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Started By
Message
House Bill 31 signed. Make the switch?
Posted on 6/27/24 at 6:20 am
Posted on 6/27/24 at 6:20 am
State workers will now have the option to switch over to the traditional teachers retirement plan. I’m currently on the optional plan that is treated like a 401k instead of the pension.
As a state worker we do not pay into social security but I do have 30 credits from other jobs.
I’ve likely got a 400k inheritance coming in the next couple of years and am 40 years old with 350k in retirement already. Worth making the switch?
Here’s the math
Stick with current plan: I put in 8% state puts in 6.2%. Currently $8600 from me, $6790 from the state. So $15k a year is what I have going in a 401k.
Switch: State takes 8% per year: $6790 and I’ll get back 2.5% of highest 5 years. I can pull at age 62 or at 20 years of service.
I’m vested at 5 years so if I quit after 5 years I have to wait till I’m 62 and I’ll get my 2.5% x years of service. If I quit before 5 years I get my 8% back.
Example 1: Switch and quit in 5 years. I would have put in 43k. I then wait till I’m 62 and I’ll pull 13,500/year till I kick the bucket.
Example 2: Switch and quit at 62. I’ll pull 54k a year till I kick the bucket.
Either example my 401k would also be paying for retirement.
As a state worker we do not pay into social security but I do have 30 credits from other jobs.
I’ve likely got a 400k inheritance coming in the next couple of years and am 40 years old with 350k in retirement already. Worth making the switch?
Here’s the math
Stick with current plan: I put in 8% state puts in 6.2%. Currently $8600 from me, $6790 from the state. So $15k a year is what I have going in a 401k.
Switch: State takes 8% per year: $6790 and I’ll get back 2.5% of highest 5 years. I can pull at age 62 or at 20 years of service.
I’m vested at 5 years so if I quit after 5 years I have to wait till I’m 62 and I’ll get my 2.5% x years of service. If I quit before 5 years I get my 8% back.
Example 1: Switch and quit in 5 years. I would have put in 43k. I then wait till I’m 62 and I’ll pull 13,500/year till I kick the bucket.
Example 2: Switch and quit at 62. I’ll pull 54k a year till I kick the bucket.
Either example my 401k would also be paying for retirement.
Posted on 6/27/24 at 7:27 am to TankDaddy68
Is the job tolerable?
If so, maybe the pension route is good.
If not, move on when you find something better. Keep the match.
If so, maybe the pension route is good.
If not, move on when you find something better. Keep the match.
Posted on 6/27/24 at 8:32 am to TankDaddy68
I don’t really have an answer for you, more of a question of how Teachers retirement works:
So they get 2.5% x years of service. Is that a straight calculation or does it jump to 100% at some number of years? I’ve always heard that it was 100% when you hit 30 years
So they get 2.5% x years of service. Is that a straight calculation or does it jump to 100% at some number of years? I’ve always heard that it was 100% when you hit 30 years
Posted on 6/27/24 at 8:37 am to TankDaddy68
I'm in the pension plan but also fund my own 401k. I'm also a bit risk averse so I'm happier with the pension plan.
It sounds like you may be missing some info. If I'm reading this right then LASERS isn't going to move your 401k into the pension system but are going to count your pre-pension years into the pension plan. That's going to be some serious double-dipping (of a sort, since you hadn't paid into the pension for the pre-pension years). If this is the case, it will likely be adjusted once they realize the error (which would change the amount you would get in retirement).
Talk to your benefits person or call LASERS.
It sounds like you may be missing some info. If I'm reading this right then LASERS isn't going to move your 401k into the pension system but are going to count your pre-pension years into the pension plan. That's going to be some serious double-dipping (of a sort, since you hadn't paid into the pension for the pre-pension years). If this is the case, it will likely be adjusted once they realize the error (which would change the amount you would get in retirement).
Talk to your benefits person or call LASERS.
Posted on 6/27/24 at 9:28 am to TigerTatorTots
quote:
I’ve always heard that it was 100% when you hit 30 years
Teachers aren't at 100% until 40 years in LA. At 30 years they would be at 75%
Posted on 6/27/24 at 11:22 am to Bard
This is a TRSL system not LASERS. My years of service would start over and I would stop contributing to my 401k. I could see myself sticking this job out or move to a different department for an easier workload.
In an ideal world I would find a way to finish up my social security.
401k funds, this pension system and social security coming in and I think I’d be pretty comfortable.
The house will be paid off in 5 years and I’ve got 30k in START for each of the two kids who should go in state.
In an ideal world I would find a way to finish up my social security.
401k funds, this pension system and social security coming in and I think I’d be pretty comfortable.
The house will be paid off in 5 years and I’ve got 30k in START for each of the two kids who should go in state.
Posted on 6/27/24 at 11:49 am to TankDaddy68
I'm going to have to ask my wife if she heard about this. She currently has a TRSL, but it may be beneficial to make the switch over.
Posted on 6/27/24 at 12:56 pm to TigerTatorTots
quote:
So they get 2.5% x years of service. Is that a straight calculation or does it jump to 100% at some number of years? I’ve always heard that it was 100% when you hit 30 years
They can draw at 30 years regardless of age.
Posted on 6/27/24 at 3:55 pm to TankDaddy68
I'm surprised nobody has said you're behind on saving with 350k at 40 years old. You're not behind but this is the Money Board.
Posted on 6/27/24 at 5:38 pm to TankDaddy68
Just keep in mind you get hosed on SS if you have a state pension.
So if you end up getting some more SS credits, that could be an issue.
So if you end up getting some more SS credits, that could be an issue.
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