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Merlo, Accountant
Category: Tax
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Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have a California PERS retirement account and will be eligible

Resolved Question:

I have a California PERS retirement account and will be eligible to receive benefits next year when I am 63. Since I now work for the federal government and no longer contribute to the PERS account, I been told there would be no advantage to postponing collecting benefits. My benefit amount will not increase once I reach 63.
I intend to continue working for a number of years. What is the best way I can collect the PERS benefits and invest them without paying taxes at this time? I have a federal TSP account. Would it be possible to roll my benefits payments directly into my TSP account?
Submitted: 7 years ago via Cornell Legal Info Institute.
Category: Tax
Expert:  Merlo replied 7 years ago.



Unfortunately there is no way to collect your PERS benefits without paying tax on them in the year they are received. The funds from that plan would not be eligible for rollover to your TSP or to any other account.


The only time that you can roll over funds is when the funds are going from one tax deferred retirement account to another tax deferred retirement account. Your PERS pension is not a tax deferred account as your TSP plan is.


Any benefits you receive from your TSP will be taxable income to you in the year you receive them, regardless of how you reinvest the funds. However, as long as your benefit amount is not reduced by taking the payments now, you are still ahead by taking the benefits and paying the taxes which will be due.


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