Should I Switch From A Pension To A 401K?
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Let's get to the phone lines on on in.

pop in and all right, we ve got lee. She's in columbo. hio. What's going on? Lee.

hi, you guys are like my two favorite chair.

and I cannot wait to tell kin and john and Rachel and dave, that's so kindly. Thank you.

How can we help?

Well, I think my question is actually pretty timely. I work in local government for my mani pension. Um I have and I are on baby steps four, five and six newly but I have always been required to put ten percent of my money or my salary into a pension and now that i'm looking into IT, um I have the opportunity only do this one.

I cannot take IT back to switch to a member or one kid type of plan. Yeah so I just you know, I can't roll over what party and attention or anything like that, but just I have I mean, I been in service for nine years and I love my job. I so this is in a matter of like staying at my job. But if I look at retirement, even twenty five years from now, because in thirty five sixty, is that enough time the till you know contribute my ten percent .

and then I matched IT like seven and a half percent.

And and the good news is, and George is going to go over a bunch of reasons, but for me, you're gone to get to choose the investments and you're going to have a Better mix. And I think that for me is the thing. And by the way, I just want to call out, I want to investing fifteen percent when the time comes. Not ten.

Oh right I we can't contribute more than ten percent in this particular plane, even the four one k but we have um and contributing above beyond N A um deferred compensation OK like a four five seven. So that's where the other money would go. But the ten percent is like what .

we're locked into required for decision. The one traditional .

IT is just traditional, okay.

because your other option is a raf. I E, as long as you know you're not above the income limits and that can be a great place to start for some tax free growth and then you can do the rest in that traditional four one. K, so I would just after the match, you said how much the match .

seven and a half percent.

is that regardless of you're investing or is that up you invest seven and half?

I have to do ten percent no matter what they just happened to, uh, match up to seven and .

a half OK also now the .

four fifty seven you have to go to that next week. Can you go to a rough? I next?

Oh, I can. Yeah, I can fetch a two, a prop. I, R, A, that was just something I was contributing to an addition a while.

Go that now that were in four, five, six. And like, we have to look back at this. So now that i'm looking at other contributions, um I can switch totally over to a roth if I want in yeah .

I I really like the idea of obviously you wanted get the match, but to Georgeous point, having that rough there, we get calls all the time of people who are on into retirement age and they most of what they have our traditional accounts and they have these required minimum distributions and everything. And it's like, oh my gosh, they're just wish that they had rolled over into rough style accounts earlier. And so I think it's important to have the right mix of that going in. And if you can start that earlier, I think it's a great thing.

okay. And then one more question. Um i'm basically with building up, so my I will be required to take you know once a retire I think retirement the age would be full benefits at sixty two for the pension IT is a payout for months since I have done nine years service um at like seven hundred and months um if I to wait till sixty seven is up to thirteen hundred and months and i'm just like there would be the option with the account value which is about one hundred thousand.

You can take a over I so the lumpsum is forty or a thousand out the door but I could roll IT over like if I ever left public service, which I don't intend to. But if I did, I could roll over the four count value, which without a hundred thousand into an I R. A at that point. So I don't know I have that chance at retirement, but i'd rather do that.

Yes, long. There's no penalty when you know the ages, right where you can do this without penalty. I would take the lump some and investment on your own and that way again, you have more control over IT can pass down to your ears because the probably pensions as they die with you.

And so you there's one one big benefit to moving IT over. And the other reasons, like the average return on pensions is not great comparatively to what you could get in a four one k where you have the options. So pension plane might be seven percent with the four one in k might be twelve or more.

And then went again, when you die, you can pass IT down your ears with the form N K, with the pension. It'll die with you or maybe your spouse at a lower amount survivor benefits. And again, you own the foreman. K, the company owns a pension. And how long is the money last? While is your lifetime with the pension and with the foreign tes, until the money is gone as you keep passing IT down?

Generation ally, oh yes. So if the health of the business starts to go down, that can definite affect your .

a major with the government IT will be here to stay so i'm not as work with the government pension ring, but I do like the idea of you doing Better on your own with more control and more say.

Good end of story.

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