two small fixed accounts qualified $ - need advice

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AlaskaTeach
Posts: 195
Joined: Fri May 27, 2022 8:51 pm

two small fixed accounts qualified $ - need advice

Post by AlaskaTeach »

I am due to move back to Texas in summer 2024 and teach at least one year, before retiring from education. I am planning to buy either 5 or 6 years of service from Alaska, depending upon whether Alaska passes a pension plan or not. The "maintained rule" will come into play if Alaska passes a pension plan, I believe.

I plan to use qualified money to purchase the time. I have experience with this topic before, having purchased six years of service from the ERS of Texas in 2012. That was almost certainly the best financial decision I have ever made, right up there with investing in Janus 20 fund in the late 1980s. Buying the time from ERS allowed me to retain the choice to retire from either ERS or TRS in Texas. ERS is the easy winner as that plan provides a free health insurance premium for me for life and my wife will get hers at half off.

One of my fixed accounts is a formerly known 401a from a private employer that I did not contribute any money to whatsoever. I left that restaurant business in 2001. The rule was if you had over $5k in the account you could not cash it out. I had $5100 at the time, so I left the money in there and it grew at somewhat normal stock market returns until I changed to a fixed rate guaranteed plan in 2017. I considered moving the money from the company, as I would be eligible to move the money once I turned 55, which was in 2019, but I did not complete the transaction. The money is now losing money to inflation. The current APR is listed as 3.49%, and the current amount is $17.5k. I have another small fixed account, a 403b from a long time ago. The two accounts will total almost 20k shortly.

The amount to purchase the service credit is projected to be $76k. I plan to purchase the service credit from these two accounts first. After that I will use either 457 money moved to an IRA or Traditional IRA money.

The current pension without buying any service is $30k. The projected pension at age 60 after buying the years and working one year in Texas is $42k. DW is two years older and may retire at age 62, because she has a projected pension of about 6K and adding in 12k SS would total 18k.

Is there any reason not to move both small accounts to an IRA or is the small increase not worth the trouble?
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