Is Your Financial Plan Bleeding Money? 5 Tax and Investment Mistakes Surgeons Make

Even the most successful and knowledgeable surgeons with strong portfolios can lose ground due to overlooked tax strategies or inefficient account structures. Often, these may not be dramatic errors, but even small missteps can add up over time.

At Surgeons® Capital Management (SCM), our team of leading financial advisors for surgeons based in Pennsylvania has seen time and time again how common—but preventable—issues can weigh down even a well-built plan.

This article highlights five frequent mistakes surgeons make—along with practical considerations that may help you plug the leaks.

1) Overlooking Tax-Advantaged Accounts

A substantial income offers the ability to build significant retirement savings—but only if the right vehicles are used. It’s surprisingly not uncommon for high earners to overlook the full use of tax-advantaged accounts like a 401(k), 403(b), or, if you’re self-employed, a SEP IRA or solo 401(k).

Some surgeons may be directing excess savings into taxable brokerage accounts while missing the opportunity to reduce taxable income through larger pre-tax contributions. Others may not be taking advantage of age-based catch-up provisions—giving up valuable deductions and tax-deferred growth year after year.

What to consider:

Review your contribution strategy to confirm you’re reaching the full IRS limits for tax-advantaged accounts. In 2025, individuals under the age of 50 can contribute up to $23,500 to a 401(k) or 403(b) plan. If you’re age 50 or older, an additional $7,500 catch-up brings the total limit to $31,000. For those between the ages of 60 and 63, a special provision increases the catch-up contribution to $11,250, allowing for a total of $34,750 in contributions if eligible.

Once these accounts are fully funded, explore after-tax strategies—such as backdoor Roth IRAs or Roth conversions—to position assets for future tax flexibility and reduce taxable income in retirement.

Looking ahead: For 2026, be sure your retirement plan elections reflect the latest IRS contribution limits so you’re making the most of what’s allowed.

2) Ignoring Tax Loss Harvesting

No one enjoys a loss in their portfolio—but when used thoughtfully, losses can work in your favor. Tax loss harvesting is the process of selling underperforming investments to offset gains or reduce taxable income. It’s a tool that can improve after-tax returns when deployed with care.

Let’s say you’ve sold a stock with substantial gains this year. If you also hold an investment that’s declined, realizing the loss on that position may help cancel out some of the tax you’d otherwise owe.

Be aware also of the wash sale rule, which disallows the deduction if you buy the same or a substantially identical security within 30 days before or after the sale. This rule applies to both purchases in taxable accounts and in IRAs or other tax-deferred accounts.

Also note that up to $3,000 in net capital losses can be written off annually against ordinary income. Any remaining losses can be carried forward indefinitely to offset future gains—or another $3,000 of ordinary income per year.

What to consider: Before the year ends, review your portfolio for loss positions. Even modest losses may provide an opportunity to reduce this year’s tax bill.

3) Suboptimal Asset Location

While asset allocation gets plenty of attention, asset location is often overlooked—and that oversight can reduce investment returns. Asset location refers to where different types of investments are held, based on their tax characteristics. This matters more than many high earners realize.

For example, holding taxable bonds, high-dividend stocks such as REITs, or high-yield funds in a taxable account may generate regular income taxed at ordinary income rates. That same income, if held in a tax-deferred account, could grow without triggering current taxes each year.

What to consider: Review your accounts to see where different asset types are located. Tax-efficient placement—such as keeping stocks with qualified dividends in taxable accounts and interest-generating assets in retirement accounts—can help reduce tax drag and improve after-tax returns. Also, consider tax-free municipal bonds and muni bond money markets for short-term cash.

4) Not Considering State-Specific Taxes

Federal tax strategy is just one layer of the puzzle. For Pennsylvania-based surgeons, state and local taxes also affect the overall plan. The state’s flat income tax rate of 3.07% applies to most earned income, as well as interest and dividends. Unlike federal rules, Pennsylvania does not allow deductions for contributions to traditional retirement accounts like 401(k)s and IRAs.

However, HSA contributions are deductible for state income tax, which makes them a more flexible tool for both state and federal tax planning.

If you live or work in a high-tax city like Philadelphia, you may also face local income taxes that further increase your total tax burden. Overlooking these factors can lead to avoidable surprises at tax time.

What to consider: Work with a financial professional who understands wealth management for surgeons in Pennsylvania and other states with different state tax structures, like those with SCM. From structuring compensation to choosing the right account types, the way you plan at the state level can meaningfully affect your results.

5) Failing To Update Your Financial Plan

A financial plan shouldn’t be viewed as a one-and-done document—it’s a living strategy. Yet many busy professionals sometimes let years pass without a careful review. That might be fine if nothing has changed, but life rarely stands still for long.

Whether you’ve added a new income stream, welcomed a child or grandchild, or shifted your retirement time-line, your plan should reflect it. Investments should still match your goals, and savings strategies and should adjust to current laws and future needs.

What to consider: Set a schedule to revisit your financial plan at least once a year. Even minor updates—like adjusting account contributions or rebalancing your portfolio—can help keep your finances on track through every stage of your surgical career.

SCM’s Wealth Management for Surgeons Can Help

With more than 200 years of combined experience, our team works exclusively with surgeons, their families, and practices. From retirement planning and tax strategies to investments wealth management, and risk analysis, we help bring order to financial complexity—without disrupting your focus in the operating room or clinic.

If you’re wondering whether your financial plan is quietly bleeding money, reach out today to explore how we support high-income professionals like you—before small issues turn into costly mistakes.