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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Can someone please explain buy-in to me?  DH is currently a non-equity partner and I guess could become an equity partner this year.

What does the transition from non-equity to equity partner look like?  As a non-equity partner, he is considers to be self-employed and we have all of the same issues with taxes, health insurance, etc.  [/quote]

Wife of big law partner here.  Typically when a lawyer has "made" partner, they ask that he/she buy in to the firm with a capital contribution.  Sometimes $1 or $2 million dollars.  Some firms ask you to take a loan to pay them up front, but most will ask that you pay $100000 or $200,000 a year out of your salary to "buy in."  That money doesn't usually ever gain interest, and if one were to leave the firm they would get it back (unless firm goes bankrupt, which has happened in other firms).  [/quote]

The one thing you left out is that while that money doesn't gain interest, you are paying income taxes on it the year that it is taken out of your pay so you're taxed on money you won't see until you leave the firm or retire.  The bright side is that when you do get the money back it's not taxable since you already paid taxes on it.[/quote]

But, again it totally depends on your firm's structure. Our firm just said that in the last two years retiring partners were using nearly all of their returned contribution on deferred tax payments. [/quote]

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