Able to 'roll over' an OH teacher tax-deferred retirement?

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bunny187
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Able to 'roll over' an OH teacher tax-deferred retirement?

Post by bunny187 » Mon Jan 26, 2015 12:26 pm

Hello -

The wife is a former teacher in Ohio, we now live in VA and do not plan to return. We just received an account summary from the OH State Teachers' Retirement System that she contributed 7k to a tax-deferred non-matched account and the she 'may be eligible to withdraw [her] account value in lieu of a retirement benefit if you cease public employment in OH.'

So wow, she wasn't aware of this account, but I'm assuming this is similar to a 401(k) or TSP account (or kind of like the Traditional IRA) and I would like to keep the funds in a tax-advantaged account rather than cashing out.

Anyone with experience in this? Do I need the services of a financial planner or can I call up someone like Vanguard and have them help me out?


Thanks in advance!

retiredjg
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by retiredjg » Mon Jan 26, 2015 2:23 pm

I doubt you need a financial planner for this.

Many teachers make a mandatory contribution to a pension plan. It sounds like this is what she did, even if she did not know it. Now that she no longer works for the state of Ohio, since she does not have the years of service to get a pension from them, they are saying she may be able to roll that money over into an IRA. It sounds like that is what you want to do.

Sounds to me you could call Vanguard and initiate the rollover and go on your merry way. :happy

jpelder
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by jpelder » Mon Jan 26, 2015 4:01 pm

I'm a teacher who just moved from Ohio

She can roll this account into a traditional IRA at no tax penalty just like a 401(k). She'll need to log on to her Ohio STRS account, and she can put in the info for the transfer. If she's got over a certain amount in the account, they'll send it directly to the IRA trustee

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grabiner
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by grabiner » Mon Jan 26, 2015 11:23 pm

I used to teach at a university in Ohio. Since my position was temporary, I chose not to use the pension system, and instead made a contribution to the Optional Retirement Plan, which was a 403(b) plan with TIAA-CREF. After leaving the Ohio position, I was allowed to roll the plan over to an IRA, which I did, with Vanguard.
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sport
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by sport » Tue Jan 27, 2015 12:11 am

Public school teachers in Ohio pay into the STRS plan instead of social security. The employer also pays into the plan instead of social security. Although she has been given the option to "cash out" of the plan, she may have vested rights in the pension plan if she does not cash it out. Before you decide to roll the money into an IRA, be sure you know what all the options are. The people at STRS are very helpful if you contact them. A phone call would probably be a good idea.
Jeff

Carl53
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by Carl53 » Tue Jan 27, 2015 5:12 am

If she ends up taking the pension or if her withdrawal ends up being more than her contributions plus interest, it might end up impacting SS benefits someday. My spouse withdrew her modest contributions and interest earned and rolled it into a VG IRA years ago.

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N1CKV
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by N1CKV » Tue Jan 27, 2015 8:43 am

I replied to your post on arfcom, I'll repeat it here:
YES.

Most public pensions are like this from what I can tell (mine is). If she wasn't in it long enough to be vested, then her contributions can be refunded. If you take those funds directly and keep them you will be taxed on the distribution. Her best bet is to have that information in hand and contact Vanguard. You will want to take this money and roll it over to a Traditional IRA (putting it in a Roth IRA will result in a taxable transaction). From there you can pick and chose mutual funds to invest this money. You will want to do this as soon as you can, chances are her contributions are not earning anything and only her exact contribution will be refunded, so you might as well get that money where it will be invested and working for you.
I have met a lot of people that claim to love money, but they also seem to be the same people that are in the biggest hurry to get rid of it.

flyingbison
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Re: Able to 'roll over' an OH teacher tax-deferred retiremen

Post by flyingbison » Tue Jan 27, 2015 8:48 am

jsl11 wrote:Public school teachers in Ohio pay into the STRS plan instead of social security. The employer also pays into the plan instead of social security. Although she has been given the option to "cash out" of the plan, she may have vested rights in the pension plan if she does not cash it out. Before you decide to roll the money into an IRA, be sure you know what all the options are. The people at STRS are very helpful if you contact them. A phone call would probably be a good idea.
Jeff
Yes, be sure to find out all the options before doing anything. The way my state pension plan is set up, I can withdraw/rollover my contributions when I leave employment, but if I do that I forfeit the employer contributions. There may be more benefit to leaving the funds there, so check with the plan administrators for all the details first.

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