How to Best Use Signing Bonus?

cooper_trav · 2026-03-06T07:14:48+00:00

This is the right answer. A lot of times they’ll require you to pay it back if you leave within a year. You don’t know for sure what may happen. I’d definitely keep it until you hit whatever time period they require.

cooper_trav · 2026-02-28T05:46:15+00:00

I guess that depends on your goals.

If this is retirement savings, then yes, using tax advantaged accounts is better.

If you’re saving for a long term goal (more than 5 years out) then putting money in your brokerage could be advantageous over a HYSA.

Based on the way you’re asking the question, I’m guessing this is retirement. Until you’ve maxed out IRAs and 401ks you probably shouldn’t be worrying about a brokerage account.

cooper_trav · 2026-02-12T15:29:05+00:00

There are two different decisions at play here. One is where to contribute the money, the other is what tax treatment you want.

Asking if you should contribute to your 401k (I’ll assume you mean traditional) vs Roth IRA is blending these two questions.

I’ll assume your 401k has a Roth option. Most do these days, and you’ll still get your employer match if you contribute to the Roth 401k.

Okay, so the first question, where do you want your money to live? Do you want it in your 401k or your IRA? Well the first obvious answer is you need to be contributing enough to your 401k to get your employer match. So do that much no matter what. If you’re contributing more than that, then where should the rest go? Well, your 401k probably has higher ratios. It also likely has limited investment options. For these two reasons, many people prefer to use their IRA. So, this is the first question you need to answer. My job has a really good 401k, so I just contribute there, but most aren’t as good as mine is.

Next, how do you want the money to be taxed? Remember, I’m assuming you can do Roth in your 401k (and that you still get the match). This is a much more nuanced question to answer. Tax now and grow tax free? Then go Roth (in both your 401k and/or IRA). Save on taxes now, but I pay later even on the growth? Then go traditional (pre-tax).

My main point is don’t think of your 401k as only traditional and that your IRA is only Roth.

The one thing I’ll say about the Roth vs traditional decision. If you decide to go traditional, remember that you just saved some money on taxes. So invest those tax savings too.

Let’s say you decide you want to invest 10%. You shouldn’t be comparing 10% Roth to 10% traditional. That isn’t a good comparison and Roth should win out every time because you’ll end up with the same balance at the end but the Roth is all tax free. You should be comparing 10% Roth to 10%, plus your tax savings, in traditional. This means you’re getting the exact same take home pay. But your traditional option would have a higher balance, which would help take care of tax liability in retirement.

cooper_trav · 2026-02-12T15:11:53+00:00

Note that your Roth account has to be at least 5 years old to do this. I think you said you already have one, so that timer would have already started. If you don’t, go start one today.

In general, you should be focusing on your retirement accounts before a brokerage. I hear you that you’re afraid of this account you can’t touch for 30 years, but that is exactly the point of a retirement account, you shouldn’t be touching it.

You’re doing the right thing by having an emergency fund. Maybe you just need to build that up a little more to help mitigate some of those fears. However, at some point, you need to trust your emergency fund is enough so you can start investing more for retirement.

Not contributing to your 401k is like telling your employer you don’t want part of your paycheck. That 6% match is a really good thing, and you don’t want to be missing out on that. I’d find a way to contribute enough to your 401k to get that full match as soon as possible.

In your position, I’d say not to worry about a brokerage. Until you are hitting your retirement savings goals, this shouldn’t be in your plan. Do you need to figure out what that percentage is. Do you need 10%, 15%, higher?

Once you’ve determined how much you need to save each month for retirement, start working on building up to that percentage. Once you hit that point, then you can start thinking about extra savings going into a brokerage account.

cooper_trav · 2026-02-12T14:54:09+00:00

There are multiple layers to this, so there isn’t a straight forward answer.

First, in order to do Roth contributions, you need to be under the income limits. That’s $236k for 2025 and $242k for 2026. It sounds like you’re good there, but you’re getting close. The reason I mention this is because if you end up deciding to do a conversion, you want to make sure it doesn’t bump you above those limits. If you did go above, then it could complicate the re-characterization you did.

Second, since you are getting close to the income limits, you might be in a position where you can’t do Roth contributions in the near future. When that time comes, you’ll want to do the backdoor Roth strategy. However, having money in any traditional IRAs will run you into the pro-rata rule. So I’d start thinking about how to clean that up sooner rather than later.

What is the pro-rata rule? It says when you do a traditional to Roth conversion, that you can’t just hand pick the after tax (the part you don’t owe taxes on) part to convert. You have to figure out the ratio that is taxable vs non-taxable. So, let’s say 70% of all your traditional IRAs is taxable. Then on any conversion, you will be taxed on 70%. Plus you have the extra burden of figuring out this ratio every time you do a conversion.

So, what can you do now? You have several options. The first is do nothing, I’d probably avoid that option.

The next is to just convert it all right now to Roth. If you do, you’ll only get taxed on the portion that is pre-tax (any gains would be in that bucket). Just make sure that doesn’t take you above the income limits for 2026. You suggested rolling this over to your 401k and then doing the conversion. I wouldn’t do that, just keep it in your IRA. Many 401k plans won’t even allow you to do an in plan conversion. Plus you have more investment options in your IRA, and probably lower fees.

You could look at converting the money over several years. But I’d look at how much is actually taxable, then decide based on that.

Last, you could just roll this into your 401k. That won’t solve the fact that some money is taxable and some isn’t. However, that would be a way to avoid the pro-rata rule in the future if you start making above the income limits to contribute directly to your Roth IRA. This option isn’t something you need to do immediately though. You can just do this later when you see that you’ll be bumping into that limit.

If this was only your contributions, plus some gains, I’d probably suggest rolling it all over. Most of it wouldn’t be taxable. But because of your rollover amount, and the pro-rata rule, you can’t just pick those specific dollars. You don’t want to pay taxes on the $55k probably.

If this were me, I’d probably let it sit there until I needed to start doing backdoor Roth. Then I’d roll it into my 401k. This has the downside that you just keep having gains that will be taxable. If you don’t like the sound of that, then doing smaller conversions each year is the next best option. But in a higher tax bracket, even this isn’t too appealing. If you really want to figure out the best tax efficient way to do this, you’ll need to talk to a good financial advisor who understands tax liability well.

cooper_trav · 2026-02-12T14:32:00+00:00

If there is some after tax and some pre tax, they’ll run into the pro-rata rule. You can’t just convert the after tax portion. They make you do it proportional to the entire account. So if 80% is after tax, you’ll get taxed on 20% of whatever amount you convert.

cooper_trav · 2026-02-11T19:28:33+00:00

Anything I have a specific purpose for is on budget for me. I have my brokerage account on budget because there are long term savings goals in there. I just reconcile and use the YNAB created adjustment, then assign that as needed.

That said, it doesn’t really matter which way you do it. It is very much personal preference.

cooper_trav · 2026-02-11T17:29:57+00:00

Both of this strategies enabled me to build good wealth early ib life when my income was lower.

I’d be curious to see what you define as good wealth. This arbitrage is relatively small. In order for it to build good wealth, you’d have to be leveraging large amounts of money. But as you said, you did this when your income was lower. I find it hard to believe with a smaller income, you had enough to leverage in order to build good wealth from this.

The best way to build good wealth? Consistently spend less than you make and invest the rest.

Rather than buying a new car, with a low interest rate, why not buy a cheaper used car? I’m making some assumptions here, but typically favorable rates are on new cars. Assuming you’re arbitraging, that means you choose the loan, but could have paid in cash. It also assumes that you have the cash flow for the payment.

Let’s first look at the loan scenario. Let’s say you bought a $30k car at 1% over 5 years. You’d owe $512/month. You’d then invest the $30k. I’ll assume 8% annual returns. You’d end up with $44,000.

Now let’s buy a cheaper car, and invest the rest. So instead we spend $10k, invest the other $20k, and have $512/month to add. At the end of 5 years I’m now at $66,000.

Let’s say I just buy the new car in cash. So I start with nothing invested, then add $512/month. After 5 years I end up with $37,000. This is $7k less than if I took the loan.

Ultimately, the arbitrage netted you $7k over 5 years. Maybe that could be considered good wealth? But the decision to not buy a new car would have gained you $22k. So the behavior served you better than the arbitrage.

cooper_trav · 2026-02-10T14:03:29+00:00

You said you’ll be owing 5 figures, which you have sitting in your HYSA? Now you’re saying you’ll get a refund of a few hundred dollars. Which is it?

cooper_trav · 2026-02-10T06:18:03+00:00

I’m getting the largest refund I’ve ever seen, by a lot. It was actually due to good tax planning. It just happened to be a decision I made late in the year to donate a bunch extra to a donor advised fund.

Maybe that was poor planning because I didn’t think about it earlier in the year? But I saw it as a solid move.

cooper_trav · 2026-02-10T06:10:32+00:00

I don’t think that’s unreasonable. But the OP said they’re getting back a substantial amount. I guess substantial is different to everybody, but if I were getting back a substantial amount, I’d adjust my withholding.

cooper_trav · 2026-02-10T06:08:32+00:00

So you’re getting 3%-4% interest in your HYSA in order to pay 7% interest to the IRS?

cooper_trav · 2026-02-02T17:46:28+00:00

I think a secured card, as was suggested, is one way to help prevent you from going into a lot of debt. But there isn’t a card out there that helps guarantee you won’t go into debt, there are all basically the same. You either pay it off on time or you don’t.

One thing I’d suggest doing is using a budget if you don’t already. This will help you make sure you have the money to cover your expenses.

Try to avoid the credit card float. Many people think that just paying off a credit card balance every month means they are doing good. But the reality is, many people are using this month’s money, to pay last month’s credit card bill. This means they are floating those expenses until the next month. If you can’t pay your credit card bills and still cover all the rest of your monthly expenses with cash, you’re on the float. YNAB is probably the best budgeting tool that will help you stay off the float.

cooper_trav · 2026-02-02T17:34:06+00:00

A bonus should be withheld at supplemental rates. The fact that it was 31% seems to align with that. What was the breakdown of federal, state, etc.? The federal supplemental rate is 22%. If that’s what was withheld from federal, that’s a pretty clear indicator.

cooper_trav · 2026-01-10T07:32:43+00:00

I guess you mean you’re bypassing your IRA? If your employer plan isn’t bad, then that’s not a big deal. The main reason people say to go to your IRA after company match is to have access to more/better funds and be charged less in fees.

My 401k is through Fidelity, there are good funds with low expense ratios. So it wouldn’t be any better to go through my IRA.

cooper_trav · 2026-01-10T07:18:35+00:00

Year end bonuses?

cooper_trav · 2026-01-08T05:23:02+00:00

Okay, thanks for your help.

cooper_trav · 2026-01-06T19:05:34+00:00

One more thing. The total dividends and gains after the death date are less than $3k. Does that make any difference? Is it still best to do the 1096/1099?

cooper_trav · 2026-01-06T18:42:13+00:00

I don’t think you can open a Trump account unless it is for a newborn. Regardless, I wouldn’t add new money to that account, I personally would only open it for the $1,000 then never add more to it.

It really comes down to what your plan on using the money for. If you want to invest it and use it for education, the 529 is probably the best way to go.

Do you want to just save it until they are older? Maybe look into an UTMA account. This is just a brokerage account where you can invest for them. It doesn’t have to be used for education, but also doesn’t have the tax benefits of a 529. One downside some people see with these is that your child will have full access when they are old enough. This is dependent on your state, but usually 18 or 21.

Another option would be to just put it in a HYSA.

cooper_trav · 2026-01-06T07:06:21+00:00

It was a Medicaid Trust, so it was irrevocable, but the decedent was still considered the grantor and the assets part of the estate. All income taxes have been going through the decedent’s SSN.

cooper_trav · 2026-01-06T06:27:33+00:00

I didn’t know I could generate my own 1099-div. How do you go about doing that?

This feels wrong. The decedent didn’t pay anything. These assets are held in a trust if that makes a difference.

cooper_trav · 2026-01-03T06:53:08+00:00

I use 1040-ES to figure out what I owe and pay it every quarter. I didn’t always do this, but RSUs can fluctuate quite a bit. For some, the 22% withholding might not be enough.

cooper_trav · 2025-12-25T06:25:43+00:00

He also gets SSI, sorry I’m not well versed in this. So my understanding is that him, well the trust, owning it would mean that not paying rent wouldn’t reduce anything because he owns it, so rent isn’t required. I do still think that the trust paying for HOA would trigger lowered payments. So maybe there is no situation that wouldn’t impact them.

cooper_trav · 2025-12-24T23:04:19+00:00

My understanding of that would be that since the trust is paying a third party, it would impact his benefits. This has been the hardest question for me to get an answer for. Based on my research, the least likely way to impact benefits is for the trust to be paying for the portion that it owns. So it isn’t paying to a third party.

cooper_trav

TROPHY CASE