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On Mom's behalf- TERI-State Teacher Retirement Program

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Dubya123
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On Mom's behalf- TERI-State Teacher Retirement Program  Reply with quote  

Hello All- I am inquiring on my Mom's behalf. She just retired after 35 years of public school teaching and has an assortment of different insurance and retirement time sensitive options to address.


First- Her last 5 years of teaching was under a retirement program called TERI. From what i understand, this is a deferred income strategy to retain experienced teachers that over the course of 5 years, put $150K into a account that is then rolled over into a traditional IRA upon retirement (all while getting full salary as well). Seemly straight forward- But does anyone have experiences with this situation. Snags or speed bumps to look out for? When she withdraws, will this be taxed as ordinary income? From what i understand these $'s are in addition to her normal retirement as a teacher.

Secondly- While working, she had short term disability insurance. My understanding of this type of insurance- It is only necessary while working. Does this apply or is it needed upon retirement?


Lastly- She has something that may be too focused to her state plan to even discuss (or for anyone to really have experience in). Its a product by TrustMark Insurance called Cancer and critical care illness insurance.. believe it is about $60/month and is in addition to her regular health insurance. Evidently it "pays her money on a monthly basis if she get cancer or something really bad".... I've requested further info on this as this was all she knew about it and as you can see, her depth of knowledge on the subject isn't too vast.


Thanks everyone for suggestions or directions on further learning on this subject!!
Post Tue Jul 03, 2012 2:36 pm
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oldguy
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TERI - That is specific to South Carolina, lots of detail, you'll probably need to grind thru it at the State level to get the answers.

Disability - you are right, no need for it after retirement (disabled from what?)

Cancer Insurance - this was something sold by the purveyors of life insurance a few decades ago, it is redundant with your normal health insurance. I would drop it, that $720/yr could be used for far better things.
Post Tue Jul 03, 2012 4:29 pm
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Dubya123
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Another note on the "cancer insurance"... if she gets 1 mammogram or pap smear a year, they refund her $100 bucks, if she gets both, she still only gets 100 back. (I have no idea what this logic is on this is). That being said, would she 'lose out' on money invested into this 'cancer insurance'? IE is there some cash out value to it? Or just stop payment and walk away?
Post Tue Jul 03, 2012 4:54 pm
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coaster
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That "cancer" insurance is not health insurance; it's a kind of sick-pay / income continuation / disability insurance; it's unnecessary / redundant, and highly unlikely it would ever be collected on; the qualifiers are too narrow and restrictive. High recommend you discontinue that; it's a waste of money. You lose what's been paid so far; there is no cash value.

Insurance is never an "investment"

~Tim~
Post Wed Jul 04, 2012 6:20 am
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clydewolf
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Re: On Mom's behalf- TERI-State Teacher Retirement Program  Reply with quote  

quote:
Originally posted by Dubya123

a product by TrustMark Insurance called Cancer and critical care illness insurance.. believe it is about $60/month and is in addition to her regular health insurance.


This insurance is not necessary. It is a very specific insurance, think of buying flight insurance in the airport terminal.
Follow Oldguy's advice and cancel this. There probably is no type of money coming back. Think of it as "peace of mind" for $2/ day if she had been diagnosed with cancer.
quote:

While working, she had short term disability insurance. My understanding of this type of insurance- It is only necessary while working. Does this apply or is it needed upon retirement?

Your mother's income is now from retirement. This income will be available if she is disabled or out side jumping rope and playing with hula hoops, playing bridge or working as a walmart greeter.
Buying disability insurance for a retiree is not needed.
quote:


From what i understand, this is a deferred income strategy to retain experienced teachers that over the course of 5 years, put $150K into a account that is then rolled over into a traditional IRA upon retirement (all while getting full salary as well). Seemly straight forward- But does anyone have experiences with this situation. Snags or speed bumps to look out for? When she withdraws, will this be taxed as ordinary income? From what i understand these $'s are in addition to her normal retirement as a teacher.

TERI is a retirement plan specific to South Carolina, and there are many distribution options. Read the plan carefully. Glancing through the plan here: (http://www.retirement.sc.gov/scrs/active/basicinfo/default.htm#paymentplans) it does appear that she could move the money in her TERI account to a Traditional IRA (TIRA) This would not be a taxable event.

However the TERI administrator may want to withhold income tax on this, and they may be required to withhold an amount equal to 20% of the distribution.

To avoid that 20% withholding for income tax, mom should open a TIRA at an IRA Custodian of her choice, and tell the IRA Custodian she wants to Transfer the TERI money to her TIRA. The IRA Custodian will handle the transfer, and there will be no withholding for income tax.

Mom should read through the TERI plan, and decide what is the best option for her.
Post Wed Jul 04, 2012 6:09 pm
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coaster
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Re: On Mom's behalf- TERI-State Teacher Retirement Program  Reply with quote  

quote:
Originally posted by clydewolf
... think of buying flight insurance in the airport terminal.


Thanks....that's a good description. Smile

~Tim~
Post Thu Jul 05, 2012 6:17 am
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coaster
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Re: On Mom's behalf- TERI-State Teacher Retirement Program  Reply with quote  

quote:
Originally posted by clydewolf
mom should open a TIRA at an IRA Custodian of her choice, .

To get technical, it's actually termed a "Rollover IRA." The major difference is that so long as it's kept separate from any other IRA accounts, it can at some point in the future be rolled into another employer's qualified plan.

That being said, the distinction doesn't really apply in this case, since the account holder is already retired. It's only pointed out for non-retired readers of the thread. Wink

~Tim~
Post Thu Jul 05, 2012 6:22 am
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Dubya123
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Thank you all so much for the responses!!!!!!!!


Now I just need to process it all and read up and I'm sure that I will be back to the group with questions.

Thanks again.
Post Sat Jul 07, 2012 9:53 pm
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