After 7 years in the classroom, I am leaving public education. I have started a business that has been open for a little over a year now and is doing well. I am leaving teaching to run the business full time.

My question is this, what should I do with my funds in my teacher retirement? It's by no means a large sum of money. For instance, my wife has been at her job for about half the time I've been teaching and she has three times the amount in her retirement.

I'm currently leaning towards simply rolling it over to someone my accountant referred me to at a Stifel Nicolaus firm. I am curious as to what forum members might suggest. Thanks!

How about rolling it over to Vanguard? SN looks like they will charge you high feels. Are you sure your accountant is not earning a kickback from the referral?

You also need to be concerned about vesting. Do you know if you are vested or by which fraction? Some teachers retirement systems can be quite generous so even if you leave now and never come back you could potentially be entitled to generous benefits 40 years from now. I would at least check into that.

Thanks for the feedback! My accountant was upfront about the kickback. I believe I am entitled to the full amount I currently have, but I do need to check into that to be 100% certain. I am done in the classroom June 5th, but my contract does not end until September 1st so I am trying to get my ducks in a row.

I've heard about Vanguard, but I am by no means familiar with them. Is there a particular reason why you suggest using them?

You will pay about 0.2% annual expenses at Vanguard. You are likely to pay 1-3% at the firm you mentioned. There is absolutely no rational reason to believe that the higher fees will produce higher returns. Indeed, over time the higher fees will do nothing for you except cost you money. That is about as close to a proven fact as anything in finance.

(I get absolutely no kickback for recommending Vanguard. It's simply the right thing to do.)

Haha, thanks for the info. I'll be reading up on them, but the quick glance supports your suggestion. Thanks again.

i believe federal law dictates the vesting of pensions. There are two options, a 5 year all or nothing and a 3-7yr partial vesting scheme with full vesting after 7 years. If the OP has truly worked 7 years, they should be fully vested in the pension as well. Understanding how it works (especially what happens if interest rates rise), would be wise before rolling it over to an IRA.

Table 3 in the following link shows the "graduated" vesting scheme. http://www.dol.gov/ebsa/publications/wyskapr.html

Generally yes. But there can be complications, especially with teachers. Plus, sometimes people work for a year or two in a position that is not part of a plan then are reclassified etc. My wife, for example, works as a professor on a 9 month contract. For her, 9 months = 1 year for pension purposes. Vesting was at 5 years but was long ago. At that time she often taught in the summer so she earned credit faster than the "time" would suggest. Some teacher pensions can be set up so that the 9 month teaching year only counts as 9/12 of a pension year so that 7 years becomes only 7*3/4 = 5.25 pension years.

But my point in asking is that if he is not fully vested (let's say he worked 6.97 years at this point) then it could be best to wait just a few months to take any action. If he is fully vested and has terminated already even though he is technically still under contract then he might be able to move the money immediately. It is best to get this all nailed down before making any decisions or taking immediate action.

Roll the money over into a low cost brokerage account. I use Fidelity, but others here really like Vanguard.

Just got off the phone with a TRS rep and she said that there is no vesting period. She said employees are entitled to the full amount starting day 1.

After looking at Vanguard, is it as simple as they present it? Using the tools they have it suggested Vanguard Target Retirement 2045 Fund.