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Author: TartyMae Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Purchase service credit? Date: 3/20/2003 6:26 PM
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I am an employee of the state of Nevada. On May 1, I will start my 4th year of employment. I will be vested in the PERS (Public Employees Retirement System) for the state when I hit 5 years of employment. I reckon I will be working for at least the next 3 decades, possibly (probably) for the state.

I have the option to purchase additional service credit -- up to 5 years worth -- at the cost of 1/3 annual salary per year of service credit. If I choose to do this, the longer I wait, the more it will cost me. (Right now, 1 year would be just under 9000 dollars. I can make lump sum payments or I can have additional money taken from my paycheck.)

According to the PERS representitive, PERS of Nevada is one of the soundest, best managed programs in the nation, with assets of $13.4 Billion. (And how do I check this out -- the part about PERS NV being so well managed and run.)

Yes, I DO, have other retirement plans going. I have an IRA account, a Roth IRA account, and I just opened my 403b plan.

Purchase extra service credit, or invest extra in my 403b?






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Author: Thurst Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35937 of 75383
Subject: Re: Purchase service credit? Date: 3/20/2003 6:52 PM
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I retired from the state of Colorado about ten months ago. Since I employed prior to Jan. 1, 1999 I could buy more than five years. It cost me 15.5% of my three highest years average salary with a gain of 2.5% for each year purchased. I had been investing for years in my 457 and more recently in my 401k. With changes in the tax law I was able to use both to purchase service credit after Jan 1, 2002 I bought the entire 9.951 years I was eligible for. I figured it would pay me 16.1% (2.5/15.5) on that purchase the rest of my life. It boosted my pension by 40%.

Your cost sounds more expensive. The 403b may increase in value faster than your salary. The eligibility to purchase could change with new laws. I was employed by CDOT for 25 years. A lot changed in that time.

Good luck to you!

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Author: JLC Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 35946 of 75383
Subject: Re: Purchase service credit? Date: 3/20/2003 11:19 PM
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<<<Purchase extra service credit, or invest extra in my 403b?>>>

Personally I'd invest extra in the 403b, you can control that. If you're going to work for the system over the next 30 years, many, if not all rules, will change during that time. Espeically how your pension will be calculated and paid out. My mother recently retired from Louisiana teachers system. About half way through her career the rules totally changed. Estimating her pension before retiring was diffucult and the 5 years of unused sick days was even harder to calculate because different rules applied to each half of her career.

JLC


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