Leaving your current PERS-covered position before you retire will have an impact on your benefits. The nature of the impact depends on where you are employed and whether you withdraw your contributions from PERS. If your next position is PERS eligible, your membership and service credit will continue.
If you leave PERS 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 and benefits you have accrued in PERS. You can learn more by reading Withdrawal of Retirement Contributions, a DRS information and application packet available on this Web site or through your employer.
You are not required to withdraw your contributions when you leave PERS-covered employment. If you leave your contributions with PERS, your funds will continue to accrue interest and your service credit will be preserved. (See “Vesting” section.)
If you leave PERS-covered employment and leave your contributions in the plan, keep DRS informed of changes in your name, address and beneficiary.
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 Internal Revenue Service (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.
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 IRS publication 575.
To restore service credit, you must repay the total amount withdrawn, plus interest, within 60 service credit months of returning to a PERS-eligible position, or before you retire, whichever comes first. Payment must be completed by the statutory deadline, or your service cannot be restored under this statute.
It is still possible to purchase withdrawn and some optional service credit after the statutory deadline. The cost for purchasing service credit after the deadline date is considerably more expensive.
You can learn more about restoration or purchase of service credit by reading the DRS publication, Plan 1 Recovery of Withdrawn or Optional Service Credit.
If you are a dual member and wish to restore service credit, 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 determine how much you owe in order to restore service credit, contact DRS.
It may be possible to purchase service credit after the restoration deadline. For details, see the DRS publication, What is Dual Membership and How Does it Affect Me?