Dragaholic

iTrader: (180)

At my last 2 employers, they offered a retirement system different than your usual 401K. It was called Texas Mandatory Retirement System, or also known as TMRS. It was a great system because they matched your dollar 2 to 1 from the day you start, but you must have been there for a minimum of 5 years to be eligible for their portion. Anyhow, I managed to accumulate $2800 in retirement (I was there a short period of time). I know its not much, which is why it brings me to my question.

Of course, if I take it out before retirement age, there's a penalty. I believe I read in the hand book and even asked human resources about it, and they stated that there's a 20% penalty up front. So that would put me at $2240. I was also told that I would pay an additional 10% at the end of the year, so that would put me at $1960. So by the end of the year, I'd be losing out on $840.

I am not positive on this, but I looked at my statement on it and if I understood it correctly, there's a 5.75% interest rate on.

Is that a monthly, quarterly, or annual interest rate?

I was also told from human resources that if I wanted to take it out early, that I should wait 5 years, then take it out, because after 5 years, it stops earning interest.

So...

Should I leave it in there?

If so, till retirement age or after 5 years?

Or take it out?

I believe I can even transfer it to another type of retirement account. I really need to find out how often the interest rate is applied and calculate how much I'll earn at the end of the 5 years to see if its even worth it to keep in there. I sure could you the extra dough.

Let me know your thoughts. Thanks.

2002C5COUPE

iTrader: (3)

Why would you take it out? To buy meaningless stuff? What is more important having a few bucks, some new crap, or having it double every seven years until you retire in a good inivestment plan?

Dragaholic

iTrader: (180)

You're right. I would just buy more stuff for my truck or car. I want new wheels, bigger lift, bigger tires, etc.

But I spoke with human resources and they stated that it would stop earning interest after 5 years. Maybe this is one of the downsides to this particular system.

2002C5COUPE

iTrader: (3)

....with a contribution rate of 2:1 you only accumulated $2200? you are not saving enough

look around the world wide web, there are many big name companies that can help you find a good place to put it

95zpro

That's the problem with the youth of today they've lost the meaning of saving a quarter or more for every dollar you earn, easy credit/financing which puts you in the hole because you are only making the minimum payments while being charged twice as much in finance fees, not living for today but looking down the road and planning for your future, the list goes on and on. Not to rant but if I were you, treat that money as if it doesn't exist ! Look into rolling it over into your new company's retirement plan or even some type of investment that will make you even more money or a better rate of return; I can't help it just the econ major in me speaking out !!!!!

Dragaholic

iTrader: (180)

2002C5COUPE, as stated, I was at the company for a short period of time and the amount was my portion only. The employer's portion becomes available after 5 years. My $1 = their $2.

95zpro, how would you know if I'm 16 years old or 50 years old? You're going way off track with this one and jumping to conclusions. I'm very good at saving which is why I have a lot of the stuff I do. I hardly finance anything. Of course I pay EVERYTHING on my credit card, but when that cycle ends, I pay it in full every month no matter what the amount. I've been doing that with one of my cards for 6 years. I prefer not to carry cash and credit is accepted pretty much everywhere so, my card eliminates me from having to carry cash. Anyhow, I'm going to look into it and see if I would be able to roll it into my current employer's retirement system.

mitchntx

iTrader: (14)

If this is a pre-tax retirement fund, like a 401K, you should be able to roll it ALL to an IRA. But, I'm not familiar with TMRS.

I started very late (~30s) saving for my retirement. If I had started just 10 years sooner, I would be in such better shape today. But when I was 21, I didn't think I'd ever be 30.

ProStreet_632

U know the problem with kids today, which u r, u want want want, u buy buy buy with what money u do make at ur job..But the reality is that what about the important things in life, like a house, wife, kids think about all that as u r growing up in life not about how many toys u have. U can always buy toys and other things, but u can't always buy a happy life. Retirement is very important, you will c very little of the money if u keep taking it out, by the time all the penalities and taxes hit, u will pocket nothing. All for what because u want a lift kit for ur Truck or some other stuff for ur car. Think about the future not about today, because mommy and daddy will not support u for ever(this is directed to all the kids these days who live off their parents) Jay knows what he is talking about so think about it.

Shackleford

iTrader: (12)

I'm opening a 5.XX% HSBC online savings account and a Roth IRA with Bank of America.

Dragaholic

iTrader: (180)

ProStreet_632, whoa buddy, too much coffee this morning? Don't refer to me as a kid, you don't even know me. I don't care about what toys I have or how many I have. Its just an addiction I have, modifying cars and trucks. I like my vehicles to be unique, with my own taste. I do "want want want", but guess what, I "buy buy buy" with MY money. I am very independent, make decent money, and sure, I've had a little help on the way. Sure I have supportive parents who are willing to help me, so what. I don't have them cater to me and buy whatever I want. So please, don't point your finger at me like I'm some young punk spoiled kid!

Toys are not all that is important to me. I am in a very stable, happy, and fun relationship right now. I think about marriage with her all the time. We've even considered moving in together and were just talking about it last night.

Kids, I don't have any as we speak, but yes, I plan to have them. I am not ready to have any at this point in my life and that's ok. Nothing wrong with that.

Look Dr. Phil, who woke up on the wrong side of the bed this morning, you're getting off on the wrong foot. You're blowing this way out of proportion. Making way too many ASSumptions.

I'm very happy in my life and I didn't buy it. Family, friends, job, etc. I didn't buy any of those things. My "toys" are an added bonus. I live once and I want to enjoy it while I'm young. It doesn't mean I'm going to be broke when I can't work anymore.

I was just using the liftkit as an example. Yes I would like to lift my truck up more, but that doesn't necessarily mean I wanted to take this money out for it. That just was at the top of my head for an example.

So Mr. Jay who knows what he's talking about, lighten' up buddy. Take a chill pill. I was just looking for some inputs, opinions, suggestions, etc., not a lecture on life. I could of done without the first half of your response.

To everyone else: I made this thread and asked about what to do with this money because it was a very large amount. Again, I'm going to look into rolling it over into another account. If it can be done, what kind of account do ya'll suggest I put it in?

IRace2ChevyII

I handle 401k retirement for a living. You have the facts right, you will have a 20% penalty upon distribution of your money and you will get penalized another 10% at year end when you file your personal taxes.

The best thing to do is tax shelter it, it may not be much (in some eyes) but it is a start and you need to keep it sheltered. Which means you either roll it into a new 401k or into an IRA rollover account.

Question is the employer portion, the match, are you vested in that portion? Regardless at this point if you are no longer working for that employer you will not vest any more. Vesting means for each year of service you receive more of a portion of that employer matching contribution. If there is a vesting schedule. Sometimes they are really nice and say regardless of how long you are with them you will receive all that they put in for you. This is really a mute point because you can't accrue any more vesting not working there. You will receive upon distribution/rollover whatever portion you are entitled to of the employer money and of course all of your money.

The part about stopping earnings after 5 years doesn't make sense to me at all but.....

It is much easier to track if you let the money follow you where you go, hence rollo it into the current plan you can participate in or put it in an IRA rollover account where you may have other moneys invested.

No matter what should you take a distribution! Again it may be a small amount to some but it needs to stay sheltered and grow. Add to it!

Dragaholic

iTrader: (180)

Thank you, that is the type of response I was looking for.

I don't know the differences between 401K and TMRS, but from what has been explained to me is that they are different. The most obvious and best part of TMRS is that they match your dollar 2 to 1. So for every dollar you contribute, they put in 2.

I am no expert on TMRS, but the way I understand it is, you must have been at the job a minimum of 5 years to get the system's portion. If you are there less than 5 years, you basically forfeit their portion. Basically you're not fully vested until 5 years. You will start earning those 2 to 1 benefits from day one.

What I need to find out is if I can transfer funds from TMRS into 401K.

As far as stop earning interest after 5 years, this was the lady in human resources that made this statement. So I'm not sure if she's 100% correct as she isn't a representative for TMRS.

mmiller

iTrader: (1)

Enough. Drag, sorry but this is another in a long line of your typical question asking posts. You only want to hear the answers that you like and if someone veers off of what is acceptable to you, you want to tell them to chill out, stay out of your posts, etc. Give it a rest man. Go see a financial advisor somewhere if you're really serious about saving for retirement.