Free Washington Retirement Planning Community and CoursesWashington State Plan 3 is one of the most misunderstood retirement systems, part pension, part investment account. In this episode, we break down the real pros and cons of Plan 3 so you understand how it works, what it does well, and where it can fall short if you’re not careful.

You’ll learn why Plan 3’s 1% per year pension is still a valuable guaranteed benefit (and completely free), how the forced savings component helps many employees retire with more money than they otherwise would, and why Plan 3 pensions continue to grow by 3% per year even if you leave service early after 20 years.

We also cover the investment side, including contribution limits, default funds, target-date funds, and why many Plan 3 portfolios underperform compared to private retirement accounts. Then we explain the biggest downside: only half of your retirement income is guaranteed, while the other half depends on the market, timing, and sequence of returns.

In the second half, we answer a common listener question:

Can you access Plan 3 (401(a)) and Deferred Comp (457) after separating from service without penalties?

We walk through the Rule of 55, how Deferred Comp works differently, and a critical mistake people make when contributing to multiple 457 plans.

If you’re in PERS 3, TRS 3, or SERS 3, this episode will help you decide how to manage risk, income, and flexibility in retirement.

00:00 - What Plan 3 is and who it applies to

01:23 - Pro #1: 1% per year guaranteed pension (free benefit)

02:01 - Pro #2: Forced savings and long-term account growth

02:58 - Pension growth after leaving service early (3% per year)

03:52 - Using Plan 3 money for TAP annuities

04:27 - Con #1: You cannot change your contribution rate

04:59 - Con #2: Investment limitations and default fund risks

06:39 - Why Plan 3 portfolios often underperform private accounts

07:21 - Con #3: Only half your retirement income is guaranteed

08:40 - Why market volatility affects retirement income

09:12 - Listener Q&A: Accessing Plan 3 and Deferred Comp penalty-free

10:30 - Rule of 55 for Plan 3 explained

11:09 - Deferred Comp (457): No penalty after separation, any age

11:53 - Critical warning: Multiple 457 plans share one contribution limitLinks:

1. ⁠⁠Free Washington Retirement Planning Community⁠⁠

2. ⁠Plan 3 Investment Advice⁠

3. ⁠Schedule Meeting⁠

4. More free resources at ⁠WATRSPERS.com⁠

Free Washington Retirement Planning Community and CoursesPlan 2 is one of the most generous pension systems in the country, but it’s not perfect. In this episode, we break down the real pros and cons of Plan 2 for Washington State teachers, public employees, and school employees so you can understand what you’re gaining, and what you may be missing.

We explain why Plan 2’s 2% per year lifetime pension is such a powerful benefit, how vesting works after just five years, and why many Plan 2 retirees actually earn more guaranteed income than Plan 3 members who saved aggressively on their own. You’ll also learn about lesser-known features like the 5.5% interest credit on contributions after separation.

Then we cover the downsides:

- No built-in savings account

- Rising mandatory contribution rates

- Limited liquidity and legacy concerns

- What happens if you pass away early in retirement

In the second half of the episode, we answer a critical listener question about survivorship benefits and community property rules. We explain why spouses do not automatically receive a pension unless the correct survivorship option is selected, and why this decision is permanent.

If you’re in PERS 2, TRS 2, or SERS 2, this episode will help you avoid costly retirement mistakes and make smarter planning decisions.

00:00 - Intro - Plan 2 for WA State Employees

01:32 - The biggest advantage: 2% per year lifetime pension

02:29 - Why income matters more than account balances

03:32 - Low required contributions vs private retirement savings

04:04 - Vesting after just 5 years

04:26 - Little-known benefit: 5.5% interest on contributions after separation

05:24 - The biggest downside: no built-in savings account

06:01 - Mandatory contributions and why you have no control

06:54 - Liquidity and legacy concerns with Plan 2

07:17 - What happens if you pass away early in retirement

08:13 - Listener question: survivorship benefits and community property

08:32 - Pension option choices and why they are permanent

09:09 - Why spouses must sign and notarize Option 1

10:16 - Real example: how Option 1 can financially devastate a survivor

11:56 - Why survivorship options often break even faster than expected

12:26 - Why this is one of the most important retirement decisions you’ll make

Links:

1. ⁠⁠Free Washington Retirement Planning Community⁠⁠

2. ⁠Plan 3 Investment Advice⁠

3. ⁠Schedule Meeting⁠

4. More free resources at ⁠WATRSPERS.com⁠

Free Washington Retirement Planning Community and CoursesIf your income is too high to contribute to a Roth IRA, you’re not out of options, especially if you’re a Washington State employee.

In this episode of the Washington Retirement Planning Podcast, we break down three proven ways to continue building tax-free Roth income, even after you’ve passed the Roth IRA income limits. We also explain why some commonly recommended strategies, like backdoor Roth IRAs are often overused, misunderstood, and sometimes done incorrectly.

You’ll learn how Roth options inside Deferred Comp (457), 403(b), and employer plans work, why they have no income limits, and how recent Secure Act changes created powerful new catch-up opportunities for ages 50–63. We also walk through Roth conversions, when they make sense, how to avoid IRS penalties, and why paying taxes the wrong way can cost you extra.

Finally, we cover backdoor Roth IRAs: what they are, when they actually make sense, and the critical tax form (Form 8606) that people forget to file, often leading to penalties years later.

The second half of the episode answers a listener's question about Plan 3 annuity options, comparing private annuities versus Washington State options like service credit purchases, TERS annuities, and the TAP annuity, including why the guaranteed 3% COLA makes TAP so powerful for early retirement planning.

If you’re a high-income earner trying to reduce future taxes and retire earlier, this episode is a must-watch.

00:00 - Why high earners get shut out of Roth IRAs

01:32 - 2025 Roth IRA income limits and phaseout ranges

02:53 - Best option #1: Roth Deferred Comp (no income limits)

04:05 - New Secure Act catch-up rules (ages 50–63)

05:16 - Option #2: Roth conversions and when they make sense

06:39 - How to pay Roth conversion taxes correctly (avoid penalties)

08:11 - Option #3: Backdoor Roth IRA explained (and common mistakes)

10:42 - Pro-rata rule and Form 8606 warning

14:55 - Listener Q&A: Plan 3 annuity options explained

20:22 - TAP annuity vs service credits vs TERS annuity

23:40 - Using annuities strategically to retire earlier

Links:

1. Free Washington Retirement Planning Community⁠⁠

2. ⁠Plan 3 Investment Advice⁠

3. ⁠Schedule Meeting⁠

4. More free resources at ⁠WATRSPERS.com⁠