Three Tax Planning Strategies for Surgical Professionals

As a surgeon, you are often among the top earners in the United States. While this is certainly an important benefit of your profession, the hefty income taxes accompanying your income create an expense that requires expert advice and services and can add a layer of unnecessary pressure to your life.

At Surgeons Capital Management, we specialize in working with surgeons across the U.S. who consider high tax rates one of their biggest financial concerns. It stands to reason when you have a comprehensive tax plan in place, and it can help you accumulate more assets for your future use with less stress.

Here, we will look at some of the top tax planning strategies for surgeons and provide examples of how each can be implemented to help reduce your income and other taxes each year.

Why is tax planning so important for high-earning surgeons?

Tax planning is more than just finding ways to reduce your tax bill. It’s about developing and managing a sophisticated financial plan that helps you pursue your long-term financial goals. Part of this strategy is recognizing every dollar of expense is one less dollar for your future use. Future use includes maximizing the accumulation of retirement assets so you can retire when you want to and live the way you want to for the rest of your life. This can be particularly important for surgeons.

A good tax plan isn’t just about saving money today; it’s about strategically managing your finances to maximize your wealth while keeping your tax costs as low as possible.

Tax Planning Strategy #1: Asset Location 

Asset location is a tax planning strategy that involves allocating investments to the most tax-efficient accounts in order to maximize after-tax returns. Asset location involves distinguishing between tax-advantaged accounts, like IRAs or 401(k)s, and taxable personal savings accounts.

The goal is to place assets with higher tax rates, such as interest income, into tax-advantaged accounts. Conversely, more tax-efficient assets (for example, stocks that produce long-term capital gains) are put into taxable accounts. 

As a high-income earning surgeon, you can benefit significantly by using an asset location strategy to reduce your taxable income and potentially realize substantial tax savings over longer periods. 

Case Study: Dr. Seana Smith, a noted orthopedic surgeon, has a 401(k) and a taxable brokerage account. In her 401(k), she invests in higher-yield bonds, which generate income taxed at her marginal income tax rate. By investing in this type of asset in her 401(k), she defers taxes on the reinvested income until she is ready to start taking distributions in her retirement years. She may also be in a lower tax bracket after retirement. 

In her taxable account, she invests in stocks, focusing on capital appreciation. These investments may qualify for lower long-term capital gains tax rates if held for more than a year, making them more tax-efficient than bonds’ interest income.

By aligning her investments with the tax characteristics of her accounts, Dr. Smith effectively reduces her current tax burden and potentially increases her after-tax investment returns.


Tax Planning Strategy #2: Health Savings Plan

Health Savings Accounts (HSAs) can be another effective tool for your tax planning efforts.

Here’s how they work: 

  • You must be enrolled in a qualified high-deductible health plan to use an HSA. 
  • If you have an individual HSA, you can contribute up to $4,150 in 2024. You can contribute up to $8,300 if you have a family plan. If you are 55 or older, you can contribute an additional $1,000 to your HSA, which is considered a catch-up contribution.
  • Any funds you contribute to an HSA are pre-tax dollars, reducing your current income taxes. 
  • HSA accounts also produce tax-free appreciation and income.
  • Depending on the HSA provider, you can invest your HSA funds in stocks, bonds, or mutual funds, allowing the potential for tax-free growth over time.
  • Withdrawals from the HSA for qualified medical expenses are tax-free. This includes expenses not typically covered by health insurance, such as dental and vision care.
  • HSAs are portable, meaning they stay with you even if you change jobs or retire. Funds in the account roll over from year to year, with no requirement to spend down the balance annually.
  • After age 65, you can withdraw funds for non-medical purposes without any penalties, but these withdrawals will be taxed as regular income. At this point, you could be in a lower tax bracket.


Tax Planning Strategy #3: Establish Solo 401(k) or SEP IRAs

If you are a self-employed surgeon, you’ll want to create either a Solo 401(k) or a Simplified Employee Pension (SEP) IRA. Both offer valuable tax advantages:

The Solo 401(k) allows you to make significant contributions, with a dual capacity as both employer and employee. In 2024, the total contribution limit is $69,000, with an additional $7,500 catch-up contribution if you are over 50. Like employer-sponsored 401(k) plans, your contributions reduce taxable income.

It’s important to note that some Solo 401(k) plans also offer a Roth option for after-tax contributions, providing tax-free growth and withdrawals in retirement. 

These plans also allow you to have more control over your investment choices and may also allow you to take out loans against them. 

Simplified Employee Pension (SEP) IRAs are typically easier to set up and maintain than Solo 401(k) plans. Again, the maximum contribution amount in 2024 is $69,000. SEO IRAs do not allow catch-up contributions if you are over 50. 

Both options serve as excellent tools to assist in building your retirement savings while reducing your taxable income. 


About Surgeons Capital Management

At Surgeons Capital Management, we make it a point to be at professional surgical conferences, not just as spectators but as learners, keen on understanding the ever-changing elements of your career and practice. 

This hands-on approach helps us keep our wealth advisory services current and tailored to maximize benefits for you and your family.

Our team, boasting over 200 years of collective experience in private wealth management, dedicates itself exclusively to surgeons, their families, and the surgical practice team. We’re here to make sense of your financial well-being so you can spend more time focused on the physical well-being of your patients.

Connect with us to learn more about the tax planning strategies for successful surgeons.


asset location and asset allocations


The subject matter discussed in this article is for informational purposes only. It is not intended and should not be relied upon as investment or financial advice and does not constitute an offer, recommendation, or solicitation.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.
Duly-registered and duly-licensed financial professionals with Surgeons Capital Management offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA/SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of California, LLC, Equitable Network Insurance Agency of Utah, LLC, Equitable Network of Puerto Rico, Inc.). Equitable Advisors and Equitable Network are affiliates and do not provide tax or legal advice or services.  Surgeons Capital Management is not a registered investment advisor and is not owned or operated by Equitable Advisors or Equitable Network. PPG-6336825.1 (2/24) (Exp. 3/27
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Surgeons Capital Management is a private wealth management firm that works solely with surgeons and surgical practices.