Menu

New Job with guaranteed salary as a forgivable loan

Home General/Welcome New Job with guaranteed salary as a forgivable loan

  • Avatar alhoffma 
    Participant
    Status: Physician
    Posts: 2
    Joined: 05/03/2019

    My physician husband is joining a group in California that is offering a 1 yr guaranteed salary in the form of a 3-year forgivable loan. He received two different offers from two different hospitals both with the initial 1 yr W-2 income followed by forgiveness over 3 yrs (1/3 per year). We picked the one with the highest salary offer. They warned us to get an accountant so we’re not double taxed. Then he would join a private group after that. Also, there is basically no chance we will leave before 3 yrs (this is our second job and it’s with a great group and we’re moving to be close to family.)
    Anything we should be concerned about? And they are giving him the option to split the salary to take part as a bonus (the total wouldn’t change). Would this be a good idea? Do our total taxes change if we take a bonus?
    Thanks!!’

    #212025 Reply
    Avatar adventure 
    Participant
    Status: Spouse
    Posts: 1183
    Joined: 10/24/2016

    This all feels strange to me.

    in the form of a 3-year forgivable loan

    Click to expand…

    Is there an interest rate on this loan? Do you have to take it, or could you just get paid normally?

    We picked the one with the hugest salary offer.

    Click to expand…

    Did you consider the benefits for each too?

    there is basically no chance

    Click to expand…

    Then he would join a private group after that

    Click to expand…

    Why are you 100% sure this job is awesome for exactly 3 years, and then say you know you will leave? Why not just join a private group now?

    Most of us can’t plan perfectly that far ahead. Feels foolish to lock in for 3 years, or is that really necessary?

     

    Anything we should be concerned about?

    Click to expand…

    If you take a loan (say 200k – 1 year salary)… and something (e.g. life) comes up, what are you doing with that loan in the meantime? Spending it? Keeping in case you have to leave and pay it back?

    I’d be concerned about why I’d take the loan, what I’d do with it in the meantime, and the oppourtunity cost it would have to keep me from leaving.

    #212267 Reply
    Liked by Panscan
    abds abds 
    Participant
    Status: Physician
    Posts: 241
    Joined: 01/16/2017

    Perhaps it’s just me but I’ve never heard of this. Or more likely I’m just not understanding. Your husband is planning to work there for 3 years? And his pay is structured how exactly for the 3 years?

    When you say it’s a “hugest” 1 year salary structured as a 3 year forgiveable loan, are you implying he is getting 3x what would be considered a normal salary in year 1 and then getting nothing in years 2 and 3?

    Why doesn’t he just get paid a normal W2 salary each year for 3 years?

    #212273 Reply
    Liked by SLC OB, adventure
    Avatar SLC OB 
    Participant
    Status: Physician
    Posts: 565
    Joined: 06/23/2018

    This is an odd set up…. I’ve heard of loan repayments set up this way, for instance, you get you loan paid over 3 years ($250K divides up monthly and distributed) and then forgiven over the next 2 years, but never a salary.
    What is being forgiven? Just the amount above what he brought into the practice? He’s working, receiving a salary for his work, why would he need it to be forgiven? I would absolutely worry about double taxation, because in the loan forgiveness example the person then gets taxed on $250K over those two year (lands on 3 tax years because they usually start in July, when they finish residency/fellowship) and they need to have enough $$$ to pay those taxes, as they are not seeing any increase in pay at that time!
    This is very concerning, tell us more so that we can feel comfortable.

    #212279 Reply
    Liked by wonka31
    abds abds 
    Participant
    Status: Physician
    Posts: 241
    Joined: 01/16/2017

    Yes to clarify, I meant I have never heard of this for a salary. The multiple-year forgiveable loan is very common for signing bonuses, moving expense repayment, and things like that. I’m interested to hear more specific details.

    #212283 Reply
    Avatar ZZZ 
    Participant
    Status: Spouse
    Posts: 702
    Joined: 06/18/2018

    “Anything we should be concerned about?”

    Choosing to practice medicine in what is likely a HCOL area, picking a job based on some metric called ‘hugest salary offer’, being warned by your employer that you should get an accountant lest you be doubled taxed, the oddity of the ever common ‘you work for us for 3 years then you join a PP’, your certitude that there’s no chance you leave this job in less than 3 years.

     

    #212286 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 8130
    Joined: 01/09/2016

    The facts you posted are confusing. If I understand correctly, your husband is working for free in the first year if you decide to leave at any time before three years are up. I think there must be something you are leaving out because that just doesn’t make sense. I also don’t know how anything would be double-taxed, which leads me to believe there is some kind of signing bonus that is forgiven over 3 yrs in addition to the guaranteed salary. Is that possible?

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #212287 Reply
    Liked by adventure
    CM CM 
    Participant
    Status: Physician
    Posts: 1168
    Joined: 01/14/2017

    .

    Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried bags for Cyd Charisse (gracious). Hosted epic company parties after Friday night rehearsals.

    #212301 Reply
    Avatar Tangler 
    Participant
    Status: Physician
    Posts: 358
    Joined: 08/23/2018

    sounds fishy. Never assume you will love a job before you have worked it for 6 -8 months and even after years things can change and go poof. $ can buy a lot of things and it can buy freedom. Nothing is more valuable than freedom. Why the smoke and mirrors? Advice to get an accountant? Sounds like a freakin trap to me, but i am a skeptical little rascal. “you are not paranoid, if they are really out to get you” I would never agree to this.

    #212398 Reply
    Avatar saildawg 
    Participant
    Status: Physician
    Posts: 335
    Joined: 01/24/2016

    This whole post seems off, starting with the title and continued with the content.  I can offer no advice but would recommend gathering all the specific details and reposting it with correlating questions.

    #212405 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 3059
    Joined: 09/18/2018

    Or don’t. To my son I would say:

    Walk like a man, talk like a man
    Walk like a man my son
    No job’s worth crawlin’ on the earth
    So walk like a man, my son

    #212425 Reply
    Avatar Kamban 
    Participant
    Status: Physician
    Posts: 2487
    Joined: 08/01/2016

    This is an absolutely confusing story. So a salary 1st year. Does he get a salary in the 2nd year or just money for loan forgiveness, or 1099 + some money for loan forgiveness.

    A simpler approach would have been to post some numbers, 200K 1st year W2. 1/3 of 300K (100K) as loan forgiveness at 2nd year plus a set sum as income. Or something like that. A clear post with some numbers will help get you clear answers.

     

    #212426 Reply
    Liked by Tim
    CM CM 
    Participant
    Status: Physician
    Posts: 1168
    Joined: 01/14/2017

    This is an absolutely confusing story.

    Click to expand…

    .

     

    Erstwhile Dance Theatre of Dayton performer cum bellhop. Carried bags for Cyd Charisse (gracious). Hosted epic company parties after Friday night rehearsals.

    #212454 Reply
    Avatar alhoffma 
    Participant
    Status: Physician
    Posts: 2
    Joined: 05/03/2019

    Thanks for the replies. I should clarify:
    My husband will be joining a private group with the intent to become partner at a later time. The majority of his first year salary is in the form of a forgivable loan from a hospital that is supporting him by stating there is a community need. He is a surgeon moving to a new area so the hospital is providing a “guaranteed salary” for his first year to allow him to have income while first getting started while building up a patient/referral base. The idea is that he will transition into his own collections after the first year and no longer need assistance (and the hospital will subtract off his gross cash receipts as income is earned, thereby decreasing the total forgivable loan amount.) There is interest on this income and that will be forgiven as well. Then over the following three years (as long as we remain in the geographical area) the entire loan will be forgiven.

    I posted because I had never heard of this kind of set up, and didn’t know if it was common or if there were any red flags to look out for. Both local hospitals in the area are offering this forgivable loan option to recruit him.

    Also, I was trying to say that we have decided to move to the area because a lot family is there, so it would be extremely unlikely we would leave anytime soon. Ideally, we would retire in that area, so the likelihood of us moving out of the geographical area during the forgiveness period (which would trigger payback and lose forgiveness) is extremely slim.

    #215070 Reply
    ACN ACN 
    Moderator
    Status: Physician
    Posts: 634
    Joined: 01/08/2016

    My one buddy had a very similar set up where the hospital provided two-thirds of his private practice income for Year One while the Private Practice Group provided the other third. The hospital 2/3 salary was then forgiven over the following two years if he stayed. If he left after year 2 he would have to repay back one-third of his salary to the hospital

    In my opinion if you like the area and you for see this as being a good Private Practice Group that you want to partner in it’s a nice way 2 get a salary that is higher due to the hospital having deeper Pockets than the Private Practice Group.

    If you're ever having a bad day, just remember in 1976 Ronald Wayne sold his 10% stake in Apple for $2,300.

    #215090 Reply
    Liked by alhoffma

Reply To: New Job with guaranteed salary as a forgivable loan

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear