Why don't physicians use a Roth 401k in addition to the Roth IRA so they can contribute more to the Roth 401k then roll it over near retirement if they want to avoid the RMD? Is owning a Roth 401k and Roth IRA common?
Very good point. The reason is that someone in a high tax bracket might benefit more from a tax-deferred account. I've done the math, and it really does depend on your tax bracket and time horizon. You want to diversify your tax liability by having both Roth and tax-deferred assets. Some are in such high tax brackets that it makes no sense to contribute to a Roth 401k. However, if you can contribute to a Cash Balance plan to the tune of $200k (and you are 45+), then you might want to mix in some Roth contributions into your 401k. It all depends on individual situation, and if your tax bracket is really low, it does make sense to max out Roth and make Roth 401k contributions, so that later on when the tax bracket grows you can diversify by making tax-deferred contributions. Not many physicians have the option to do Roth contributions though, because most 401k plans are not designed with physicians' personal goals in mind, and use generic template that usually disallows Roth contributions. Even when such contributions are allowed, very few take advantage of them, which is simply bad planning. Another way to play this is to make Roth conversions early in retirement, but you are totally correct - physicians should make Roth IRA and Roth 401k contributions preferably early in their careers when the tax savings are small compared with tax-deferred contributions, though I would recommend doing the calculations to make sure that this would be a prudent move.