Which retirement plan should I choose?
May 8, 2013 10:10 AM   Subscribe

I find this comparison really confusing. I'm starting the job in August. I'm an early 30s married woman who would like to become pregnant in the next year. The contract only lasts through the end of 2014. I do want to continue on working there, but I have no idea if additional grant money will become available at that time. Which plan would you choose? Or, failing that, which are the important factors to consider?
posted by anonymous to Work & Money (4 answers total)
I would talk to your HR about the best package given the limits of a short contract. It doesn't look like the employer's money is immediately vested in either package except under certain circumstances and it's not clear whether those apply for you. Some aspects of the Arizona plan sound more important if you were a life-long worker in Arizona, which may or may not apply.
posted by jetlagaddict at 10:22 AM on May 8, 2013

I currently work at the UofA so feel free to MeMail me directly if you would like. I am a faculty member, and when I started I remember thinking that the ASRS only makes sense if you will be a state employee for a long time. I didn't have tenure and so I chose the ORP.
posted by bove at 10:45 AM on May 8, 2013

You should absolutely talk to HR and coworkers about this because the specifics of the state plan will be really important.

But the general shorthand of it is to ask yourself two questions.

First and most important, do you think that you're going to keep working for the state until you retire? If so, you almost certainly want the state defined benefit plan. At retirement, defined benefit plans are like manna from heaven. Googling, the AZ plan will pay you a specified percentage of your highest salaries.

If you don't expect to make a career at the state, the defined benefit plan is less attractive. If you don't expect to stay long enough to fully vest, a defined benefit plan will absolutely Fuck. You. Sideways. Typically you'll get your contributions back, with no or minimal interest, and that's it -- the state's contributions just go away, as does most of what your money earned while they had it. The comparison you linked to makes it appear that you never actually fully vest in the system until the day you retire; if you ever, ever quit, all the state contributions go poof and disappear.

The second question to ask yourself is how much you trust the state's voters not to fuck with you by altering the formula that defines your retirement benefit. Money in your 403b is your money, except for the question of vesting in the state's contributions, for good or ill. Money in the defined benefit retirement plan is the state's.

If you take the ORP, TIAA/CREF has convenient plans that basically boil down to you pushing a big red button labeled "RETIRE IN 2045" or whenever, and they do all the balancing crap between their index funds, bond funds, and whatever else.
posted by ROU_Xenophobe at 10:49 AM on May 8, 2013

If you're planning to spend most of your working life working for the state, then the first one is worth considering; if you're planning on moving around, the ORP will be more flexible and portable.
posted by mskyle at 10:51 AM on May 8, 2013

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