Author Topic: Cash out of PERS?  (Read 2721 times)

Cincy Stache

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Cash out of PERS?
« on: November 07, 2014, 02:45:38 PM »
I used to work for a Park District in which we paid into Ohio PERS instead of social security.  I started working there when I was 16 years old and continued back there when I got out of college.  During that time I accumilated 6.5 years of service credit and the money put into it plus employer contributions.

My question is what to do with this account now.  I've been 3 years removed from working as a public employee and in all likelihood will stay in the private sector for the duration of my career.  I'm told that the $ in the account is making 1%/yr; in effect losing little by little each year.  Even if the chance of becoming a public employee again is 10%, I'm thinking it's still much wiser to yank the $ out of there, forgo the service credit and start putting these $oldiers to work.

specifics...
Already Taxed monies: $10,500
Taxable monies: $4,250

Is anyone familiar with the tax implications?
Would it be possible to roll over the 10,500 into a Roth and the taxable 4,250 into a regular IRA with Vanguard?  If I were to do this, I want to make sure I'm not losing any of these cash soldiers to Uncle Sam. (at least not yet)

Thanks in advance!

GGNoob

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Re: Cash out of PERS?
« Reply #1 on: November 07, 2014, 02:54:10 PM »
I work for a school district and contribute to my pension instead of Social Security. My plan is when I leave here or retire, to roll that over into a Traditional IRA to manage it myself. Assuming they allow you to do that, it's exactly what I would do. There shouldn't be any tax implications when you do a simple roll over. You may even decide to roll all of it over into a Roth and the $4,250 would be considered a Roth conversion and pay the taxes, but thats up to you.

Thankfully my money earns a bit more interest than you as mine earns 3%, but if it was invested it would be worth a heck of a lot more in 20 years!

superathlete

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Re: Cash out of PERS?
« Reply #2 on: November 24, 2014, 06:26:58 AM »
I've been in a public pension system for some years now and am vested.  I've contributed to Social Security every year I've worked.

Before pulling the money out, check:

-If the PERS has disability and life insurance benefits for where you currently are.
-If there is a cost of living adjustment when you retire.
-If you are vested or not.
-If there are benefits not listed above (access to other products, etc.)
-When you can begin pulling payments out of the plan, assuming you are never covered by it under another job.

A lot of people make a fallacy when it comes to Social Security that it is a poor investment compared to the market, which is generally true. However, when compared to the market + disability insurance + life insurance (when there are dependents), it becomes a much better deal. Make sure to look at the pension system the same way.

Cincy Stache

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Re: Cash out of PERS?
« Reply #3 on: November 24, 2014, 10:43:28 AM »
Thanks SuperAthlete... I'll make sure to take a look at those too.

 

Wow, a phone plan for fifteen bucks!