Leaving your current PSERS-covered position before you retire will have an impact on your benefits. The nature of the impact depends on where you are next employed and whether you withdraw your contributions from PSERS. If your next job is PSERS eligible, your membership and service credit will continue.
If you leave PSERS-covered employment, you may withdraw your accumulated contributions. This is the only circumstance in which a refund is permitted. Withdrawal of your contributions cancels all rights to future benefits from PSERS. You can learn more by reading Withdrawal of Retirement Contributions, a DRS information and application packet available on the DRS Web site or through your employer.
You are not required to withdraw your contributions when you leave PSERS-covered employment. If you leave your contributions with PSERS, your funds will continue to accrue interest and your service credit will be preserved. See “Vesting” section.
If you leave PSERS-covered employment and leave your contributions in the plan, keep DRS informed of changes in your name, address and beneficiary.
You may be required to begin receiving your untaxed benefit by April of the year following the year you reach age 70½. For additional information refer to Internal Revenue Service (IRS) publication 575, Pension and Annuity Income.
DRS is required to withhold 20 percent of the tax-deferred portion of lump sum payments for federal income tax, unless the funds are transferred directly to another eligible retirement plan. Federal law may also require an additional 10 percent tax as an early withdrawal penalty if you are under age 59½.
DRS is required to report all lump-sum payments to the IRS. It is your responsibility to report the withdrawal on your tax return. For more information on this subject, contact the IRS or your tax advisor.
To restore withdrawn service credit, you must repay the total amount withdrawn, plus interest, within five calendar years of returning to a PSERS-eligible position, or before you retire, whichever is first.
It is still possible to purchase withdrawn or optional service credit after the deadline of five calendar years. The cost for purchasing service credit after the deadline date is considerably more expensive.
To learn more about purchase of service credit see the DRS publication, Recovery of Withdrawn or Optional Service Credit.
If you are a dual member and wish to restore service credit in a system other than PSERS, you must repay the amount withdrawn, plus interest, within two years of first becoming a dual member, or before you retire, whichever comes first. To find how much it will cost you to restore, contact DRS.
It may be possible to purchase service credit after the restoration deadline. See “Restoring PSERS service credit” above. For details, see the DRS publication, Recovery of Withdrawn or Optional Service Credit.