Beyond 401(k) or 403(b) Plans - What Extra Retirement Benefits Do Top Hospitals Offer?

At Earned Wealth, we've taken a closer look at the retirement packages offered by top hospitals. In a sample of top hospitals, detailed in the table below, the most common additional retirement benefits were: 457(b) and defined benefit pension plans.  Although we did not analyze all major hospitals, we hope that this sample analysis empowers physicians to double-check their plans and make sure they are maximizing their retirement savings.

457(b) deferred compensation plan

The 457(b) retirement plan is a valuable benefit that can be offered by nonprofit and government hospital health systems. In contrast, 457(b) plans cannot be offered by for-profit institutions.  457(b) plans work much like 401(k) and 403(b) plans with two key distinctions. First, typically, savers only need to be separated from an employer (not hit a certain age) to start withdrawals or — in some cases — savers may be required to liquidate the savings when they stop working for the employer. Second, if you have access to another employer-sponsored retirement plan, like a 401(k) or 403(b), you are allowed to contribute the employee maximum to both plans. Notable health systems, such as the University of California and the Mayo Clinic, provide this benefit. 

Pension plan

Some top hospitals, like New York Presbyterian Hospital and University of Pittsburgh Medical Center offer an additional retirement benefit - a defined benefit plan also known as a pension plan. Defined benefit plans provide hospital employees with a specific amount of income during retirement, based on a formula that considers factors such as the employee’s salary history and years of service. Unlike 401(k) and 403(b) plans, the employer bears the investment risk and is responsible for funding the plan.

Other retirement benefits and bonuses 

In some instances, individual institutions offer unique retirement packages. For example, Mass General Brigham offers a Retiree Medical Savings Account allowing benefits-eligible employees age 50 or older to save up to $4,500 per year for retirement medical expenses. Similarly, John Muir Health provides a Retiree Health Reimbursement Account, contributing funds for health care expenses upon retirement. These examples highlight the growing trend of health systems recognizing the importance of retirement planning and financial well-being. While unique to specific institutions, physicians are encouraged to review their retirement plans thoroughly to take advantage of any distinctive benefits offered by their employers.

Other large institutions offering useful benefits include Jackson Health Systems, Providence St. Joseph Health, Houston Methodist, and Beth Israel Lahey Health, among others.

Make sure to thoroughly review all retirement offerings

In summary, healthcare systems nationwide offer diverse retirement benefits beyond conventional 401(k) and 403(b) plans. Physicians are encouraged to closely analyze their retirement options so that they don’t miss potential advantages. As high salaried employees, physicians should consider ways to reduce their taxable income, including maximizing their contributions to employer-sponsored retirement plans.