A2A Bonus Clawback - Advice
Hi Monkeys,
Currently a second year IB analyst, just signed a buyside offer to start in Jan 2025. I'm on track to be promoted to ASO at my IB this year, but I think I'll get my bonus clawed back because I'll leave 5-6 months later to the buy side.
Problem is the A2A bonus is $15k gross (made up number), but I'll only receive the net of $8k. Means that if I was clawed back, I'll lose a total of $7k because the claw back is based on gross not net.
My friend who's leaving in Sept will be telling his boss not to give him the A2A bonus, but I don't think I can do the same because it's later in January, so things will be awkward. Not to mention I risk getting fired too given my IB is doing massive layoffs.
Thanks!
Currently in a similar position - I plan on just not paying it back.
There are some precedents at my EB of people not paying it back but curious to hear others on what can happen.
Not legal advice, but I have two suggestions:
1. If you receive the bonus in tax year 2024 and have it clawed back in 2024, it should be a tax nothing for you because you can exclude it from the W2 income. The key is getting it clawed back in 2024 and NOT 2025.
2. If you don't want to pay it, then this whole problem is moot. You get the bonus, pay the taxes, and fight the man if they want it back. This is the cruddier option in my point of view.
If contracts at your firm say they have the right to claw, your goal should be getting them to claw in December 2024 rather than letting it bleed into January 2025. It's the same crap as the daytraders who make a bunch of money in tax year X, then lose it all before April 15th of tax year x+1. It's a financial self-inflicted gunshot wound.
Did you raise your hand for the A2A promote signaling you wanted to stay in banking for longer (i.e., not recruit for buyside)? At my shop you have to be very certain on staying long term so I am confused how you all got the promo and then recruited without ruffling feathers with recommenders etc
You'll be asked to pay back the gross ($15k) but you will get the tax amount back the next time you file taxes, so it's not really a loss, just an accounting/cash flow thing to be aware of. Just hold back some extra bonus money to cover it.
In similar situation but currently at buy side shop. current plan is to negotiate that a new employer would cover the old clawback, but whether or not that works, i plan on telling my current employer that if they want a smooth 2 week transition then they should waive the clawback. we’ll see how that goes!
That's a good way to burn a bridge with your own shop unnecessarily... either get the new shop to cover it or view it as the cost of lateraling, don't threaten them over something they are contractually entitled to. If you are leaving that quickly, the firm lost money on training you
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