Author Topic: Buy back pension time with rollover?  (Read 1922 times)

Rural

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Buy back pension time with rollover?
« on: June 28, 2013, 04:25:17 AM »
I have the option to buy back a very short stint in my current pension plan from the early 90s (1/3 of a year). I was making virtually nothing as a library assistant, so the cost is low - $320. It's totally worth doing in the long run; that third of a year will translate to $50-80 a month when I reach retirement age. My question is whether I should do it with a rollover or just pay for it from post-tax funds.

I foolishly cashed my contributions out at the time (which is why I have to buy it back), so I've already paid taxes and penalties. It sort of irk me to pay tax again (by buying with post tax money), but I'd really like to to the most optimal thing.

matchewed

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Re: Buy back pension time with rollover?
« Reply #1 on: June 28, 2013, 04:54:18 AM »
Rollover. Over the long term letting it grow tax free is optimal. With this we're talking a miniscule amount but it is what it is.

aj_yooper

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Re: Buy back pension time with rollover?
« Reply #2 on: June 28, 2013, 05:12:07 AM »
Rollover is better way, but your after tax costs would be very low if you just paid it.  Good to do it now as the costs really mount up.  If you do a rollover, ensure you keep the receipt from the receiving pension fund, as you will need it for your income taxes. 

Rural

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Re: Buy back pension time with rollover?
« Reply #3 on: June 28, 2013, 06:34:43 AM »
Thanks, guys. My only hesitation on the rollover is that then I lose all the opportunity for compound interest on the $320 in the 403b, and of course there's a limit to how much I can put in. But I'm leaning toward doing it anyway.