Unexpected income

[noodleoo]

I got a huge surprise at the end of 2020 and I need advice on how to manage it. Long story short, my first job was with a tiny start up and I was given stock in the company. It was super informal and the company is private and still very small, so I figured maybe some day they’d be worth something, but otherwise I completely forgot about it. They emailed that they decided to pay a dividend and I got a check in the mail on NYE. It was a LOT more than I expected. After taxes, it looks like it will be about $100k. 

I’m still kind of in shock. I wasn’t expecting this and it is amazing, but overwhelming. I’d appreciate any advice for how to handle this money. PDQ details.

1) Stupid question first: how do I deposit this money? Can I just deposit it through an ATM? I’ve never seen a check this big in my life.

2) Are dividends marital property? I hate that I’m even asking this question, but this board has taught me to think about it. I acquired the stock before we married. I’m thinking I should deposit it to my individual account to be safe, but I feel bad telling my H that. I know inheritance is not marital unless you comingle it, but not sure about dividends. H and I are happy, but I don’t want to make a mistake I might regret.

3) What would you do with this money? We’re going to be hit with a HUGE tax bill, so in the short term, I should keep it in cash I guess? Long term I’d like to invest it.

4) I think I’d like to use this opportunity to start using a financial planner to invest/manage our money. We have saved pretty aggressively, but I’m scared of investing, so I have never been good at it. I need someone else to do it for me.  Is my best bet to use a financial advisor at Vanguard? I have my 401K and an individual account there (401k rollover).

5) We had no idea this was coming so we both had ongoing contributions to Roth IRAs for the year. This will put us above the contribution eligibility limit.  Do I need to pull the money out? How do I do that?

Thanks! I have no idea why they did this now and why so much. I kind of want to ask, but I’m not really in touch with anyone at the company any more. My guess is that the owner is either pulling the money out for some big purchase or because he plans to sell the company. He owns many more shares than I do, so his dividend would be in the millions. I don’t know how this might affect me in the future, I wish I knew his plans but I’m not sure how to ask.

[ohgillian]

Holy crap. That's amazing.

This board convinced me to leave USAA for Vanguard and it was a great move for me. I buy some individual stocks in a self-managed account there, but most of my stuff is in accounts they manage. I like that Vanguard has a fund-based approach. I love love our advisor there, and she was just randomly assigned to us when I went online and started the account process. Since you're already there, I personally would stay. They would also be able to help you figure out what to do about having contributed to Roths.

ETA: For depositing, I would not be comfortable doing it at an ATM. I would want to do it in person, and I never do anything in person, lol. Or via mobile - do you have mobile deposit as an option?


Regardless, I think you should give your bank a heads' up. They may need to waive the deposit limit for you.

[noodleoo]

Jan 6, 2021 11:31:16 GMT -5 ohgillian said:

Holy crap. That's amazing.

This board convinced me to leave USAA for Vanguard and it was a great move for me. I buy some individual stocks in a self-managed account there, but most of my stuff is in accounts they manage. I like that Vanguard has a fund-based approach. I love love our advisor there, and she was just randomly assigned to us when I went online and started the account process. Since you're already there, I personally would stay. They would also be able to help you figure out what to do about having contributed to Roths.

Yes, it really is!  I seriously was expecting like $5K or something.  It has taken me almost a week to stop freaking out enough to actually start thinking about what to do with the money.  The check is currently hidden in a cabinet because it freaks me out so much.   I half expected the company to go bankrupt and the stock to be worth nothing ever.  I'm even more shocked that they did this NOW, this year.  It is killing me not knowing why.

Glad to hear you are happy with Vanguard.  How do I get a personal advisor?  I probably just need to call them, LOL.

[ohgillian]

noodleoo , I'm sure calling would be best but I hate doing that. I think you can try the "get started" link here: investor.vanguard.com/advice/financial-advisor/personal-advisor-services

But the first priority IMO should be getting the check deposited.

[noodleoo]

Jan 6, 2021 11:42:41 GMT -5 ohgillian said:

noodleoo , I'm sure calling would be best but I hate doing that. I think you can try the "get started" link here: investor.vanguard.com/advice/financial-advisor/personal-advisor-services

But the first priority IMO should be getting the check deposited.

Awesome, thank you! Would you mind sharing what the process was to start using an advisor? Did you do it fully online or did you have an initial call? Do they fully manage your account? I basically want this to be as hands off as possible.

Yes, I probably need to go to bank... I totally understand Izzy in Grey's Anatomy now when she hung her $8M check on the fridge forever.

[dr.girlfriend]

Wow, that's amazing! And that's just the dividend? Is there value for the actual stock? If so I think you'd need to keep careful track of the value when you received it for cost basis if you ever sell? IDK too much about it though.

At my bank you have to go in person / drive through to deposit checks over $5k per month. Good luck with the rest -- sorry I don't have more advice, but I hope you enjoy your windfall!

[ohgillian]

Jan 6, 2021 11:45:07 GMT -5 noodleoo said:

Would you mind sharing what the process was to start using an advisor? Did you do it fully online or did you have an initial call? Do they fully manage your account? I basically want this to be as hands off as possible.

It's been more than 5 years since I started with them, and I had pretty young kids at the time so my memory is hazy in those years. But I just did a search in my sent email to jog my memory.

During the transfer process, I didn't work with the person who is now my advisor. I worked with "concierge services" - and I am pretty sure I got up with them initially by a phone call. I mean I literally just called the main number on the website and was like, "Hi I want to bring you all my assets." They have transfer teams who can help you bring in whatever accounts you have that aren't already there. In the case of your dividend, say you put it just in your primary checking account. Vanguard would help you create an account to house it, and then you probably would need to do the transfer yourself online but they can walk you thru it on the phone. They'll be like "click here. Type this." Etc. I say that b/c you'd essentially be making a deposit into a Vanguard account, which is different than bringing over a whole account. I hope that makes sense.

The concierge person helped me do the transfers and then told me that my new advisor would be Christine. She had Christine reach out to me, I think by email. In the beginning, there was more work for Christine and I to do, because she needed a lot of information to understand our planning needs. Such as, when do we want to retire? how old are we? What about college for kids? What other goals do we have? She helped me figure out what we needed to save per year in which vehicles to reach our goals.

I talk to Christine several times a year, but mainly b/c I like her and like to feel reassured that things are continuing as they are supposed to be. You wouldn't need to have calls that often.

She has told me what funds to invest in, and how to allocate my resources. Most of my accounts are "managed," and I have one that's "self-managed." Which means exactly what it says. They rebalance the Managed Accounts, etc. I buy individual stocks in the self-managed at times, though not often.

I also moved the 529s there, later on.

I would say that overall, it can be as hands off as you want it to be, once things are set up. But for them to do a good job for you, you will need to talk with your advisor to help her or him understand your current financial picture and your future goals.

Feel free to ask any specific questions that I didn't hit.

[ohgillian]

Also, re the marital property thing -- I don't know but I received a large inheritance and I put it into funds that are in my name. I think in my state that doesn't matter, but I'm not sure. We use it towards our shared future goals, but it has my name on it. I don't feel bad about it.

[scm1011]

Woah, that is incredible. Congrats!

I'm not sure about the community property question, but I think its smart to keep it separate if possible and I hope your DH isn't offended. FWIW, when I got my broken leg settlement money I kept it in my name only (my DH didn't bat an eye).

[mcsangel2]

OMG, no, please don't try to deposit that check via ATM. For $100k you can walk into a branch.

[ohgillian]

Jan 6, 2021 12:44:41 GMT -5 mcsangel2 said:

OMG, no, please don't try to deposit that check via ATM. For $100k you can walk into a branch.

LOL, this is my reaction also. 

[tacokick]

I’d call the bank and see what they want you to do. My bank isn’t open inside at all so I had to make an appointment to sit in the drive through at a specific branch to complete a big transaction. At the very least, I don’t think you can do it through an ATM!

Congratulations! What a happy surprise!

[orval]

I recently deposited a similar size check. I went through the drive through (inside was closed/Covid) and they had to get manager approval with ID. Took about 5-8 minutes for them to get approval. So definitely go to the bank.

[Susie]

My credit union has a limit for using the app, I think around $6k.  Whatever it is, $100k is definitely over it.  I would go to the bank in person for that much.  Ours have closed the lobbies due to covid, but you can still do drive through.

[ohgillian]

Also: it's totally okay to be freaked out about this and it's okay not to make any quick decisions about how to invest or apply it.

[brooklyn]

Yes, definitely go in person with that check. My mobile app would not let me deposit a check of that size, plus I would want the in person confirmation that it deposited ok.

My dad gave me a large amount of money in the spring to help with our house purchase. The teller was very excited to deposit it for me, and had to bring her manager over to check it, and I ended up getting roped into listening to an investment spiel, so be prepared for that.

[dcn]

Wow! Congrats!

Yes call your bank and ask what the procedure to deposit it is.

MIL passed away 5 years ago and we suddenly had a large chunk of money that we didn’t know what to do with. We too just called Vanguard and said “help what do we do?” They were so incredibly helpful. The guy who answered the 800 number walked us through everything. He spent over 2 hours with us, even called MIL’s advisor with us on the line to clarify the type of account and how to transfer it over. We moved our ROTHs and my rollover IRA at the same time and it was pretty seamless.

We were also assigned an advisor, and ours recently changed but we’ve been happy. We are pretty hands off - she checks in quarterly with us but it is usually a very quick 10 min conversation. She’s very responsive to emails and phone calls when we have questions.

They had us fill out a risk questionnaire, asked us about what our financial goals were, where we were with retirement savings etc and then came up with a plan for us that they went over in detail. We review that annually and also have the quarterly check ins. I know we could probably manage it ourselves but I prefer to be hands off and let the professionals handle it.

[mbcdefg]

Jan 6, 2021 12:44:41 GMT -5 mcsangel2 said:

OMG, no, please don't try to deposit that check via ATM. For $100k you can walk into a branch.

I don’t have any good financial advice but I was immediately reminded of the Simpsons episode where Homer tries to use a $1 trillion bill in a soda machine, lol.

Anyway, congrats noodleoo! I’d call the bank and deposit it ASAP, as others have suggested, then figure out how to handle it. I know squat about money but I transferred my retirement funds to Vanguard in 2019 and they were awesome about slowly and clearly walking me through the process.

[protozoa]

That is amazing, congratulations!

#1 has been covered, #2 I am not sure.

#3 I'd set it aside in a cash account for the time being and give yourself some time to think about it. If you decide you do want to invest you can always just hold back an amount you think you might need for taxes.

#4 not sure

#5 Is kind of a pain but do able. You will need to recharacterize your Roth IRA contributions as to Traditional IRA. You will need to open a Traditional IRA, preferably with your current provider. You need to know what gains you had this year. When we did this, I used TurboTax for taxes and Fidelity for my investment provider and between the two it was pretty straightforward.

Then you can re-convert the funds BACK to the Roth IRA (sometimes referred to as a back door Roth). 

[savan]

Jan 6, 2021 12:44:41 GMT -5 mcsangel2 said:

OMG, no, please don't try to deposit that check via ATM. For $100k you can walk into a branch.

 
I actually just did this (deposited $100k).  I walked into the branch where they then directed me to their automated teller machine and I did it from there.  They acted as though I could have used the ATM but I was afraid to do it from anywhere other than inside the bank.

[madringal]

Jan 6, 2021 15:08:12 GMT -5 savan said:

Jan 6, 2021 12:44:41 GMT -5 mcsangel2 said:

OMG, no, please don't try to deposit that check via ATM. For $100k you can walk into a branch.

 
I actually just did this (deposited $100k).  I walked into the branch where they then directed me to their automated teller machine and I did it from there.  They acted as though I could have used the ATM but I was afraid to do it from anywhere other than inside the bank.

I was going to say, I bank with Chase, and I would totally use their ATM to make that kind of deposit.  But I work at a CU and would never use their ATM network for something like this.  I think it just depends on the institution and how much you trust their technology.

[sadlebred]

A few others have already mentioned it. Contact your bank or look on their website. Some banks or branches may be appointment only right now because of the pandemic. You can probably make an appointment online if that's the case. If you really want to feel safe, call the branch and ask to speak to the branch manager. Tell them you want to make a large deposit with the "head teller" or "teller coordinator." That is bank speak for the tellers' team lead and should know how to handle it.

[marie]

I work for a large bank and I am not getting why you think you have to call before going in to deposit? That is literally what they do, every single day. We would not even think twice about processing this... through the teller, drive through or ATM.

[ohgillian]

Jan 7, 2021 8:25:27 GMT -5 marie said:

I work for a large bank and I am not getting why you think you have to call before going in to deposit? That is literally what they do, every single day. We would not even think twice about processing this... through the teller, drive through or ATM.

My primary bank is USAA and the mobile app has a $100k deposit limit. I have to call to get that waived if I want to deposit more. (<---- hypothetical statement, lol, this has never happened to me).

[shaynaatl]

Just a heads up, we did a large deposit about a year ago (not 6 figures but still a high amount) at Bank of America. I guess they flagged it because we never do large deposits. They sent a letter in the mail asking us to fill out some additional info.

We never get mail from BofA that isn't advertising, so we didn't really pay attention to it. They ended up locking our account, which caused us to miss some automated bill payments. So just something be aware of. I think it may have something to do with the Patriot Act and possible money laundering concerns.

[pmwife]

Jan 7, 2021 12:01:19 GMT -5 shaynaatl said:

Just a heads up, we did a large deposit about a year ago (not 6 figures but still a high amount) at Bank of America. I guess they flagged it because we never do large deposits. They sent a letter in the mail asking us to fill out some additional info.

We never get mail from BofA that isn't advertising, so we didn't really pay attention to it. They ended up locking our account, which caused us to miss some automated bill payments. So just something be aware of. I think it may have something to do with the Patriot Act and possible money laundering concerns.

If you make deposits totally more than 10k in a month, they need to fill out paperwork. I only know because of Girl Scout Cookie...I was the deposit lady and several times we hit that limit.

[Poppy]

Wow, what a surprise!

Regarding the Roth, it's not too hard. Mine is at Vanguard and in the past I've called them and said I need to recharacterize my Roth contributions from the previous year. They start the process and a few days later a form appears in my account docs with the numbers (the gains also get moved), which are used on your tax filing.

Here's another reference:
www.bogleheads.org/wiki/IRA_recharacterization

[raangoli]

You've gotten great advice - all I want to say is that's awesome and I can understand being so overwhelmed and how that could be paralyzing.

[mich1]

Jan 7, 2021 8:52:27 GMT -5 ohgillian said:

Jan 7, 2021 8:25:27 GMT -5 marie said:

I work for a large bank and I am not getting why you think you have to call before going in to deposit? That is literally what they do, every single day. We would not even think twice about processing this... through the teller, drive through or ATM.

My primary bank is USAA and the mobile app has a $100k deposit limit. I have to call to get that waived if I want to deposit more. (<---- hypothetical statement, lol, this has never happened to me).

Thanks, I bank with USAA too and haven't deposited anything more than 4 figures.  It's nice to know the process to deposit more if necessary.

[madringal]

Jan 7, 2021 12:39:07 GMT -5 pmwife said:

Jan 7, 2021 12:01:19 GMT -5 shaynaatl said:

Just a heads up, we did a large deposit about a year ago (not 6 figures but still a high amount) at Bank of America. I guess they flagged it because we never do large deposits. They sent a letter in the mail asking us to fill out some additional info.

We never get mail from BofA that isn't advertising, so we didn't really pay attention to it. They ended up locking our account, which caused us to miss some automated bill payments. So just something be aware of. I think it may have something to do with the Patriot Act and possible money laundering concerns.

If you make deposits totally more than 10k in a month, they need to fill out paperwork. I only know because of Girl Scout Cookie...I was the deposit lady and several times we hit that limit.

This only applies to cash.