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I will be leaving the federal government after 6 years and 9 months for a job with the state of New Jersey. As a federal employee I paid into the Federal Employee Retirement System (FERS), which is a defined benefit pension system and the Thrift Savings Plan (TSP), which is essentially the government's version of a 401K. I have a few options as to what I can do with what I've contributed over the years when I change jobs and I'm trying to figure out what makes the most sense.
The first option would be to leave my FERS contributions where they are. If I do that, when I'm 62 I'll be able to collect my full benefit, which would be about $372 a month by my calculations. Not exactly a huge sum, but hey, it's something. It's worth noting that if I stay with the state of NJ for 30 years, I will still only be 62 and three years shy of full retirement age (65) and if I take retirement at 62 from the state, my annual benefit will be reduced by 3%. In this case, having the FERS pension coming in every month would more than cover the 3% reduction in benefit.
The other option would be to roll my FERS contributions (about $3000) into either the TSP or a new individual retirement account. Obviously that is subject to market conditions and so on, and I don't know enough to project how that could affect the growth of my retirement accounts to make an informed decision on that. I have about $30K in my TSP right now and will likely leave the money where it is and start a new individual account with the state.
talk to your plan administrator, they will give you an idea of a guaranteed return (probably 3%) and then shop that out, my wife was a teacher for a decade in Colorado and paid into PERA...anyway, we rolled hers into a mutual fund....and have CRUSHED that 3% (since inception we are up over 30% in 3 years).
YMMV...but I would move your money ASAP out of the government's care, custody, and control.
Last edited by midwestlaxer; 10-23-2013 at 06:39 PM..
Because he's an at-will Congressional employee. That's not exactly lifetime security there.
Correct. Also, many of the "perks" for federal career civil service folks (union representation, GS payscale, set working hours, overtime/comp time) do not exist for us. That said, the research I have done has overwhelmingly pointed toward leaving the money where it is. Are any of you in the lifecycle fund in TSP? I was thinking of moving all of my money to that and basically keeping my hands off of it. As for stability and security, the job I am moving to is in higher ed (one of the state universities), which is historically much more stable than the NJ civil service system at large, so at least for me, it was the right choice.
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