nun
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2006
- Messages
- 4,872
When I started working for the state I had the choice of a defined contribution or defined benefit plan. The contributions to each plan are the same, but the DC plan has 100% immediate vesting and the DB plan has 10 year vesting. As I started the job in my early 40s and wasn't sure if I'd even stay ten years I went with the flexibility of the DC plan.
Fast forward 10 years and I am going to retire on just after my 10 year anniversary so that I vest in some health care and insurance benefits. However, the state has just announced that they are allowing DC plan participants to buy into the DB plan......why I don't know, maybe someone very powerful in state government lost a load in the 2008 crash....its bizarre.
Anyway the cost to buy back is the return of all state contributions with any gain attributed to the and all of my contributions compounded annually at 8.25%. Well my 10 year average return is 6.2% thanks to fees, the crash and having a 60% equity index and 40% bond index allocation.
I have $75k in the DC plan from employer contributions that will all be returned to the state and $175k due to my contributions and I estimate it'll take $193k to buy into the plan. I have the extra to do that. I'm 52.5 now and if I give the state $75k+$193k the at 55 I'll get a $19.5k/year pension with a COLA calculated on the first $13k. Should I do it?
Fast forward 10 years and I am going to retire on just after my 10 year anniversary so that I vest in some health care and insurance benefits. However, the state has just announced that they are allowing DC plan participants to buy into the DB plan......why I don't know, maybe someone very powerful in state government lost a load in the 2008 crash....its bizarre.
Anyway the cost to buy back is the return of all state contributions with any gain attributed to the and all of my contributions compounded annually at 8.25%. Well my 10 year average return is 6.2% thanks to fees, the crash and having a 60% equity index and 40% bond index allocation.
I have $75k in the DC plan from employer contributions that will all be returned to the state and $175k due to my contributions and I estimate it'll take $193k to buy into the plan. I have the extra to do that. I'm 52.5 now and if I give the state $75k+$193k the at 55 I'll get a $19.5k/year pension with a COLA calculated on the first $13k. Should I do it?