Ohio Teacher

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TK12
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Joined: Sun Jul 10, 2016 12:17 pm

Ohio Teacher

Post by TK12 » Sun Oct 29, 2017 4:44 pm

Hello All!

I just started teaching at a new district in Ohio and they match our 14% State teachers retirement contribution with an additional 9%, so 23% total(automatically vested so if I were to ever get out of education I would still be able to keep this extra 9% from the district)..I am extremely happy about this. :sharebeer I have always contributed to my own personal Roth IRA on the side every year along with the required 14% for our pension.

My question is with this new match from the school would you still recommend putting the extra money into the roth? I try to max it out every year even if I have to tighten the budget alittle bit.

Hope this makes sense, thank you!

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Duckie
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Re: Ohio Teacher

Post by Duckie » Sun Oct 29, 2017 6:30 pm

TK12 wrote:My question is with this new match from the school would you still recommend putting the extra money into the roth? I try to max it out every year even if I have to tighten the budget alittle bit.
I would continue to contribute to a personal IRA, Roth if you can manage it, traditional if you want the deduction. Since you are a teacher you probably have a 403b plan at your job you could contribute to. You should check that out, too.

Carl53
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Re: Ohio Teacher

Post by Carl53 » Sun Oct 29, 2017 6:51 pm

TK12 wrote:
Sun Oct 29, 2017 4:44 pm
Hello All!

I just started teaching at a new district in Ohio and they match our 14% State teachers retirement contribution with an additional 9%, so 23% total(automatically vested so if I were to ever get out of education I would still be able to keep this extra 9% from the district)..I am extremely happy about this. :sharebeer I have always contributed to my own personal Roth IRA on the side every year along with the required 14% for our pension.

My question is with this new match from the school would you still recommend putting the extra money into the roth? I try to max it out every year even if I have to tighten the budget alittle bit.

Hope this makes sense, thank you!
This was not our Ohio experience of some years ago. Leaving early meant not getting the match, just some interest on our contributions.

Grt2bOutdoors
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Location: New York

Re: Ohio Teacher

Post by Grt2bOutdoors » Sun Oct 29, 2017 6:58 pm

Are you paying into Social Security in addition to the 14% contribution into your teachers pension plan?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

TK12
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Joined: Sun Jul 10, 2016 12:17 pm

Re: Ohio Teacher

Post by TK12 » Sun Oct 29, 2017 7:08 pm

I do not plan on leaving education as I love my job but I did check on what would happen if I left and from what I gathered I would keep the match money.

No, I am not paying into social security with the 14%.

Grt2bOutdoors
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Location: New York

Re: Ohio Teacher

Post by Grt2bOutdoors » Sun Oct 29, 2017 7:24 pm

TK12 wrote:
Sun Oct 29, 2017 7:08 pm
I do not plan on leaving education as I love my job but I did check on what would happen if I left and from what I gathered I would keep the match money.

No, I am not paying into social security with the 14%.
So, effectively, you are saving closer to 24% of your income via employer/employee contributions to retirement plan + Roth. Well done! If you manage to stick with it, you will be just fine at the end of your career. Even better, you actually love your job, congratulations! :sharebeer
Last edited by Grt2bOutdoors on Sun Oct 29, 2017 9:17 pm, edited 1 time in total.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

krow36
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Re: Ohio Teacher

Post by krow36 » Sun Oct 29, 2017 8:58 pm

OP states he is NOT paying into Social Security. OP are you in the default Defined Benefit option of STRSOH? I see that there are also a Defined Contribution option and a combination option. The STRSOH website explains that if you leave STRSOH after 5 years, they will provide 150% of your contributions plus interest, but I don’t think you can take out any of the state’s contributions. https://strsoh.org/actives/new-memb ... -plan.html
Portability
You may want to take your retirement assets with you if you leave Ohio public employment before retirement eligibility. While you can leave your account intact at STRS Ohio to qualify for future benefits, your STRS Ohio contributions plus interest can be refunded or rolled over to a traditional individual retirement account (IRA) or another qualified retirement plan. After five years of qualifying service credit, interest plus a 50% match on your contributions and interest is paid on funds withdrawn or transferred. (italics original)
Is the additional 9% match payed by your district, not the state? Is a separate 401a plan? If so, that's outstanding! Very unusual for a public K-12 school district. :happy

Determined
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Joined: Sat Aug 12, 2017 7:43 pm

Re: Ohio Teacher

Post by Determined » Sun Oct 29, 2017 9:19 pm

Congratulations on your new job. Sign up for Ohio Deferred Compensation 457. You can go directly to their website to do it. If your district offers a 403b, you can do that as well, but I would start with the 457.

Krow36 is correct. We do not pay into social security, and our STRS now has the three options he listed.

Personally, I am in the Defined Benefit Plan because I have been teaching for nearly 25 years, and I didn't have a clue where we had the one time option to switch to the new plans. What too many teachers don't realize is that the pension is not enough anymore.

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grabiner
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Re: Ohio Teacher

Post by grabiner » Sun Oct 29, 2017 10:24 pm

TK12 wrote:
Sun Oct 29, 2017 4:44 pm
Hello All!

I just started teaching at a new district in Ohio and they match our 14% State teachers retirement contribution with an additional 9%, so 23% total(automatically vested so if I were to ever get out of education I would still be able to keep this extra 9% from the district)..I am extremely happy about this. :sharebeer I have always contributed to my own personal Roth IRA on the side every year along with the required 14% for our pension.

My question is with this new match from the school would you still recommend putting the extra money into the roth? I try to max it out every year even if I have to tighten the budget alittle bit.
How much will the pension be? If the pension will be enough to cover your retirement spending, you may not need to save any more for retirement. If it won't be enough, then contributing to the Roth IRA is still important.

You can keep your emergency fund in your Roth IRA, since contributions can be withdrawn penalty-free at any time. If you do this, keep that part of your Roth IRA in a low-risk bond fund.
David Grabiner

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CyclingDuo
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Re: Ohio Teacher

Post by CyclingDuo » Sun Oct 29, 2017 11:21 pm

TK12 wrote:
Sun Oct 29, 2017 4:44 pm
Hello All!

I just started teaching at a new district in Ohio and they match our 14% State teachers retirement contribution with an additional 9%, so 23% total(automatically vested so if I were to ever get out of education I would still be able to keep this extra 9% from the district)..I am extremely happy about this. :sharebeer I have always contributed to my own personal Roth IRA on the side every year along with the required 14% for our pension.

My question is with this new match from the school would you still recommend putting the extra money into the roth? I try to max it out every year even if I have to tighten the budget a little bit.
Excellent that you get a 9% match with your mandatory 14%. Just to compare, one of us has a mandatory 11% in the 401a with a 8% match (but also pay into Social Security). So we use the Roth IRA and a voluntary 403b to fill it out a bit more. You have more pre-tax percentage going to the 401a, so understood on the need to tighten the budget a little bit to max the Roth. In spite of that: yes, keep on taking advantage of the Roth IRA. Even if you can't max it for the full amount on a tight budget, put something into it every year.

If you have a voluntary 403b available with decent options as well, it wouldn't hurt to consider utilizing that as well to lower your pre-tax contributions even a bit more if you find yourself in a financial situation where you could do it within budget (dual income household, a few pay raises without succumbing to lifestyle creep, or a windfall). Sounds like that might be stretching it if you are feeling like your budget is too tight with a double, let alone by hitting a triple with the mandatory 401a contribution, Roth IRA, plus a 403b. Never hurts to explore the options though. Especially since you won't be receiving Social Security, you'll want to build plenty of assets to replace the annuity stream that SS provides in retirement.

TK12
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Joined: Sun Jul 10, 2016 12:17 pm

Re: Ohio Teacher

Post by TK12 » Mon Oct 30, 2017 5:00 pm

Thanks everyone for the help! Yes the extra match is paid by the district and not the state. I was very happy when I found this out! I was looking at the Ohio Deferred Compensation 457 and this looks good too. I think I will still look to fund the Roth first though and later on down the road look to throw a few bucks in this, trying to save for a house currently also.

The pension for Ohio is not as good as it used to be but it is still a pension. I believe after 35 years of service you get 77% of your best 5 years. I forget what you get after 25 and 30 years. I am figuring with the roth and the pension it will be plenty once I am at retirement age. :sharebeer

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