What to do with pension after leaving job?
I am 33 years old and am leaving my position with the city schools for another job. I have been with the city for 11 years and have been contributing to the pension system (as all employees do) since I started. The new job I am taking has a TIAA/ CREF 403B program that I can contribute to and they match contributions. My question is, what should I do with the money in the pension that I have accumulated. I was told that I could roll it over to the 403B or open a Roth IRA, or just leave it there until I am ready to retire. What would be the best option? If I cashed it out today I would get 75,000 minus taxes, or 28,000 per year when I turn 62.
- sanibel_999Lv 57 years agoFavorite Answer
Just to help confuse you more I am going to give you a third option. You can roll this over into a traditional IRA and not have to pay the taxes now. (Look up differences between Traditional IRA and Roth IRA) Most likely you want the Roth, but just know you have another option.
Only you know what is right for you, but if there is a possibility that you could lose some or all of your pension I would suggest rolling it over into either the Roth or Traditional IRA. This way you know this money is yours and you know what you have.
One of the benefits of the IRA over the 403b is that you will have more investment choices. Some company plans can be very limited in their investment choices.
If you like the idea of a defined payout look at opening an annuity with this money. There are good kinds of annuities and bad kinds of annuities, so you really need to educate yourself about them if you decide to go that route.
An IRA invested in mutual funds can give you nice returns over time. You can consider opening the IRA with TIAA/CREF if you like to have your money all in one place. Fidelity and Vanguard are also reputable investment firms.
If you don't understand something then don't invest in it and if it sounds too good to be true it probably is.
- JudyLv 77 years ago
Depends a lot on what investment options you have each place.
At your age, I'd consider the roth for some of all of it, but if you do that you have to pay income tax on it the year you move it to a Roth