're comparing INCOME of two people. You need consider all of their income, wages/salary AND benefits.

A retirement account you fund out of your wages is NOT INCOME. A pension given to you on top of your wages IS INCOME.

It is a benefit. A significant tax benefit. And it's not funded out of your wages, it's funded as a company expense.

[Archigeek]

Uh huh, actually, they have to. For an S Corp all profits have to go to shareholders.

You know though the benefit of stock options is in publicly traded companies where your option is at a price lower than the market price. There is no market for shares in an S-corp. It isn't the same thing.

The first paragraph is pretty much what I said; glad we can agree on something. A distribution is still a benefit though, whether it's a stock option or a cash payout to share holders. Why wouldn't you count it in your analysis?

All of this is mental gymnastics though, because the truth is that we all know the pay delta is far higher than doctor brown would like us to believe.

[crb]

The first paragraph is pretty much what I said; glad we can agree on something. A distribution is still a benefit though, whether it's a stock option or a cash payout to share holders. Why wouldn't you count it in your analysis?

All of this is mental gymnastics though, because the truth is that we all know the pay delta is far higher than doctor brown would like us to believe.

.... Jill is a doctor who is in private practice. Jill pays herself a wage of $150,000, leaving the business a profit of $50,000, which is distributed to her on schedule C, making her total income $200,000. The next year Jill pays herself a wage of $200,000, leaving the business no profit, and schedule C shows no income. What is the difference?

I don't know why you think owning a business gives you magical income from somewhere. Money doesn't grow on trees, it all comes from somewhere, how you allocate your business income is largely irrelevant (at lower levels there are some FICA tax implications). For an LLC it is not atypical for the owner to take 0 wages and put everything on schedule C. It doesn't really matter, and is utterly irrelevant to this discussion. We know what the average internist makes, whether he is a hospital employee or in private practice, and if he is in private practice it doesn't matter how he decides to divy up his income between sections on his 1040.

[crb]

It is a benefit. A significant tax benefit. And it's not funded out of your wages, it's funded as a company expense.

What is Kerl? What retirement benefit is not funded out of your wages? It isn't a SEP, or an IRA, or a 401k. All of those are funded out of pretax wages. The exception is an employer match on a 401k, which isn't universal, and is limited when implemented to a small percentage.

For the purposes of calculating how much someone makes. If they make $200k, and take 10k out of that and invest it, you then don't get to say they made $210k, they didn't. On the other hand, if someone gets paid $200k, but also get a pension on top of that, then yes, you do add in the value of the pension. What is the value of the pension? There are tables to look it up. http://www.ehow.com/how_8576639_calculate-present-value-future-pension.html

If the employer invested $10k on the employee's behalf, then YES you do get to count that as wages. But, you don't get to simply assume it happens. Most plans are not so generous, as evidenced by the numerous examples I have cited with links.

I feel like I'm kicking a dead horse.

[Bobmuhthol]

If the employer invested $10k on the employee's behalf, then YES you do get to count that as wages. But, you don't get to simply assume it happens. Most plans are not so generous, as evidenced by the numerous examples I have cited with links.Many doctors have profit sharing contributions. Your examples were not of doctors. Please stop.

[crb]

Jesus Christ you're dense and know absolutely nothing about stock options.[/COLOR]

1. Sure I do.

2. I told you not to use my real name here in the forums.

But here you go Bob:

http://money.howstuffworks.com/personal-finance/financial-planning/stock-options1.htm

The very first line:



The price the company sets on the stock (called the grant or strike price) is discounted and is usually the market price of the stock at the time the employee is given the options. Since those options cannot be exercised for some time, the hope is that the price of the shares will go up so that selling them later at a higher market price will yield a profit.

What I said:



You know though the benefit of stock options is in publicly traded companies where your option is at a price lower than the market price. There is no market for shares in an S-corp. It isn't the same thing.

Gee whiz, looks like I'm right. The benefit is being able to purchase stock at below market prices. Then again, I am Jesus Christ, so I'm usually right.

[crb]

Many doctors have profit sharing contributions. Your examples were not of doctors. Please stop.[/COLOR]

Source?

I apologize for making the assumption that a hospital would employ doctors.

Maybe you can trawl medical job boards for examples of what you seek?

[Bobmuhthol]

Gee whiz, looks like I'm right. The benefit is being able to purchase stock at below market prices. Then again, I am Jesus Christ, so I'm usually right.You're implying that stock options are valueless for S corps, and that S corps do not issue stock options. You're dead wrong. The fact that you had to link howstuffworks.com as an example of what a stock option is helps my position out a lot; my understanding of options comes from actually studying them.

How will I ever provide support to demonstrate that I know what stock options are?

4902

[Latrinsorm]

If you're comparing INCOME of two people. You need consider all of their income, wages/salary AND benefits.

A retirement account you fund out of your wages is NOT INCOME. A pension given to you on top of your wages IS INCOME.Is a profit sharing plan a benefit?
To be fair, teachers can also get second jobs during the summer. And if a doctor works more hours doing other things to make more money does that really increase his hourly wage, which was the basis for the comparison? The comparison did not include any extra work by either profession because working more hours for more money wouldn't increase or decrease the hourly earnings.It does if the doctor can get more from side jobs than a teacher would get from a once a year three month job due to their respective degrees.

[Parkbandit]

Just, you know, for another interesting anecdote from a different field - my old firm used to contribute 15% to its employees' retirement funds, period. So even if the employee contributed nothing, they contributed 15% of gross salary to a Keogh. Of course, this was to benefit themselves because that maximized the amount they could contribute as business owners, but it is not impossible to find an employer that still offers very generous retirement benefits.

Can you show us the math on how that was to the benefit the owners?

A company contribution of 15% even if you put 0 in is a huge benefit to the employee.

[Bobmuhthol]

Retirement benefits are not a zero sum transfer between the employer and employee. The employee benefits by getting the contribution, and the business benefits by getting better tax treatment from the government.

[Parkbandit]

Retirement benefits are not a zero sum transfer between the employer and employee. The employee benefits by getting the contribution, and the business benefits by getting better tax treatment from the government.

I'm just asking for the math of how this program would benefit the employer and not as much for the employee. Is the company really saving money by giving their employees 15% of their salary?

To me, it sounds like a very generous benefits program.

[Bobmuhthol]

Their salaries would probably be higher otherwise. If I'm interpreting her post correctly, the owners wanted to maximize their own retirement contributions, so they had to provide the same treatment for everyone else. Yeah, it helps the employees, but it's just a necessary consequence of their actual goal. I'm not going to pretend to know the administrative costs of dealing with this stuff, but it could easily be cheaper for them to dump 15% into a fund by default than to pay it out as a mix of salary and some other form of benefits. The point is that total comp is not (necessarily) higher just because they have this plan.

[Latrinsorm]

I'm just asking for the math of how this program would benefit the employer and not as much for the employee.You're the first one to add that clause.

[msconstrew]

Can you show us the math on how that was to the benefit the owners?

A company contribution of 15% even if you put 0 in is a huge benefit to the employee.

It was a huge benefit to the employees, yeah, especially for the secretaries who had been working there Since Time Began. Or maybe even before time began.

It benefited the owners by allowing them to contribute a similar percentage (actually it was more, but I would have to go look to see what it was) to their own retirements. It was more beneficial to have a Keogh rather than a SEP-IRA or a SIMPLE 401(k) because of the amount of money the partners earned (higher percentage was allowed to be contributed to the Keogh than through those two other retirement plans), but in order to contribute the highest percentage they had to offer a certain percentage to the employees. So basically it benefited the owners by allowing us to sock away as much as possible for retirement.

Also, those guys were really quite generous and they felt it was one way they could help take care of their employees. You should have seen the profit-sharing model they used before I abused the shit out of it.

[diethx]

If you're comparing INCOME of two people. You need consider all of their income, wages/salary AND benefits.

A retirement account you fund out of your wages is NOT INCOME. A pension given to you on top of your wages IS INCOME.

A retirement account you fund out of your wages can lead to income, if it earns interest (and don't the majority of them do that?)

And if you have a high salary and can contribute a much higher sum to those accounts, you dramatically increase the amount of interest income. ie: doctors

(Forgive me if this has already been said. I cannot wade through all of this, haha.)

[Parkbandit]

It was a huge benefit to the employees, yeah, especially for the secretaries who had been working there Since Time Began. Or maybe even before time began.

It benefited the owners by allowing them to contribute a similar percentage (actually it was more, but I would have to go look to see what it was) to their own retirements. It was more beneficial to have a Keogh rather than a SEP-IRA or a SIMPLE 401(k) because of the amount of money the partners earned (higher percentage was allowed to be contributed to the Keogh than through those two other retirement plans), but in order to contribute the highest percentage they had to offer a certain percentage to the employees. So basically it benefited the owners by allowing us to sock away as much as possible for retirement.

Also, those guys were really quite generous and they felt it was one way they could help take care of their employees. You should have seen the profit-sharing model they used before I abused the shit out of it.

Yea.. I guess I just interpreted your initial post incorrectly.


Just, you know, for another interesting anecdote from a different field - my old firm used to contribute 15% to its employees' retirement funds, period. So even if the employee contributed nothing, they contributed 15% of gross salary to a Keogh. Of course, this was to benefit themselves because that maximized the amount they could contribute as business owners, but it is not impossible to find an employer that still offers very generous retirement benefits.

I took it as you believing that the owners were mostly out for themselves and a side benefit was to the employees... but 15% seems like a huge benefit and pretty damn generous and no matter what tax incentive they realized from doing so.. they were still way behind breaking even on the deal.

[msconstrew]

No, no, I meant the exact opposite. Yes, they did it because it benefited them to the extent they could maximize their retirement contributions. But it was a huge benefit to the employees, too. So even if it was solely self-interested (which it wasn't), generous benefits packages are still out there. I can see where you interpreted it that way, though.

[Archigeek]

.... Jill is a doctor who is in private practice. Jill pays herself a wage of $150,000, leaving the business a profit of $50,000, which is distributed to her on schedule C, making her total income $200,000. The next year Jill pays herself a wage of $200,000, leaving the business no profit, and schedule C shows no income. What is the difference?

I don't know why you think owning a business gives you magical income from somewhere. Money doesn't grow on trees, it all comes from somewhere, how you allocate your business income is largely irrelevant (at lower levels there are some FICA tax implications). For an LLC it is not atypical for the owner to take 0 wages and put everything on schedule C. It doesn't really matter, and is utterly irrelevant to this discussion. We know what the average internist makes, whether he is a hospital employee or in private practice, and if he is in private practice it doesn't matter how he decides to divy up his income between sections on his 1040.

How did you get here from your contention that a 35% tax benefit shouldn't count in Dr Brown's analysis? Or are you just trying to side step admitting that it is indeed a benefit worth considering in this already seriously flawed equation? Do you think it's so irrelevant that you write an extra check to uncle sam for what you would have saved on retirement funding going into an account pre-tax? I know I'm not that generous.

Also, I want to meet this Jill person, and show her the error of her ways. No expenses? Shame shame!

[Tgo01]

Do you think it's so irrelevant that you write an extra check to uncle same for what you would have saved on retirement funding going into an account pre-tax? I know I'm not that generous.

Paying taxes is patriotic you commie!

[crb]

You're implying that stock options are valueless for S corps, and that S corps do not issue stock options. You're dead wrong. The fact that you had to link howstuffworks.com as an example of what a stock option is helps my position out a lot; my understanding of options comes from actually studying them.

How will I ever provide support to demonstrate that I know what stock options are?

4902

Your attachment is tiny Bob, I'm not sure what it says.

I didn't "have to" link to howstuffworks, but, unlike some other robin hoods, I like to always back up points I make lest I be accused of being a blathering idiot.

When you get an stock option Bob it has two things, a price, and a timeframe. The value in it is if the market values the stock at a higher point than your strike price during your timeframe, you can buy it, instantly sell it, and reap the difference in value. If it doesn't trade above that price, it essentially has no value. A stock option is not a grant of shares, it is the option to buy shares.

S-Corp's cannot trade publicly, they are limited by law to no more than 100 shareholders, there is no market for their shares. If you had an option to buy scorp shares there is no market in which you could sell them to make a profit. It isn't a path to riches.

You're really out in the weeds Bob. Sometimes it is best just to admit mistakes. I admitted that the link I posted did not take into account potential 401k matching contributions (which aren't universal, and are usually much smaller and limited than what you think they are, and don't come near the value of a pension, but you were right in that they could exist).

I don't want to just pull rank, it seems like a lame thing to do, I mean, I may not have a bachelor's degree in economics, or whatever you got your degree in (now you say business, so I don't know), but I'd be willing to bet that I'm the only participant in this thread whom is an accredited investor. I might just know a little bit about stocks and investing, just a wee bit.

And even of course Bob, the number you came up with for the lifetime hourly wage was $40.00, so even if all your bull shit was taken as true, it doesn't really support an argument of doctors being overpaid and having room there to cut healthcare costs by reducing reimbursements (the point of the thread).

But whatever, I grow tired of paddling upstream of the river ignorance.

[crb]

A retirement account you fund out of your wages can lead to income, if it earns interest (and don't the majority of them do that?)

And if you have a high salary and can contribute a much higher sum to those accounts, you dramatically increase the amount of interest income. ie: doctors

(Forgive me if this has already been said. I cannot wade through all of this, haha.)

Of course, but the ability to contribution to a retirement account is not a unique feature of a medical profession. Anyone can open an IRA and do that (and in fact, many doctors cannot open IRA). Some less than bright people were trying to account for a defined contribution retirement plan the same way as a defined benefit retirement plan, that is the error I was correcting.

You don't, in the end, have that much of higher take home pay as a physician, which is the point of the thread. When you factor in the cost of not working until your 30s, (think of all the compounding interest you lost out on in your 20s), probably not getting out of debt until your 40s, and of course the tax treatment in our most progressive tax system in the world.

[msconstrew]

Your attachment is tiny Bob, I'm not sure what it says.

I didn't "have to" link to howstuffworks, but, unlike some other robin hoods, I like to always back up points I make lest I be accused of being a blathering idiot.

When you get an stock option Bob it has two things, a price, and a timeframe. The value in it is if the market values the stock at a higher point than your strike price during your timeframe, you can buy it, instantly sell it, and reap the difference in value. If it doesn't trade above that price, it essentially has no value. A stock option is not a grant of shares, it is the option to buy shares.

S-Corp's cannot trade publicly, they are limited by law to no more than 100 shareholders, there is no market for their shares. If you had an option to buy scorp shares there is no market in which you could sell them to make a profit. It isn't a path to riches.

You're really out in the weeds Bob. Sometimes it is best just to admit mistakes. I admitted that the link I posted did not take into account potential 401k matching contributions (which aren't universal, and are usually much smaller and limited than what you think they are, and don't come near the value of a pension, but you were right in that they could exist).

I don't want to just pull rank, it seems like a lame thing to do, I mean, I may not have a bachelor's degree in economics, or whatever you got your degree in (now you say business, so I don't know), but I'd be willing to bet that I'm the only participant in this thread whom is an accredited investor. I might just know a little bit about stocks and investing, just a wee bit.

And even of course Bob, the number you came up with for the lifetime hourly wage was $40.00, so even if all your bull shit was taken as true, it doesn't really support an argument of doctors being overpaid and having room there to cut healthcare costs by reducing reimbursements (the point of the thread).

But whatever, I grow tired of paddling upstream of the river ignorance.

An accredited investor? Maybe. Knows how to use whom properly? Definitely not.

[crb]

How did you get here from your contention that a 35% tax benefit shouldn't count in Dr Brown's analysis? Or are you just trying to side step admitting that it is indeed a benefit worth considering in this already seriously flawed equation? Do you think it's so irrelevant that you write an extra check to uncle sam for what you would have saved on retirement funding going into an account pre-tax? I know I'm not that generous.

Also, I want to meet this Jill person, and show her the error of her ways. No expenses? Shame shame!

I don't think we're on the same page Kerl.

Deducting legitimate business expenses is not a comparative "benefit" for people in private practice. His analysis already includes it, the starting figures are average AGIs for physicians, not average gross practice receipts. Anyone employed in a business technically "benefits" (I use the term loosely) from the ability of the business to deduct legitimate expenses. Employees in all fields get reimbursed for things by their employer. I would imagine there are more than a few teachers with IPADs they didn't pay for, not that there is anything wrong with that.

Unless what you're saying is that, by being self employed, a business owner can benefit from committing tax fraud, or otherwise has more tools to defraud the government, whereas someone who is merely an employee has to limit illegal activities, to at most, embezzlement. Seems like a weird argument to make.

Or it is like you're confusing gross and net, but we're definitely not on the same page.

[crb]

An accredited investor? Maybe. Knows how to use whom properly? Definitely not.

If the worse you can do is attack my grammar, I'll consider it a victory. I loathe grammar, chains on the art of expression. I'll try to make sure my future posts are to the standard of this Internet message forum.

[diethx]

Except she's attacked way more than your grammar in this thread, however you're so blind to what everyone is basically saying to you, that I think she's realized there's no longer a point.

[msconstrew]

Except she's attacked way more than your grammar in this thread, however you're so blind to what everyone is basically saying to you, that I think she's realized there's no longer a point.

^

[Catts]

401ks suck btw

[crb]

Except she's attacked way more than your grammar in this thread, however you're so blind to what everyone is basically saying to you, that I think she's realized there's no longer a point.

I think I've refuted every point someone has brought up. Usually citing sources lest I be accused of making things up.

I honestly feel as if there is no longer a point. I think I've spent too much time on this thread. You can lead a horse to water and all that. We're now what, in derivatives in the argument? Arguing not on substance but arguing over the argument itself?

I need to stop getting sucked into Internet arguments, such a waste of time. No one ever changes their mind. An obstinate fool will always be an obstinate fool.

[diethx]

Refuted yes, but not successfully. Therein lies the problem that you just do not see.

But you're right, you should stop arguing.

[Warriorbird]

Pretty much. If you're going to defend conservative scholarship you should at least defend something not so obviously full of holes.

[Bobmuhthol]

I'm not going to quote crb's post but pretend that I did. crb knows nothing about stock options as employee compensation at all. At fucking all.

[Bobmuhthol]

By the way, for anyone unfamiliar with securities regulation (I'm not), the term accredited investor is just a bright line test of either income or net worth. The threshold is not particularly high. Once you reach it, you can be sold securities without the issuer going through all the trouble of meeting public issuance registration requirements. Being an accredited investor does not have anything to do with knowledge of investments. It is simply a protection for security issuers which states wealthier people can make their own decisions without the SEC getting involved because the SEC is not in the business of protecting people with money to spare. An 18 year old with a trust fund is an accredited investor.

And crb, in the event you're wondering how I know this, I will defer to my law minor and securities regulation class. Not to pull rank or anything.