Should I Withdraw My Contributions To My Teacher Retirement Plan?

Mar 27 2017 - 6:45am

I am a teacher and when I turn 62 I will still need to teach 1 more year to reach the rule of 80. I worked previously and have paid in my 40 quarters in SS. Should I just draw out my part that I've paid in TRS and put it with my previous 401K money and draw either my SS or draw spousal support on my husband's SS since he will be full retirement age and his benefit is much greater than mine? Thank you.

Hi,

I can't give you a definitive answer to that question. As you're apparently aware, if you receive a pension from work that was exempt from Social Security taxes, the Windfall Elimination Provision (WEP) can cause your Social Security retirement rate to be reduced (https://www.ssa.gov/pubs/EN-05-10045.pdf). And, if you receive a non-covered government pension, the Government Pension Offset (GPO) provision can reduce or eliminate benefits that you could otherwise draw on a spouse's record (https://www.ssa.gov/pubs/EN-05-10007.pdf).

Withdrawals of just your own contributions prior to meeting the eligibility requirements for a non-covered pension would generally permit you to avoid the effects of WEP and GPO. However, whether or not that is a good strategy depends on a) how much you'd be giving up by forfeiting your rights to the pension, and b) how much more you would receive in Social Security benefits as a result. And, if you withdraw your contributions after meeting the eligibility requirements for a non-covered pension, you would likely still be subject to WEP and/or GPO (https://secure.ssa.gov/apps10/poms.nsf/lnx/0300605364).

The maximization software available on this website is programmed to handle the effects of both WEP and GPO, so you may want to strongly consider using the software before making any decisions with regard to your pension plan.

Best, Jerry