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Signing Bonuses

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Senior Manager
Joined: 19 Nov 2006
Posts: 256
Location: Washington, DC
Schools: Ross 2010
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Kudos [?]: 18 [0], given: 1

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31 Jul 2009, 11:22
When do companies usually give out signing bonuses to second year students and more importantly in what year are they taxed? If I were to sign with a company this fall would the bonus get taxed in 2009 or 2010? I'm planning to do a rollover of my IRA to a Roth while I have low income, but only makes sense if I stay in a lower tax bracket and a signing bonus could make a BIG impact on this, thanks.
VP
Joined: 28 Feb 2008
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Schools: Tuck
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31 Jul 2009, 12:54
I'm sure there may be the occasional exception, but most companies explicitly state that you will receive your signing bonus "within X weeks" after your start date.

In terms of taxation, it's taxed in the year it shows up on your pay stub.

I wouldn't worry about a company giving you money before you've actually started.

RF
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Joined: 10 Apr 2007
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Location: Back in Chicago, IL
Schools: Kellogg Alum: Class of 2010
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31 Jul 2009, 14:23
dates of getting bonuses varies pretty greatly. I have heard of people getting all on signing, 50% at signing and 50% with first pay check, all in your first check, and even within 60 days of start. Some companies dont have signons they have "relocation" bonuses which come after you move and sometimes when you get your bonus depends if you interned there or not. I know someone who signed with their internship employer and got it immediately but people who recruited during the fall got them after joining.
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Kellogg Class of 2010...still active and willing to help. However, I do not do profile reviews, don't offer predictions on chances and am far to busy to review essays, so save the energy of writing me a PM seeking help for these. If I don't respond to a PM that is not one of the previously mentioned trash can destined messages, please don't take it personally I get so many messages I have a hard to responding to most. The more interesting, compelling, or humorous you message the more likely I am to respond.
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VP
Joined: 28 Feb 2008
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Schools: Tuck
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01 Aug 2009, 14:20
riverripper wrote:
I know someone who signed with their internship employer and got it immediately but people who recruited during the fall got them after joining.

So when exactly did they get the money? Before they started their second year?

RF
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Manager
Joined: 04 Jan 2007
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Location: Bay Area
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20 Aug 2009, 12:20
Mine was spread out over 6 months AFTER I started the job.

Relocation bonus was given in a lump sum immediately within a week.

There was no money to tie you over between graduation and starting date but I am not working at the same company where I interned. I got my offer 7 months before graduation.
VP
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20 Aug 2009, 18:29
Thanks cbreeze!

I'm really curious how the bonus-before-you-start works. I've always thought companies were reluctant to give bonuses before starting because of the hassle of getting the money back if the person pulls out.

RF
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Joined: 10 Apr 2007
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Location: Back in Chicago, IL
Schools: Kellogg Alum: Class of 2010
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20 Aug 2009, 19:11
refurb wrote:
Thanks cbreeze!

I'm really curious how the bonus-before-you-start works. I've always thought companies were reluctant to give bonuses before starting because of the hassle of getting the money back if the person pulls out.

RF

Basically you sign a contract, if you bail I am sure you would royally screw yourself.
_________________

Kellogg Class of 2010...still active and willing to help. However, I do not do profile reviews, don't offer predictions on chances and am far to busy to review essays, so save the energy of writing me a PM seeking help for these. If I don't respond to a PM that is not one of the previously mentioned trash can destined messages, please don't take it personally I get so many messages I have a hard to responding to most. The more interesting, compelling, or humorous you message the more likely I am to respond.
GMAT Club Premium Membership - big benefits and savings

VP
Joined: 28 Feb 2008
Posts: 1323
Schools: Tuck
Followers: 6

Kudos [?]: 127 [0], given: 6

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21 Aug 2009, 05:37
riverripper wrote:
refurb wrote:
Thanks cbreeze!

I'm really curious how the bonus-before-you-start works. I've always thought companies were reluctant to give bonuses before starting because of the hassle of getting the money back if the person pulls out.

RF

Basically you sign a contract, if you bail I am sure you would royally screw yourself.

Either way, it's nice to know that it's an option. A signing bonus after your internship would sure help in reducing the loans you take out in your 2nd year.

RF
_________________
GMAT Club Legend
Joined: 10 Apr 2007
Posts: 4318
Location: Back in Chicago, IL
Schools: Kellogg Alum: Class of 2010
Followers: 89

Kudos [?]: 754 [0], given: 5

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23 Aug 2009, 19:12
refurb wrote:
Basically you sign a contract, if you bail I am sure you would royally screw yourself.

Either way, it's nice to know that it's an option. A signing bonus after your internship would sure help in reducing the loans you take out in your 2nd year.[/quote]
I dont know how much I will take this year, I have the option to max out if I want but I saved enough this summer to not need anything beyond my share of tuition after scholarships. My employer doesnt give out money until you show up, and I dont think you would be successful in negotiating that point. Then again maybe I will take out a bunch and just live life up this year...mortgage your future earnings for some amazing fun now.
_________________

Kellogg Class of 2010...still active and willing to help. However, I do not do profile reviews, don't offer predictions on chances and am far to busy to review essays, so save the energy of writing me a PM seeking help for these. If I don't respond to a PM that is not one of the previously mentioned trash can destined messages, please don't take it personally I get so many messages I have a hard to responding to most. The more interesting, compelling, or humorous you message the more likely I am to respond.
GMAT Club Premium Membership - big benefits and savings

VP
Joined: 28 Feb 2008
Posts: 1323
Schools: Tuck
Followers: 6

Kudos [?]: 127 [0], given: 6

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24 Aug 2009, 14:25
riverripper wrote:
I dont know how much I will take this year, I have the option to max out if I want but I saved enough this summer to not need anything beyond my share of tuition after scholarships. My employer doesnt give out money until you show up, and I dont think you would be successful in negotiating that point. Then again maybe I will take out a bunch and just live life up this year...mortgage your future earnings for some amazing fun now.

Considering they give you $20K or so for living expenses, you could REALLY live it up. RF _________________ SVP Status: Burning mid-night oil....daily Joined: 07 Nov 2008 Posts: 2400 Schools: Yale SOM 2011 Alum, Kellogg, Booth, Tuck WE 1: IB - Restructuring & Distressed M&A Followers: 79 Kudos [?]: 741 [0], given: 548 Re: Signing Bonuses [#permalink] Show Tags 24 Aug 2009, 15:16 refurb wrote: Either way, it's nice to know that it's an option. A signing bonus after your internship would sure help in reducing the loans you take out in your 2nd year. I received a signing bonus before. I remember that about half of the bonus amount went to the IRS..... _________________ VP Joined: 28 Feb 2008 Posts: 1323 Schools: Tuck Followers: 6 Kudos [?]: 127 [0], given: 6 Re: Signing Bonuses [#permalink] Show Tags 24 Aug 2009, 18:57 nink wrote: refurb wrote: Either way, it's nice to know that it's an option. A signing bonus after your internship would sure help in reducing the loans you take out in your 2nd year. I received a signing bonus before. I remember that about half of the bonus amount went to the IRS..... Yeah, i think the IRS treats it as a gift and taxes it at the highest rate (you'll get some back depending on your final income for the year). Otherwise, the gov't treats it as actual income for the year. In other words, if you$4000 biweekly paycheck puts you in the 20% bracket, the $20K signing bonus will automatically be taxed in the highest bracket. The cool thing is, if you can pull a signing bonus after your internship, you'll likely pay a LOT less tax on it, since your only income for the year is your internship (~$24K over 3 months) and the bonus!

RF
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Re: Signing Bonuses   [#permalink] 24 Aug 2009, 18:57
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