I am in a situation where I have just retired (58) and can transfer some of my 401k money to purchase service credit on a public employee pension. The purchase can be up to 48 months; but, I am at this time considering only 1 year of service credit purchase that will bring my percentage of full retirement from 73.5% to 79.25%. This is an increase of around $100.00 per month.
However, the cost will be somewhere around $11,000. The balance in the 401k will be around $155,000 after paying the $11,000.
This is what I am thinking, and please correct me if I am off base. The pension is somewhat "guaranteed" while the 401k is market dependent, and I intend to leave the funds in the 401k for at least another 5 years.
Please provide your thoughts as to whether the I should make the transfer. Also note that if I buy 2 years of service, the percentage goes up to 85% of the full retirement amount; 3 years would be 88%, and 4 years would be 91%.
EDIT: Need to edit. I did a more thorough calculation and it turns out that the difference is $90.00 (instead of $100) per month for a total of $1080.00 per year. The cost comes out to around $1080.00 for each month purchased for a total of around $12,900 to purchase 1 year of service.
However, the cost will be somewhere around $11,000. The balance in the 401k will be around $155,000 after paying the $11,000.
This is what I am thinking, and please correct me if I am off base. The pension is somewhat "guaranteed" while the 401k is market dependent, and I intend to leave the funds in the 401k for at least another 5 years.
Please provide your thoughts as to whether the I should make the transfer. Also note that if I buy 2 years of service, the percentage goes up to 85% of the full retirement amount; 3 years would be 88%, and 4 years would be 91%.
EDIT: Need to edit. I did a more thorough calculation and it turns out that the difference is $90.00 (instead of $100) per month for a total of $1080.00 per year. The cost comes out to around $1080.00 for each month purchased for a total of around $12,900 to purchase 1 year of service.
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