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davistw

Bus Driver SS benifits in Texas

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My wife has been a bus driver for 27 years and has been paying into TRS.

The question is have if she withdraws from TRS all of the money she has put in and puts it in a IRA will she be eligible for spousal benefits from Social Security?

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There is a specific way to withdraw from TRS and thus enable your spousal or survivor benefits, but it's usually not worth it. 

The provision that takes away spousal benefits is referred to as the Government Pension Offset. This provision will reduce a spousal or survivor benefit by an amount equal to 2/3 of your TRS pension. Read more about the workaround in my article What You Should Know About the Government Pension Offset. 

The basic math on why this strategy does not work for most is as follows:

Assume the following
$1,000 TRS Pension
$1,000 SS spousal benefit (without the offset)
$334 SS spousal benefit after the offset

If you withdraw from TRS, your SS benefit would go up by $666, but you would lose a $1,000 in pension benefits. 

There are some cases where this makes sense. However, you have to be very careful when executing this strategy or the SSA will still count a withdrawal as a pension and the same provisions will apply. Again, I list the applicable SS publications in the linked article above. Read those before you do anything. 

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Thank you. I will definatly do my research before we do this.

My only concern is her TRS pension is only a fraction of my SS benefits.

If I pass away then her benefits will only be this fraction.

 

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1 minute ago, davistw said:

Thank you. I will definatly do my research before we do this.

My only concern is her TRS pension is only a fraction of my SS benefits.

If I pass away then her benefits will only be this fraction.

 

She is not going to lose all SS spousal or survivor benefits, just an amount equal to 2/3 of her pension. Since this came from wages as a bus driver, I suspect it's not very high. Thus, the corresponding reduction will not be that high. 

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Gotcha...

Yep the amount she is due from TRS is about 600 a month with a 17000 cash value

If I figure it right she would get spousal benefits minus 400.

If that is right she would still  be spousal+200 if my calculations are correct.

If these calculations are correct it would payoff at 8 years.

So the question is to take it out lump sum or gamble on living 8+ years.

Im ordering your book right now and downloading your free PDF.

 

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