{ "media_type": "text", "post_content": "How does the partnership comp work at EY? Whats the buy in? Do they give interest free loan for buy? Is it only profit sharing or PS + salary. Also how to negotiate when offered partnership?", "post_id": "59e22ae29a159400118f841e", "reply_count": 32, "vote_count": 24, "bowl_id": "564a5cdb94887803001dd07c", "bowl_name": "Accounting" }

How does the partnership comp work at EY? Whats the buy in? Do they give interest free loan for buy? Is it only profit sharing or PS + salary. Also how to negotiate when offered partnership?

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There are two partner pensions now; one for partners who made it I think 2 years ago going forward and then the prior one. I am grandfathered into the prior one so don’t know the exact workings of the new plan but they are similar. Basically they look at your 3 highest grossing years out of your last 5 years before retirement. If you make more than $1.1M in those three highest grossing years, then you are capped at $1.1M. They effectively pay you 1/3 of that for as long as you live. There are different payments if you want it lump sum, over 10 years, or for as long as you or your spouse live. I don’t have the specific details on how these payouts work, but it is a good pension. Getting about $385K for the rest of your life isn’t bad.

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Few things i would add. 1-I think folks need to be realistic about their earning potential outside ey. Of course we hear of seniors leaving for 10-20 percent bumps - but I think some folks have unrealistic expectation of how many jobs out there paying over 150k there are. I said in another thread - I had 3 seniors dissing the 150k made by director of fr at our small public client - no idea what these guys (who were all low 3's) think they will earn. So hard to say early but if you think you can make partner - then definitely an avenue to a sizable income. 2-don't be afraid to boomerang. Seems lots more of our partners now - including those in leadership positions - are not lifers at our firm. 3-grass is always greener. Look at folks earning a lot of money at your clients - the higher ups are probably same as big 4 execs / might get home early but computer goes back on at night. Just my $0.02

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No negotiation for partnership. The buy in is a specified percentage of your targeted "salary" - I think 30%. You get a bank loan - EY arranges. It carries interest but EY also pays you interest on your capital (you actually make money on the interest). My buy in had a 5-year term. Just came out of my distributions.

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We're not trying to make it a mystery! It's complicated even for partners. Margins are relevant in that they affect a partner's ratings - and ratings are relevant for future increases. Target salary is what I get paid each month; actual results affect my final distribution. Partners do receive money every month - we need it! That's based on a target and then actual distribution trues up. Capital account requirements increase as you become more senior but it's not really a big deal. It's good to be a partner but we are definitely not without worries. What else do you want to know?

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This has been really informative you guys. Thanks for the transparency.

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EY 2- you're the real MVP!

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Prob 350? But now you're paying your own taxes and other stuff. Lots of SM think it's a pay cut. You'll make it up though.

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Thank you EY2. How does the partner pension plan work? (heard it's different from staff - ED pensions)

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EY8 - in my 12 years in the partnership I have never needed a loan to pay my taxes. There was 1 time that phantom income was significant that I needed to plan for it. However it has never been a real issue. The firm does try and prevent this from happening. The only time personally there was an issue for me was when before the Obama tax increase, the firm accelerated income into the year before the taxes took affect (let’s call that Year 0). Then the next year (Year 1) our K-1s we’re smaller because of the income accelerated into Year 0. In Year 2, they base your withholding on what you made in Year 1 (which was lower). As such, I had a very large tax bill at the end of Year 2 because my withholding wasn’t sufficient to cover what I actually paid in Year 2. There is a group of professionals who do the partners tax returns (if you want them to; it costs a small amount); they gave me over a year notice to so that I could plan for that tax payment. Again, complicated, not perfect, but the firm does try and prevent this from happening. For me it was acerbated because I live in NYC ( a high tax city/State).

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How do a partner's margins affect their pay? (ie just how much does it piss partners off when I go over budget?)

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That's essentially a buy in. You need to invest in shares of the partnership. Those shares pay out earnings. You cash out that investment when you retire. Buy more shares the longer you are with the firm or as your responsibility increases.

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At EY there is def a buy in. Trust me, I had a giant loan from Barclays to prove it.

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I get paid 2x a month just like everyone else at EY. My payments are based on my target salary. All partners get $9k (less payroll deductions) on the last day of the month;the mid-month payment is 4% of your target salary less the 9k. You get 12%(ish) quarterly to make your estimated tax payments. Sometimes that is enough and you have some left over, sometimes it's not.

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How does it work partners in leadership positions that no longer have clients since they are no longer generating revenue for the firm?

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Thank you EY2, one final question, if you were a new SM now, is it worth the grind to have no worklife balance to become a partner? Do things get better?

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OP - not EY2 here; but I am a 12th year partner; in my opinion it very much worth it to grind it out. I am well paid, I have flexibility, I have a great pension, I work with great people, and I travel the world. I am also a husband and father and have time to see my family and pursue my hobbies. It is not always an easy job but I don’t know many jobs that pay what this does that are.

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Somewhat unrelated, but I've heard you get hit with a bunch of phantom income on your k-1s in your first few years as a partner, and many need a loan from EY to pay the taxes.

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Hi, yes def try to make it to partner. Totally worth it. It's not as easy as a job as you all think it is, but it is very well paid and fulfilling. Unlike EY6, I have had to take a partnership loan to pay my taxes - but you'll be ok. If you're complaining about taxes, you're probably doing pretty well.

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Following but I think it'll be confidential

@EY2 Thanks for the input! Why is partnership such a mystery ?

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