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Are you thinking of requesting a refund of your contributions and interest? Taking a refund may be right for you. But it is important to understand the implications of this decision, as well as the benefits of retaining your membership.

When you take a refund:

  • You forfeit your retirement system service
  • Your membership ends
  • You lose the right to receive future retirement benefits

This can greatly impact your income during retirement. You also give up the potential financial protection your beneficiaries may receive from PSRS/PEERS after your death.

If a refund is right for you, call us at (800) 392-6848 for a Refund Application and submit the application at least 30 days after your last day of covered employment.

  • Requesting a Refund


    Once 30 days have passed since you ended all covered employment, you can request a refund, unless you are:

    • Under an agreement for future employment with any covered employer
    • On a leave of absence
    • Finishing a school year with one covered employer and starting the next school year with another

    Refund Amount

    • All your contributions (employer contributions are not refunded to you)
    • Payments to purchase or reinstate service
    • Interest you have earned as of the previous June 30 
    • Partial refunds or loans are not available

    You can find the total amount you have contributed by logging in, or by referring to your last annual Member Statement. 

    Payment Information

    Payment can take up to 60 days, but depends on whether we must verify your current-year employment and contributions with your employer. If you earn a full year of service during your last year, the earliest possible refund date is the end of July.

  • Taxes and Rollovers

    Income Tax on Refunds

    Your refund may be subject to income tax:

    • If the taxable portion of your refund is $200 or more, the IRS requires us to withhold 20% for federal taxes.
    • You may also incur an additional 10% tax penalty if you are under age 59½ at the time of the refund.
    • This penalty generally does not apply if you separate from service in, or after, the tax year in which you reach age 55.
    • You may also incur a state tax liability on your refund.
    • You can defer taxes and eliminate the federal 10% penalty if you choose a direct rollover of your funds to an Individual Retirement Account (IRA) or other eligible retirement plan.
    • If you turn age 72 before or during the tax year of your refund payment, we will calculate the IRS Required Minimum Distribution (RMD) payment as required by the IRS, and make this payment directly to you.
    • If you request a Refund Application, detailed tax information and payment options will accompany the form.

    Defer Taxes on a Refund with a Rollover

    You can rollover your refund payment to an Individual Retirement Account (IRA) or other qualified retirement plan. By rolling the funds into a qualified account, you may be able to defer any taxes and penalties that can occur with a lump-sum refund of your contributions and interest.

    NOTE: Funds rolled into a Roth IRA are considered taxable income in the tax year the rollover takes place.

    We strongly advise that you read the brochure, Your Rollover Options, which you will receive with your Refund Application. For further assistance you may wish to contact a tax professional.

    PSRS/PEERS does not answer individual tax questions or give tax advice.

    Inquiries should be referred to a tax professional or to the appropriate state or federal taxing agency.

  • The Impact of Vesting

    You are not required to take a refund just because you are no longer working in covered employment. But there are differences in how long you can leave your funds with the Retirement System, depending on whether or not you are vested. You are vested when you have five years of qualified service.

    If you are vested, you can apply for service retirement benefits when you reach eligibility. For this reason, it may be to your advantage to leave your funds, instead of taking a refund. In most cases, the benefits our members receive as retirees greatly exceed the amount they would receive in a refund.

    If you are not vested:

    • You can leave your funds for the next five years and continue to receive interest.
    • If you do not earn or purchase service during those five years, your membership automatically terminates and your interest stops.
    • At that time, you will be contacted with the information you need to request a refund.

    If you are vested:

    • You can leave your funds indefinitely.
    • Your funds accrue interest every June 30.
    • You are entitled to lifetime retirement benefits when eligible.
    • Options may also be available for qualified family members to receive benefits in the event of your death.

    Carefully consider the pros and cons of taking a refund. When you receive a refund, you forfeit all of your service and any future monthly benefits. If you are vested, it may be to your financial advantage to leave your funds and collect retirement benefits when you become eligible.