MA Educator Pension Buyback Guide: Evaluating Service Purchase Options & Costs
By Tim Hayes, Financial Advisor for the Public and Not-for-Profit Sector
Your out-of-state service buyback accrues 7% annual interest, calculated from the date you earned the service in your prior state. Because this interest compounds annually, the longer you wait, the more you will pay.
Consolidate or Coordinate Your Pensions?
In the 2026 landscape, we evaluate whether it is more advantageous to purchase those years into the Massachusetts system or to collect a separate out-of-state pension alongside your MA benefits and Social Security. My fiduciary audit explains the calculations behind the buyback information.
Legislation Pending
The RetirementPlus Buyback Decision
Both the Massachusetts House and Senate have passed versions of the buyback bill — the two differ significantly in cost and must be reconciled before going to the governor. The 180-day election window begins on the date it is signed into law. Read Tim's Analysis →
Your Two Paths: Service Purchase Options for Members
I don’t guess at your numbers. We get the real data from the system first, then we build the strategy.
If you are Vested in your old plan:
Get the Cost: We fill out the required forms to get your official buyback cost from the Massachusetts system (1–2 months).
I compare the value of your old pension versus moving those years into Massachusetts. Crucially, we determine if it is more beneficial to “Divest” (liquidate) your old account to fund the buyback or keep the two pensions separate. (2 weeks).
The Funding: If moving the years is the winner, we prioritize how to pay for it using your existing retirement funds.
Total average timeline: 3–6 months. Read More: What Happens to Pension if You Don’t Stay With MA State for Ten Years
If you are NOT Vested in your old plan:
Get the Cost: We start by filling out the forms to get the exact cost of purchasing your service time (1–2 months).
The Comparison: Once we have the cost, I compare the benefits of buying that service time versus rolling your old plan money into an IRA or 403(b).
The Goal: we find the path that gives you the most monthly income.
Total average timeline: 3–6 months.
Get Your Buyback Analysis Before the RetirementPlus Rush
You might not even need the buyback — RetirementPlus could get you more years at a lower cost, and let you keep your old pension instead of giving it up. My audit calculates your buyback cost, your RetirementPlus estimate, and your current benefit in the other state, so you know which line to get in before you file anything.
Once RetirementPlus is signed, thousands of educators will want this same analysis at once — and since I run every audit personally, availability will fill fast. Getting your audit done now means you’ll know which line to get in before the rush hits.
The 2026 Advantage: WEP/GPO Repeal Changes Everything
Following the 2025 repeal of the WEP/GPO, my audit becomes even more vital. We can determine whether to keep or consolidate your old state’s pension into the Massachusetts system without the concern of triggering Social Security penalties.
This is especially important for individuals who have vested state pensions and also paid into social security. Allowing us to focus on the option that offers the greatest potential benefit.
The WEP/GPO repeal isn’t the only 2026 development. Teachers hired before July 1, 2001, may soon get a one-time chance to buy into an enhanced pension — see the RetirementPlus buyback decision, with a 180-day election window that opens when the bill is signed.
The Multiplier Gap: Why Massachusetts Pays More
Covered States (The “Low Multiplier” Model): In states like Florida, South Carolina, or New Hampshire, most educators pay into Social Security. Their pension multipliers are lower—often replacing only 45% to 60% of your salary.
Massachusetts (The “High Multiplier” Model): Massachusetts is a “Non-Covered” state. The MTRS is designed to be your primary income source, offering a significantly higher multiplier to reach an 80% replacement rate.
The 2026 Strategy: Now that the WEP/GPO has been repealed, you can move your years from a “low-multiplier” state into the Massachusetts system. This allows you to “upgrade” those years to the 80% rate without losing the Social Security benefits you earned elsewhere.
Did You Know? Nationally, 60% of K-12 educators (teachers and administrators) and 72% of all state and local public employees (including university staff) are covered by Social Security.
Critical State Retirement Rules to Purchase Creditable Service
The 10-Year Rule
Eligible members may purchase up to ten years of out-of-state public school teaching service from any U.S. state. Service from Puerto Rico is capped at 5 years.
The 1-for-1 Matching Rule
At the time of your retirement, you must have a matching year of Massachusetts membership service for each year of out-of-state service you wish to purchase. For example, to credit 5 years of out-of-state service, you must complete at least 5 years of service in the MTRS, Massachusetts State, or Boston Retirement Systems.
The 80% Maximum Benefit Cap
A Massachusetts retirement allowance cannot exceed 80 percent of your allowable final salary average. Because a service purchase is non-refundable once made, it is critical to audit your career path to ensure you aren’t paying for service that won’t increase your monthly benefit.
A Valuable Investment in Clarity
An initial 15-minute discovery call is free to determine whether this audit is right for you.
The Work: This is a labor-intensive, customized process. For each client, I must:
Research the specific vesting and pension payout rules in your old state.
Run precise calculations for your unique career track and retirement goals.
Provide a clear, fiduciary analysis comparing your options.
Fee: $200 per hour.
My knowledge of the Massachusetts pension system, combined with my expertise in Social Security, often uncovers potential savings or optimizes income. This service frequently pays for itself; considering the lasting financial impact of your decisions, the $200-per-hour fee is a wise investment to ensure the best outcome.
Getting your buyback estimate takes time. Hire a financial advisor who can help you get it done.
Strategic Opportunity
A Strategic Alternative: Trading Market Risk for Pension Certainty
If a significant portion of your 403(b) is currently allocated to the U.S. Stock Market, you are holding an asset that three major historical metrics currently value at "premium" levels:
- The Buffett Indicator: Market cap to GDP is at 220% (vs. 143% in the dot-com era).
- The Smithers Q-Ratio: Valuations are at 3x fair value. Buying the market now is like paying $1M for a $300k house.
- The Shiller CAPE: Earnings-based valuations are currently rivaling 1929 levels.
The Opportunity: For those with high stock exposure, current valuations allow you to "sell high" and use those gains to purchase pension service credit. You are effectively trading 1929-level market risk for a guaranteed, lifetime income stream that won't disappear in a correction.
An Educator-Exclusive Benefit
In the Massachusetts retirement system, not all public employees are treated equally. While general state workers are limited to in-state service purchases, educators and higher education faculty have a powerful “special feature”: the legal right to buy back up to 10 years of out-of-state public school or university service.
K-12 Teachers, Principals, & Superintendents
Public University Professors & Instructors
College Presidents & Supervisors
The "Tax Shield" Advantage
The value of your pension is determined by what you take home. While Massachusetts public pensions (MTRS/State) are 100% exempt from state income tax, many out-of-state pensions are not. If you leave your funds in a “non-reciprocal” state, Massachusetts will likely tax that income at 5%. By “buying back” those years, you convert taxable out-of-state income into a tax-free Massachusetts benefit for life—often resulting in an “instant raise” when combined with the 2025 WEP/GPO repeal.
Buying Back Military Service: What You Should Know
Are you a veteran teaching in Massachusetts?
The 2024 HERO Act changed the rules for military buybacks. If you served in the U.S. Armed Forces, National Guard, or Reserves, you now have more flexibility to “buy back” up to four years of service to boost your Massachusetts pension.
The 2026 HERO Act Advantage
The new law makes the timeline for buying this service time much clearer:
- 10-Year Window: You have until one year after you vest, usually at the end of your 11th year of service, to buy your military time.
- National Guard and Reservists: For every five years you served in the Guard or Reserves, you can buy one year of creditable service, up to four years total.
Vesting and Paying for Service Are Not the Same
Unlike out-of-state teaching time, which charges 7% interest, military time costs 10% of your starting salary in the Massachusetts system. No interest is added. So, it’s usually best to pay for this time by increasing your retirement contributions from your paycheck.
Also, you do not need to match your military service credit with Massachusetts service time. Up to four years are added to your service time right away for your pension. By comparison, out-of-state service credit requires the same amount of Massachusetts service.
Read More: Military Buyback Strategy
What About Your Old 403(b) or 457?
If you have a defined contribution plan (such as a 403(b) or 457) in another state, you have three main options:
Direct Rollover: Move the funds into your current MA 403(b) or a Rollover IRA to consolidate your strategy.
Use It to “Buy Time”: You can often use these pre-tax funds to pay for the purchase of out-of-state service credit in Massachusetts.
Leave It: Only recommended if the state-sponsored plan has exceptionally low fees that you can’t match elsewhere.
Close to Forty Years
“Tim Hayes has been my financial advisor for close to forty years. He is sincere and direct in his approach to supporting his clients. I highly recommend Tim to anyone seeking a financial advisor who is skilled, client-centered, and practices with integrity. “
Julia Concannon: Retired Teacher
Client: Retired Teacher
Testimonial Disclosure: Testimonials are based on individual client experiences and may not represent the experiences of all clients. They are not a guarantee of future performance. Each client’s situation is unique. No compensation has been provided for these testimonials.
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If you are an MTRS member, you can download the official form to begin reviewing the buyback process:
[Download MTRS Out-of-State Service Purchase Form]
For Boston Public Schools employees:
Contact the Boston Retirement System directly to request their out‑of‑state service buyback application form.
Phone: (617) 635‑4311
Website: cityofboston.gov/retirement
Read More: Boston Public Schools Sick Day Buyback and Medicare premiums
For Massachusetts Public Higher Education employees (state universities, UMass, community colleges):
Contact the Massachusetts State Board of Retirement (MSBR):
Phone: (617) 367-7770
Website: mass.gov/orgs/state-board-of-retirement
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third-party sites should not be considered an endorsement of content that we cannot verify completeness or accuracy of.