As you graduate to the PGA Tour there are many decisions to be made and updates to make with the Tour. These are great benefits, so let’s try to make sure that you maximize them. Some of these you are already familiar with as they are similar to benefits that you had while a Korn Ferry Tour member, while some of these are brand new benefits. Here is a cheat sheet to reference as you update all your benefits with the Tour.

W9 & Player Financial Information Form

You should already have this on file with the Korn Ferry Tour, but these forms are updated each year no matter what. If you have been operating without an LLC and just been paid directly, pause here. Moving up to the PGA Tour is likely the catalyst for you to opt into being taxed as an S Corporation on your Federal Tax Return. There are a number of reasons listed here . If your team runs an analysis and decides to opt for the S Corporation route, the following is a guide to filling out the two forms the PGA Tour will need. If you are staying as a sole proprietor or a single-member LLC, you can disregard the corporation parts and just fill in your personal and LLC information.

If you now have an LLC and will opt to be taxed as an S Corporation, make sure your wealth management team files the appropriate paperwork with the IRS. Then when filling out your W-9 you will fill in the following:

Your Name
Business Name
Check the S Corporation box
Blank
Your LLC’s address
Your LLC’s address
Blank

Part I: Fill in your business’ EIN (this would be applied for with your LLC)

To fill out the above PGA Tour Player Financial Information Form:

State you reside in
Country

Please Pay me as: If now an S Corporation as discussed above, check the CORPORATION box

Payee Name: LLC name

Social Security Number: Your Social Security number

Federal Employer ID Number: Your LLC Tax ID number (applied for with LLC)

If you are not a US Citizen, fill in the International Tax ID number, Passport number, Country, expiration date.

PGA Tour Retirement Plans

Now that the PGA Tour will be paying you to the correct account and entity, next up is participating in the PGA Tour Retirement Supplemental Plan. There are three parts to the PGA Tour Retirement Plan Program - Supplemental Plan, “Cuts” Program, and the Fedex Cup Bonus Plan. For the second and third, the contributions are automatically made by the Tour, all you have to do is have your team set up the investment choices on your behalf or do that yourself. The first plan, the Supplemental Plan, is optional. You have access to this on the Korn Ferry Tour as well, but many Korn Ferry Tour players skip it so you may not be familiar with it.

The Supplemental Plan is a way for you to defer earned income up to the maximum amount allowed by the IRS per year, in 2024 the amount is $23,000 (2025 amounts not released yet). By putting $23,000 into the Deferred Compensation plan, you will avoid paying Federal income tax and state income tax if you live in a state with income tax. In the highest Federal Tax bracket, that will save you $8,510 in Federal tax. The funds in that account can then be invested and grow tax deferred, meaning they are only taxed when removed from the account.

The next choice to make is when you make the contribution, in other words, after you have earned a specified amount. If you have sufficient savings and endorsement income, I likely recommend setting this at $0 so that the first $23,000 you make will go into that account. With the $500k “Earnings Assurance Program”, you are going to be in a high tax bracket almost no matter what. If you don’t have as much in savings, or want to wait and make sure you make a certain amount first before contributing, that is fine too. Go ahead and set the amount at the minimum you want to first make, say $750k or $1m (just examples). This is definitely something to think and talk through with your financial team.

The first blank spot above you will fill in how much you want to have earned before contributing to the Supplemental Plan.
The second blank spot you will put in how much you would like to contribute for the year. Again, seek advice from your team, but we likely recommend the full amount possible.

The last “please note” is also important as this is a step that a lot of players miss. You need to select your investment choices, otherwise you will be automatically invested in the American Funds Capital Income Builder fund. You should have a customized investment plan, not a generic investment placeholder that may or may not fit what you need. We will discuss this next.

Set Investments for Retirement Accounts

As we started to discuss above, the next step is to select your investment choices for your retirement accounts. Do NOT just let the plan automatically put you in the automatic choice. There are good investment choices available to build out a pretty good investment portfolio in these retirement accounts. This will be for all three of the Retirement Plans. These accounts will eventually make up a substantial portion of your net worth, so you need to treat them that way.

As much as I would like to be able to put in this article the optimal mix of investments for you to select, I can’t. There is no one-size-fits-all solution. Your optimal portfolio is going to be 100% dependent on what YOU need. Without talking through your other assets and knowing what you need, it is impossible to pick the best portfolio for you. Please work with your investment team and CFA to get this part right!

Health Insurance

If you are coming off of the Korn Ferry Tour and had full status, you likely are familiar with the Health Insurance Subsidy plan. There are great health insurance choices and the Tour will subsidize, meaning pay for the premiums, of the policies. One caveat to the Tour paying for your premiums, you will get a tax bill at the end of the year for the amount that the Tour paid for you. So, if for example the Tour paid for $9,000 of premiums, the IRS would count $9,000 towards earned income for you. This won’t affect your choice of plan, but is something to remember come tax time.

Which plan you choose will be unique to you, your family, and all of your health needs. The top plan has the least out of pocket expense and best coverage. If you are single, the Tour covers all of it, if you have a spouse and/or kids, then you will likely have to pay a little bit. This is the most common choice.

There is a High Deductible Plan (HDHP) option as well. If you do need to use your insurance, you will end up having more out of pocket costs. The benefit here is that you can put money into a Health Savings Account. These accounts are pre-tax, meaning if you put the maximum amount in for 2024 of $4,150 for yourself, you can deduct that from your taxable income for the year. HSA accounts can grow tax-free if you use them for health costs in the future. This means you can actually invest the funds in there and let them grow. As long as you use the funds for health costs, you won’t owe any taxes. This can be a big win on tax savings. The High Deductible Plan is typically only considered when you are younger, healthy and likely single.

Disability Insurance

The Tour automatically provides disability insurance coverage to members based on earnings over the past three years. For PGA Tour members you can have up to $10,000 per month of coverage after a 6-month elimination period. An elimination period is how long you would have to sit out before collecting a benefit. How much you are eligible for is a calculation of the total amount you have made over the past three seasons, divided by 36 months, multiplied by 60%. The way the math works, you need to have made $600,000 over the past three years to get the full $10,000 benefit.

There is nothing you need to do for this benefit, but it is important to know what coverage you have. There is a supplemental policy available to be purchased through the Tour starting your second year on Tour. There are also private individual disability policies that many players obtain. It is a good idea to look into the cost and benefits of an individual policy. The cost is typically pretty low compared to the benefit.

Earnings Assurance Program ($500k Stipend)

In 2023, the PGA Tour started guaranteeing that fully exempt players would make at least $500,000 in earnings throughout the season. For rookies and players graduating from the Korn Ferry Tour, they have the option of receiving the $500k stipend up front in the beginning of the season. Here is how it works and how to make sure you maximize the benefits.

First, the Tour withholds $100,000 for potential taxes in other countries and states that may be owed on earnings. So you are down to $400,000. Then, if you have elected to contribute to the Supplemental retirement plan, that amount will go out, $23,000 in 2024. Now you are down to $377,000. To start the season, any money earned in events will go against this balance until you have exceeded the amount, then you will start being paid.

The first thing you want to do is make sure that your LLC has been set up and you have filed the paperwork with the IRS to be taxed as an S Corporation. If you receive the payment to yourself personally and not the S Corporation, you will miss out on the benefits of being paid to your S Corporation on that entire amount.

Next, you want to do is make sure that your last year’s tax return is ready to be filed on time. This way you can pay your first quarterly tax payment in April based on last year’s amount as a “Safe-Harbor” payment, as opposed to having to pay your estimated tax amount on the $500,000 bonus payment. Though the PGA Tour has withheld $100,000 for taxes, that hasn’t been paid out yet and will likely not count for you and the estimated payments you need to make.

The next action item is to put the remaining funds into a high yield savings account or money market account. Keeping your cash in your accounts longer and earning interest will optimize how much you keep before paying your taxes when they are required. Keeping that $377,000 in your account earning 4% would earn you over $15,000 per year in interest.

The point of this stipend isn’t to go buy a new car or have fun with it. If you have a good year, go do it then! These are future earnings that are meant to pay for your season. Invest them in yourself. Make sure you travel right, get the resources you need, and maximize your potential.

Conclusion

The PGA Tour provides many great benefits to you. Make sure that you maximize the benefits available by understanding your options and having experts guide you through the process.

PGA Tour Benefits Cheat Sheet