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- Thread starter SoapyCy
- Start date
If you go back to an IPERS covered job later in your career, you will wish you had kept your IPERS account. Your years of service are very important in calculating you IPERS benefits. Never thought I would have another IPERS covered job, but I did. Lost most of my roll over in stock market crashes. I am retired now. Those 5 years more years of service I lost would be worth 10% of my top 5 years of salary. I am still very happy with IPERS.
I'm not sure how IPERS works, but my government plan has an option to cash out when you end service however you only get your contributions back not your employer's contribution. Since the employer's contribution is roughly 120% of the employee's just taking the cash means you have a lot of ground to make up before you can even start to try to beat the eventual benefit.
That's devious. So the only way to get the benefit's of the state contribution is to be a slave a retire in their service? Ouch.
No, you can work elsewhere but your pension will be based on your years of service and "high five" salary. Then when you do retire and choose to start receiving pension it will be based on your retirement age. It just doesn't make getting a cash disbursement very competitive with leaving it in. Many do, but usually taking it as cash so they have a huge up front penalty for doing so.
In addition you can contribute to a 457 plan (similar to a 401k) or deferred comp which allows you to invest pretax dollars in a variety of funds. That is more portable.
The pension is mandatory; the 457 is optional.
Roll it over into a Vanguard index fund like Total Stock Market or Target retirement fund. Low fees & much greater income potential. Professionals like Bob Brinker or Dave Ramsey hate annuities which is what your IPERS fund is.
You're vested into IPERS after 4 years of service. Depending on your years of service, you are entitled to a portion of your employers contributions. I think after 30 years you get 100% of your employers contributions.
This. I have the same situation. When I did all the angles I came to the conclusion that it's not enough money in the grand scheme of things that I'd likely never regret leaving it but might regret taking it out. I'm about 12 years out from that decision and I wouldn't change it. I had the opportunity to buy about two years worth of service early in my career and regret deeply not doing that. Plus while you may never go back even if you went back for 3-5 years at the end of your career the kiss you get on the way out from the increase in your average pay is quite nice.
This. I have the same situation. When I did all the angles I came to the conclusion that it's not enough money in the grand scheme of things that I'd likely never regret leaving it but might regret taking it out. I'm about 12 years out from that decision and I wouldn't change it. I had the opportunity to buy about two years worth of service early in my career and regret deeply not doing that. Plus while you may never go back even if you went back for 3-5 years at the end of your career the kiss you get on the way out from the increase in your average pay is quite nice.
You can take a loan from your 401k. I do not think any IPERS money can be used that way. That issue may change your mind about rolling the money into your 401k. The potential for growth is greater if you move that money out, but there is always the temptation to use it for things other than retirement. People in general are not good savers and/or investors. Some are, but most do not save at all. Plus, it is easy to take money out of an IRA. Yes, there are penalties and taxes, but people like to buy stuff.
You still have to consider who you are and what may make that money safe. Or you may want to be a risk-taker.
I, personally took money out of IPERS after a career change, and I had to use all that money to pay the bills due to unfortunate events related to my career change. There are lots of potential outcomes to consider when you start playing around with retirement funds.
You still have to consider who you are and what may make that money safe. Or you may want to be a risk-taker.
I, personally took money out of IPERS after a career change, and I had to use all that money to pay the bills due to unfortunate events related to my career change. There are lots of potential outcomes to consider when you start playing around with retirement funds.
If I’m in your shoes I’d move it because:
- I think I can invest it better than the state
- I want control over it and would be nervous about someone else handling my retirement money
- If you die the money belongs to your estate/heirs (yes they offer a survivor benefit but it looks like you have to take a lower payment to get that)
I left mine sit. I've thougt about looking at my options but it's even less than OP. So far I'm vested in 2 locations but it's not nearly as lucrative as staying put forever. Probably time for a meeting with someone to pencil my mess out .
Seeing my wife's IPERS statement yearly, The wife would be better off if the school did a 50% match in a 401k. IPERS always uses annual 3.5-4.0 percent salary increases (she never gets those since she is at top of the pay ladder) so the amount they say she will get monthly slowly goes down every year. With what she and the school puts in, if that was in an outside mutual fund, she could match their payments with interest alone And still have extra.
I'm actually a little surprised at how tied people are to their pensions. My employer has a really good 401k program so I'm a little biased but as has been mentioned many times now, 401k's are portable and owned by you. I don't get the resistance to them.
For the same reason people like annuities. You get X amount monthly and don't have the perceived risks as you would with self investment. It just comes down to personal responsibility. Many people don't put anything waway in 401ks whereas they force you to in pensions.
Believe vesting is now 7 years. Also, they took away the purchase option (to be able to at any time) & one can only buy in service at the point which one is retiring, which is when it is the most costly.
As to the returns, yes it is below that of mutual funds, etc. It’s a pension fund & that’s the point. Shouldn’t have wild gyrations. 2008 meltdown & fraud led to it being underfunded most it’s ever been, but with changes to plan (increased contribution rates, increased years to vest, increased average used from 3 years to 5) & a plan to make up the shortfall (its either 20 or 30 year plan), & it has scrapped its way back up & is actually rated as one of the higher State pension funds in the country.
The benefit goes to those that stay the duration & get the full payout. With all the changes to shore up IPERS they would expect most in your case to take out. It’s to their benefit if you do. As numbers show if you keep in then live an above average life expectancy, you’d take out more than the value of the plan (your contribution & the match) in a very short amount of time.
If you have any chance whatsoever of going back in to public employment then leave it for sure. Few friends of mine took it out only to move back to government employment later & all regret it big time, especially after the last round of changes (in particular the purchase service option).
As to the returns, yes it is below that of mutual funds, etc. It’s a pension fund & that’s the point. Shouldn’t have wild gyrations. 2008 meltdown & fraud led to it being underfunded most it’s ever been, but with changes to plan (increased contribution rates, increased years to vest, increased average used from 3 years to 5) & a plan to make up the shortfall (its either 20 or 30 year plan), & it has scrapped its way back up & is actually rated as one of the higher State pension funds in the country.
The benefit goes to those that stay the duration & get the full payout. With all the changes to shore up IPERS they would expect most in your case to take out. It’s to their benefit if you do. As numbers show if you keep in then live an above average life expectancy, you’d take out more than the value of the plan (your contribution & the match) in a very short amount of time.
If you have any chance whatsoever of going back in to public employment then leave it for sure. Few friends of mine took it out only to move back to government employment later & all regret it big time, especially after the last round of changes (in particular the purchase service option).
