Congrats to TPM's Son!

When they dropped S contract off, wasn't to be found. During home visits, we were told the details would be forthcoming. Never was; information I got was over the subsequent years by prying it out of some of the scouts with whom I remained friendly.

 

As to whether the anticipated sum should be rolled into an all encompassing bonus, there are several issues. I don't know if that is permitted under the new CBA. If allowed, the clubs would fight against giving you the full potential amount because they pay far less on the total bucket of money committed to many players. If I were them I'd offer the total expected payout of the entire MLB scholarship fund - 20% of the total potential payout to a kid. 

 

tax issues may come into play to push you one way or the other. i don't know, for example whether FICA and Medicare are taken out of the bonus. If so, it could save the FICA component - because presumably you would be maxed out. For these issues a well qualified CPA is worthwhile.

 

I think TPMs comments about taking the lump sum was concerned with the fact that the money will burn a hole in a kids pocket and not be segregated and untouchable in some form of conservative investment. Remember, the money goes to the kid because he is over 18; any parental control is by kid permission only.  This is more of a kid by kid issue; but keep in mind that the kid is most likely facing four or more years of not earning enough to pay for what he actually needs (luxuries like food, lessons, clothing, gym membership) and therefore can either dip into his bonus or dip into his parents pockets. Dip too much into the bonus pool and oops, all gone! 

FICA and medicare are taken out at bonus.  The 25% at bonus for taxes became about due to poor accounting to the government on both sides, ML and player.  But that comes back based on the players situation.

 

As far as the info on the plan, any agent can give you that info. The team must give the plan at contract time if it is added as an addendum. But son had an agent so he took care of that.

 

Son notified the drafting team almost a year ago to find out how it works. He hasnt seen a dime since papers filed and  he began online classes in May.

 

I just want people to know that it all sounds and looks good on paper, son will get it eventually, but he is lucky he didnt have to take it as a loan or from an investment.

While I've offered my congratulations to TPM privately...let me also publicly say how happy I am for DK, what a great story this is.  Just shows that there are many paths a player can take after their playing days are over...love that he is going back to get his degree and I can see DK being quite successful as a coach if that is the long term path he chooses.

 

As for the MLB scholarship fund, its unfortunate that DK seems to have gotten a bit of a run around however I feel that it's also important to note that not all players seeking to use their scholarship have the same challenges.  

 

Perhaps it was because my son started using his scholarship funds while he was still playing and perhaps each organization handles things differently however jerseyson has had no problems being reimbursed for his tuition and has even been granted money allocated for his living arrangements (even after buying his own home).  

 

Is the money taxed...absolutely however it has been taxed at the level of his milb salary so in the scope of things it really wasn't that big of a hit.  The fact is that the fund has paid for  all of his tuition thus far and when he graduates next year he will have no student loans needed to earn his degree.  To me that was a win, win situation for him (and me).  

 

To me It's kinda like someone winning a new car at a raffle...do you have to pay taxes, yes...but I'd still say the overall value far exceeds the cost associated with the prize but that's just the way I looked at it so maybe I'm missing something?

 

Anyway, congrats to DK...now I have a reason to follow Clemson again. 

Jersey, thanks for postulating that if you're still connected to your club, the red tape may be less. I know a half dozen guys who began to draw while they were playing (all but one were college guys) and no one seemed frustrated by the process. The one kid I know who is having trouble had retired. And having family savvy and/or a good agent helps

It would seem that tax wise, income tax rates would be lower in the years the money would be taxed and more than offset the FICA savings; but I can see some weird circumstances where its not so cut and dry - CPA has those answers.

Thanks JD!

 

FWIW, DK's scholarship, given as a college junior was for tuition only. And yes he will be reimbursed, but I wanted people to know that unless you have 15K-20k per semester sitting around in the bank, tuition has to be paid for one to begin class, you will have an issue

I am thinking about the player who has never made it farther than milb or no bonus to speak of to afford the college experience without that money.

And yes, it does depend on the team.

As the person in charge of the fund program at CU indicated to me, this is money earned by the player, and since May no funds have been awarded. 

Are they being that way because they figure its all paid?

And does being connected to the club make a difference?

 

I totally get your point TPM and yes you have to be in a position to be able to spend the money to get the money back.

 

I guess my response was more to point out that not all players have a hard time implementing the program and that IMO the tax cost shouldn't be enough of a deterrent to make the program not worth while.

 

There seem to be a lot of questions surrounding the MLB scholarship program...my advice is if you don't have an advisor that can walk you through how things work then ask the drafting team to be very clear about how it works...I would ask a lot of "what would happen if" questions that would outline possible scenario's as to how the fund can be used.  

 

Sorry for taking part in highjacking this thread intended to celebrate DK's accomplishment...a very cool outcome for someone that has worked very hard and it's nice to see him transitioning so nicely. 

 

Yes, thank you for bringing the point home I was trying to make, you must ask questions!  No excuses that no one showed me the plan.

 

In sons case since he isnt working and hasnt much this year, he will get most of the tax back. But people have to understand its taken out.

 

No worries about the highjack, I actually did that myself.

 

See ya in crew chat. 

 

Congrats to you and your son. Glad that he is able to continue with his love of the game and get his degree.

Congrats.  Clemson is doing some great things.  College baseball down there is really rising in popularity.

It is really cool indeed that DK is back "home" to coach and finish school. I've been seeing some great pics on Facebook chronicling the return!