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Cashing out retirement pension - Options
Posted on 8/22/23 at 9:26 am
Posted on 8/22/23 at 9:26 am
After being in the public school system for a handful of years I am getting out. With that, I am taking about 13k out of the state retirement system.
I have a couple of rental properties that I acquired last year and am looking to add about 1 per year to my portfolio to be my retirement plan.
Currently, my wife has 9k owed on her car at 6.5% and student loans at 20k.
Should we continue making normal payments on those and put the cash into another rental or knock out a big chunk of the loans? Or roll it into a Roth IRA and begin building that up?
I have a couple of rental properties that I acquired last year and am looking to add about 1 per year to my portfolio to be my retirement plan.
Currently, my wife has 9k owed on her car at 6.5% and student loans at 20k.
Should we continue making normal payments on those and put the cash into another rental or knock out a big chunk of the loans? Or roll it into a Roth IRA and begin building that up?
3
Posted on 8/22/23 at 9:34 am to BayouBengal23
quote:
Or roll it into a Roth IRA and begin building that up?
If the monies came out pretax, you would need a traditional IRA to roll it too unless you want to pay taxes.
Paying off consumer debt is a great idea.
Posted on 8/22/23 at 10:13 am to BayouBengal23
Just curious - if you don't take the 13k out, what will that equate to in monthly payments once retirement starts?
Posted on 8/22/23 at 10:24 am to HeartAttackTiger
quote:
Just curious - if you don't take the 13k out, what will that equate to in monthly payments once retirement starts?
My guess with him working a "handful of years" and only having $13k in the system, he's not eligible for any payments.
This post was edited on 8/22/23 at 10:25 am
Posted on 8/22/23 at 10:25 am to Teddy Ruxpin
quote:
My guess with him working a "few years" and only having $13k in the system, he's not eligible for any payments.
That is correct. Only after 20 can you do that.
Posted on 8/22/23 at 11:22 am to BayouBengal23
What state? In Louisiana, you vest in 5 years in TRSL and can draw at age 60 (or 62 depending on exactly when you started).
Posted on 8/22/23 at 5:57 pm to BayouBengal23
I have no tax training but don't you have to pay income tax and likely 10% penalty on early retirement cash out unless it's a rollover?
Seems like a better option might be direct rollover to a traditional IRA. You could do conversions into Roth afterwards by paying the taxes due using non retirement money. Thus getting the entire balance into Roth IRA and preserving your Roth IRA annual contribution limit.
You didn't mention the student loan interest rate. Thats more important than the balance unless you are committing to the snowball method.
Seems like a better option might be direct rollover to a traditional IRA. You could do conversions into Roth afterwards by paying the taxes due using non retirement money. Thus getting the entire balance into Roth IRA and preserving your Roth IRA annual contribution limit.
You didn't mention the student loan interest rate. Thats more important than the balance unless you are committing to the snowball method.
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