If you're at a firm for only part of the year and get a "stub" bonus, put it as much of it as you can towards your 401(k), if you can afford to do it.

If you leave a firm, try to roll over your retirement $$$ into another retirement vehicle (to avoid getting taxed on a cash distribution).

WGWAG is a wise retirement strategy.

Many Asian guys work for i-banks, p.e., or hedge funds, and make loads of $$$ - much more than most lawyers.

Or they win a million dollars on "Survivor," like Yale Law grad Yul Kwon:

http://en.wikipedia.org/wiki/Yul_Kwon

somewhat random question: if you leave in the fall to clerk for a judge, but intend to come back to the firm a year later, do any firms give a partial bonus for that year? (Or for the next year, which would be similar to the stub-year bonus?)

Morrison & Foerster has a 401(k). No matching.

I remember from another thread that Paul Hastings had a mandatory contribution for associates. The benefit is that this mandatory contribution allows associates to go over the $15,500 401(k) contribution cap (i.e., can contribute the $15,500 + the mandated amount).

3:26: I did exactly that and my firm did not give me a bonus, which left me with a not-so-good-taste in my mouth since I had (a) been billing a lot and (b) they want me to return.

If my clerkship had started two months later, I would have had about $15,000 less in student loans . . . . It's not like I can recoup that $15,000 from another firm, but the fact that my prior firm didn't give it to me does make me less inclined to return.

I know of a couple of firms that provide financial planning. Mayer Brown was soliciting bids for someone to provide that service, and a few others also provide it. What a lot of firms are doing is setting this type of stuff up for partners in their 50's so that it is easier to force them out in their 60's. Almost every large firm I see provides matching on 401K's and a pretty good retirement plan (for partners).

3:26,
I doubt it, but they would probably pay you a clerkship bonus in that situation, which would compensate for missing out on the annual bonus for that year.

Are there any firms that offer 401(k) matching for associates?

If you get a bonus and it is paid in the beginning of the year, can you max out your 401k with it. I am assuming that you get taxed higher on your bonus than regular paychecks so why not use that to fill your 401k.

3:36:

Please take a course in federal income taxation next semester when you're a 2L. And use some common sense.

3:39 you are an arrogant twat

Income is income, so it won't be taxed at a different rate. (Bonuses are subject to greater % of withholdings, but you get that money back come tax time.)

I assume that bonuses (bonii for those who insist) paid out at the start of the year are calculated as income for the year in which they were received. In most cases, withholding the total amount for your 401(k) might not make a lot of sense since withholding evenly throughout the year gives you the same tax benefit but lets you get your hands on your bonus to invest or pay off student loans, either making you money or saving it by avoiding those interest rates. However, if you are just starting at a firm and collecting your clerkship bonus or planning to leave it before the year is done, it might make sense to try to withhold your 401(k) contribution from your bonus so that you can max out before YE.

(I did take Fed Tax, but took it P/F in my final semester, so could be wrong on a lot of stuff here. Please feel free to correct me!)

3:32 you're a genius. The clerkship bonus, in nyc anyway, is higher than junior associate year-end bonuses.

Borger Financial in the NY area is a financial planning company run by a former big law attorney. They have a good deal of big law attorney clients and are familar with the issues that commonly arise.

This is easily the funniest picture on this site.

Borger Financial in the NY area is a financial planning company run by a former big law attorney. They have a good deal of big law attorney clients and are familar with the issues that commonly arise.

Beware the AMT!!!

3:58 (non-Borger Financial): Funny, but sad.

Are these the "war stories" we will have to tell our grandchildren? How we successfully compelled document production? Or got the court to rule that certain documents weren't privileged?

Firms have little incentive to help you manage your money properly. They'd rather see you live it up and click those golden handcuffs tighter and tighter.

3:26: While that may be true, if I had remained at my firm until YE bonuses were paid out and then were to return to that firm, I would have received both the YE bonus before I started my clerkship AND the clerkship bonus when I returned to the firm. In short, I would have been paid the same as clerks who clerk right out of school: They earn their clerkship bonus when they start and then their YE bonus. The truth is, if you work for a part of a year and then leave to clerk prior to bonus payout, you lose a lot of money that is not made up for by the increase in paygrade.

From,
3:49

3:36, the answer to your question is it depends on whether your firm treats bonus amounts as "compensation" for purposes of the 401k plan. If it does (and you are allowed to defer bonus income to your 401k), you will pay the same amount of taxes at the end of year as if you made the same $ contribution over the entire year. However, you will get the benefit of tax-free earnings on your 401k earlier, so if you can afford to spare the bonus, I would say go for it.

3:39, please take an ERISA course so that you'll understand that a law school fed tax class and common sense have nothing to do with the operation of employee benefit plans. I wouldn't normally be proud of being an ERISA dork, but you sound like a complete ass.

4:16: Thanks for the info. If bonuses aren't considered compensation, what would they be considered?

From,
3:49

Re: Bonus paid into 401k. If you firm matches and you hit $15,500 in the 401k before the end of the calendar year, you will be loosing some matching money.

3:49: Bonuses and overtime are extraordinary income. Most 401k plans only let you contribute from ordinary (base) income. Ask people in staff positions at your firm if they can contribute to the 401k from overtime. (Assuming you don’t want to talk to HR.)

Cleary's website states as follows:

Annual compensation for the class of 2006: $160,000, 3% of which is contributed to a US tax advantaged 401(k) savings plan.

401(k) Plan: Associates may participate through voluntary salary deductions up to the $15,500 pre-tax limit regulated by law.

I don't think this implies that the 3% is matched. Thoughts?

4:40/ERISA Person: Thanks!

Re, Cleary: Looks like they have a Paul Hastings model, too: You must donate 3%. Then, you can donate up to $15,500 more per year. The benefit is that you can donate more per year to retirement than the $15,500 cap (and all of the tax benefits and savings that go with that). I think it is a great program that helps associates and doesn't cost the firm anything (I don't think). Wonder why more firms don't do this? I wish mine did.

And no, it doesn't sound from the webpage like Cleary matches. There was some discussion about 401(k)s in a previous thread, and it seemed very few firms do match for associates (although most do for staff). I recall someone in that thread suggesting that it had something to do with the salary/compensation differential (not just that staff earn less so firms help them, but that giving associates matching would be problematic in some way because of the salary differential).

~3:49

5:13--Which threat was that? This is a puzzle that I wonder if anyone can answer: why *don't* firms pay 401(k) matching for associates? Most of my friends from college at working at positions above Grade 2 Senior Ditch Digger get this. I know there are a few out there that do this...but of the major NY and LA firms, def. seems the exception, not the rule.

Is it just that dumb 25-year-olds looking at firms aren't thinking about such things and only want cash to pay off debts, and firms will have used up and disposed of all but the partner-material ones by the time they get to an age where retirement planning is on the horizon? Firms have 40-year-olds on staff, but how many 40yo associates are there?

Skadden does 401k contributions. Not sure if they match though. Plus business casual dress in their bay area offices! Yeah!

Skadden does 401k contributions. Not sure if they match though.

Do any firms provide anything useful in the way of financial planning services? I'd prefer not to piss away *every single* cent I make.

Sidley Austin offers free T&E planning to associates (needless to say that to partners as well).

5:59 -- It would be far more useful if Sidley Austin contributed/matched at least some portion of the associates' 401(k) contribution. Most other firms match to some degree, I believe.

621: Most other firms do not match for associates.

Granny doesn't look like much of a litigatrix, Lat...

I believe (based on something an associate there told me years ago) that Morris Nichols in Delaware has some form of 401k matching for associates who have been with the firm two years. I'm not sure how much. I think this is rather unusual.

Heller Ehrman NYC matched until we got raises.

Kirkland makes/matches 401(k) contributions up to a point and offers all attorneys access to private banking, which in turn offers a variety of (mostly) fee-free financial planning options.

7:27, true, but Heller's contribution didn't vest until the associate had been with the firm for 5 years. It was also capped at 30k. So it amounted, really, to a 30k (plus/minus investment income/loss) bonus for 6th year associates (who hadn't lateralled). Not much to brag about.

But as you say, that got kicked with raises (the 125 to 135 raises--not the 145 or 160). You're still grandfathered in on any contributions made before then though--if you're still around after 5 years to see them vest.

I worked one year at an NYC big-law firm, and left in the fall to go clerk (leaving most of the law firm bonus on the table). When they were recruiting me to return, they offered me an entire year's bonus for only the stub three month period that I would have been back (in addition to the hefty clerkship bonus - though pre-50k). It still wasn't enough to lure me back into that lion's den...

Thanks, 8:06. Maybe my firm will do the same w/r/t the bonus I left on the table . . . .

From Baker & McKenzie's NALP form:
"401(k)/IRA/Other Ret. Plan w/Employer Contribution"

Holland & Knight matches 401K contributions for associates, but only to a limited extent.

Morris Nichols in Wilmington contributes an additional 10% of base salary into a 401(k), which is kind-of amazing. If they move to $160K next year, that will make for a pretty sweet deal. However, their bonus structure still gets crushed by Skadden Wilmington.

Kaufman Borgeest & Ryan has a 401k, but no matching