A couple of points.
1. You need to contact CALPERS about buying service. In my State and
the others around here you can, and it's often a good deal. Just be
sure that you're buying a full year of service, and not one that
carries an early-retirement penalty. For example, here you get a full
unreduced benefit at 28 years (earned and purchased). If you were to
buy service and end up with less than the 28 years it would have less
appeal. I don't know what CALPERS requires for full retirement.
2. We can use 403b here to buy service. Ditto for traditional IRAs,
457, 401k, etc. And the rollover does avoid current income taxes and
the federal premature distribution penalty. It does not, however,
avoid any custodian imposed penalties or commissions. For example, if
the 403b is using an annuity with a surrender charge, you will pay it.
Ditto for mutual funds with a B share feature or individual stocks in
a self-directed account. Check with the custodian of your 403b for
the answer.
3. As for the first time homeowner exception to the premature
distribution penalty, there are requirements (you or spouse cannot
have owned in 2 years, etc.). Also, it applies only to IRA, not 403b,
401k, etc. Further, even if it applies you still owe income taxes,
surrender charges and commissions. Only the 10% premature
distribution penalty is waived.
-HW "Skip" Weldon
Columbia, SC
