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House Bill 31 signed. Make the switch?

Posted on 6/27/24 at 6:20 am
Posted by TankDaddy68
Member since Oct 2023
2 posts
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.
Posted by makersmark1
earth
Member since Oct 2011
18598 posts
Posted on 6/27/24 at 7:27 am to
Is the job tolerable?

If so, maybe the pension route is good.

If not, move on when you find something better. Keep the match.
Posted by TigerTatorTots
The Safeshore
Member since Jul 2009
81733 posts
Posted on 6/27/24 at 8:32 am to
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
Posted by Bard
Definitely NOT an admin
Member since Oct 2008
55750 posts
Posted on 6/27/24 at 8:37 am to
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.
Posted by Glock17
Member since Oct 2007
22847 posts
Posted on 6/27/24 at 9:28 am to
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 by TankDaddy68
Member since Oct 2023
2 posts
Posted on 6/27/24 at 11:22 am to
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.
Posted by tke_swamprat
Houma, LA
Member since Aug 2004
10554 posts
Posted on 6/27/24 at 11:49 am to
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 by slackster
Houston
Member since Mar 2009
90105 posts
Posted on 6/27/24 at 12:56 pm to
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 by PetroBabich
Donetsk Oblast
Member since Apr 2017
4932 posts
Posted on 6/27/24 at 3:55 pm to
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 by LSUFanHouston
NOLA
Member since Jul 2009
39300 posts
Posted on 6/27/24 at 5:38 pm to
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.
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