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Dentists, Puns, and Money is a podcast focused on two things: The financial topics relevant to dentists leaving clinical practice and the stories and lessons of dentists who have already done so.
1. The stories of dentists who have transitioned from full-time clinical dentistry.
2. The financial topics that are relevant for dentists making that transition.
If you’re a dentist thinking about your exit from clinical, and you’d like to learn from the experiences of other dentists who have made that transition, be sure to subscribe to your favorite podcast app.
Host Shawn Terrell also dives deep into the many financial components of exiting dentistry, including tax reduction strategies and how to live off your assets.
And, we try to keep it light by mixing in a bad joke… or two.
Please note: Dentists, Puns, and Money was previously known as The Practice Growth Podcast until March 2022.
Shawn Terrell (00:02.232)
There is an underrated movie from the 1990s that can indirectly help avoid confusion when it comes to talking about Roth IRAs. The movie stars Martin Short as an educated but uptight family man. And the co-star is Kurt Russell in sort of an unusual role as a simpleton boat captain. Hi, I'm your host Sean Terrell and welcome to Dentist's Puns and Money.
This podcast is brought to you by Dentist Exit Planning. At Dentist Exit Planning, we help dentists leaving clinical in the next few years build their financial treatment plan for life after dentistry. So the name of the movie that I'm referencing is Captain Ron. And Kurt Russell stars as the character named Captain Ron. And in one memorable scene, he warns Martin Short's character.
to watch out for gorillas when walking through the woods. Short's character assumes that this is an ignorant warning because, based on his knowledge, gorillas are native...
Short's character assumes this is an ignorant warning because, based on his knowledge, gorillas are native to Central Africa and the scene is taking place. Short's character assumes this is an...
Short's character assumes this is an ignorant warning based on his knowledge that gorillas are native to Central Africa and the scene in question takes place in the Caribbean. But Short's character was wrong because Captain Ron was talking about gorillas.
Shawn Terrell (01:58.317)
Short's character assumes this is an ignorant warning based on his knowledge that gorillas are native to Central Africa and the scene in question is taking place in the Caribbean. But Short's character is wrong because Captain Ron was talking about gorillas as in a small independent group of armed soldiers. And Martin Short heard gorilla as in the large ape or the biggest primate in the world.
but he soon realized what was lost in translation when he was surrounded by a group of men in camouflage with automatic weapons as he tried to walk through the woods.
Martin Short heard gorilla as in the large ape or the biggest primate in the world, but he soon realized what was lost in translation when he was surrounded by men in camouflage with automatic weapons. Inadvertently confusing gorilla and gorilla in this scene reminds me of what sometimes happens with Roth IRAs.
Shawn Terrell (03:11.22)
Inadvertently confusing Gorilla and Gorilla reminds me of what sometimes happens with Roth IRAs in which a Roth IRA contribution is confused or conflated with a Roth IRA conversion. Like the scene that I just referenced, there's a big difference between a contribution and a conversion. While not everyone is automatically eligible to make a Roth IRA contribution due to income limitations,
Almost everyone is able to complete a Roth IRA conversion.
Shawn Terrell (03:49.034)
While not everyone is able to make a Roth IRA contribution due to income limitations, almost everyone is able to complete a Roth conversion.
Shawn Terrell (04:10.39)
So this podcast episode continues the focus on Roth IRA conversions by discussing a few things to watch out for when completing Roth IRA conversions. And the first thing to look out for, don't confuse contribution and conversion. If you have been making Roth IRA contributions in recent years, you've probably had to use a workaround because of your high income. And that's often referred to as a backdoor Roth IRA.
But for our purposes here, converting money in a tax-deferred account into a tax-free account is a Roth IRA conversion, and that is seemingly a lot more straightforward. So just be aware of the language and the differences between these strategies, because people sometimes incorrectly think these words are interchangeable, and they are not interchangeable.
Shawn Terrell (05:12.446)
Another thing to be aware of with Roth IRA conversions is that the decision to make one is irrevocable. So you better be sure that this is the right move for you when you click the button to finalize everything. Because once the money is converted, not only is it irrevocable, but also it can't be touched for a certain period of time, often five years. Meaning the money that is converted, that chunk of money has a
time limit on it before you can access it again without any penalty or any
Shawn Terrell (05:55.454)
Another thing to be aware of with Roth IRA conversions is that the decision to make one is irrevocable, meaning that you better be sure that this is the right move for you before you click finalize on the transaction. So not only is it irrevocable, but also the amount that is converted also has a time limit until you can touch that money again or access that money again without penalty. Usually it's around five years.
If you're doing this, it's for a long-term tax play and you're using money that's going to be set aside not to be used in the near future, but to be used down the road.
Shawn Terrell (06:43.206)
Another thing to watch out for is to make sure that you have the cash on hand to pay the higher tax bill that's going to be due because of the Roth IRA conversion. So whatever amount that you convert to Roth IRA from tax deferred money or a tax deferred account, whatever that amount is will be considered taxable income for you in that year. It's going to get tacked onto whatever else you have for taxable income for that year. So
Naturally, if you have a higher taxable income amount for that year than you otherwise would have, you're going to have a higher tax bill. So you have to be able to make sure that you can pay that higher tax bill with cash or with money that you have on hand. And another thing to be aware of when doing that is to make sure that when you convert, you are not encountering any underpayment penalties on tax estimates that are due throughout the year for this conversion.
Shawn Terrell (07:46.196)
The final thing to be aware of on Roth conversions is that they get reported correctly on your tax returns. Roth conversions, as I just mentioned, are a long-term tax play. They are used as a strategy to reduce your overall tax bill in total over the long run. if you, in executing Roth conversions, make an error and it doesn't get reported correctly on your tax return,
it might end up or they might end up causing more harm than good and you might have been better off not doing anything at all. Just in my own Roth conversions that I've done for myself personally, I can say that I've received a 1099 form from my account custodian for the amount of conversion that had the wrong code on it. It was an error. It was an incorrect code and that almost led me to receive a penalty on my taxes incorrectly.
So you got to make sure that the form that you receive and the code on the form, it all checks out with what you actually did, what actually was accomplished. So.
Also, with my own Roth conversion, I had a situation where my tax preparer put the amount that I converted in the wrong box on the law. Also, on my Roth conversion personally, I had a situation one time where my tax preparer took the amount that I converted and put it in the wrong box on my taxes on form 1040 on the wrong line altogether. So,
that could have led to some headaches and maybe some penalties down the road if I had not caught that before it was filed to the IRS. So the execution on these conversions is critical because what gets reported on your taxes, what gets sent to the IRS, that is the only record that matters. There's not some database somewhere that makes sure that, or that reconciles what you actually were trying to accomplish.
Shawn Terrell (09:50.789)
actually was recorded and reported to the IRS.
Shawn Terrell (09:58.835)
So the execution of these transactions is critical, but so is the reporting of them. So whatever gets sent to the IRS in the form of what you report on your tax return, that's the record that everyone will go with moving forward. So it's got to be correct. There's not some huge database somewhere that is making sure that whatever you attempted to do or what you were intended to do is what actually was reported or how it's...
Shawn Terrell (10:31.635)
So the execution of these transactions is critical and so is the reporting of them because there's not some database somewhere that shows what you were intending to do with Roth IRA conversions and what was reported actually happened with the IRS on your tax return. So if there's an error on your tax return, that is the record that carries the day. So you have to make sure that what you did and how it gets reported is reconciled.
correctly and properly before taxes are filed so as to avoid a lot of headaches and potentially some penalties in the near future or over the long term. So to wrap it up, just a few things to be aware of on these Roth IRA conversions, starting with making sure that you know the difference between a conversion and a contribution because to quote Martin Short in Captain Ron, there is a huge difference kids, huge difference.
Shawn Terrell (11:35.529)
Speaking of taxes, if you would like a reference of the many rules and the current numbers in effect, we have a free tax cheat sheet that we can send you. And it includes the changes that are in effect now that it's 2026. So whether you are watching this on YouTube or listening to it on a podcast app, you can go to the show notes for this episode and scroll down to look for episode resource in the show notes. And if you click there,
and put your information in, we will email you this free tax cheat sheet. Also, if you are a dentist and you're thinking of leaving clinical practice in the next few years and you would like a financial treatment plan for how to go about doing that, you can schedule a personalized consultation with me with DentistXit Planning. There's no obligation. All you do to do that is go to our website, DentistXit.com, and click on free consultation at the top right-hand corner of the screen.
and you'll be able to pick a date and a time that works best with your schedule. So one final reminder before I go, and that's that dentist exit planning is a registered investment advisor. The information presented here should not be interpreted as investment, legal, tax, financial planning, or wealth management advice. The information is for educational purposes only. Past performance also not indicative of future results.
Thanks for watching and thanks for listening. I'm Sean Terrell and we will talk to you again very soon.