Trump’s SALT Cap Fuels a Wealth Exodus from High-Tax States

ktm said:
I haven't heard of that happening in my area as the rules prevent it. Even if someone makes 3X their annual salary, the retirement calculation is based on the annual salary. I would have to believe that any jurisdiction that has rules to the contrary would quickly resolve such a loophole. The Feds and most law enforcement and firefighting agencies generally use the base salary amount times a high 3/high 5 to get the primary amount that goes into the pension formula. I would also have a problem with someone gaming the system in that way - although it's hard to blame them if the rules allow it!
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Yeah, the federal system for sure has that built in...actually to the point of being borderline unfair for the GS employees who spent their whole career in a high COLA area since COLA isn't included in the calc (but is for WG employees for some reason). But every time you see a headline about some ridiculous firefighter/cop retirement it's almost certainly a local jurisdiction that didn't close the loophole (but probably has now!). After working in the federal government and now working with some local jurisdictions it's interesting the range of professionalism you get at the local level. Some up there with the best of the federal government, but many just shockingly unprofessional and poorly run.
 
Sig said:
A defined benefit pension isn't a bad thing per se. I think several other posters in this thread have it right, if you actually fund the pension it's just a cost the same as 401k matching and all your other costs. In fact there are plenty of private sector companies that will give out a lifetime annuity for a given stream of initial payments, so it's not even necessary that the municipality take on the risk.
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:thumbsup::thumbsup::thumbsup:

You are right. The problem is most municipals won't fund the pensions because they don't want to raise taxes and just kick the problem downstream for the next elected official to handle.

I ran a simple calculation for someone starts work today at 20 and starts to receive the annuity at 65. Buys a defer annuity, with $5K invested every working year, adjusted for inflation of 3%, assuming he puts it in SP500 index. He will receive ~ $15,000 a month payout @ 65. That amount is equivalent to ~$4,000 a month of spending power today.
 
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