Every dollar you contribute to PERA is yours and goes into an account with your name on it. If you’re no longer working for a PERA-covered employer, you have two options with the balance of your Defined Benefit (DB) Plan account(s):
- Leave your account(s) with PERA for a future rollover/refund or monthly benefit.
- Do a rollover/refund of your account(s).
Leaving Your Account(s) With PERA
You may want to leave your DB Plan account(s) with PERA, especially if you anticipate returning to PERA employment or if you would like to receive a lifetime monthly benefit in the future. Your DB Plan account(s) will remain tax-deferred, continue to accrue interest, and you may do a refund/rollover at any time.
If you leave your DB Plan account(s) with PERA until reaching the age and service credit requirements for retirement eligibility or age 65, you may request a lifetime monthly retirement benefit or do a refund/rollover of your DB Plan account(s).
Reasons to leave your DB Plan account(s) with PERA until retirement:
- Your balance will continue to earn interest compounded annually (the interest rate is set by the PERA Board and is subject to change annually; currently the interest rate is 3%).
- If you do a refund/rollover of your account prior to age 59½, in addition to regular federal and state income taxes, you may have to pay a 10% additional federal income tax for early distribution.
- Most PERA members do not contribute to Social Security, so if you do a refund/rollover of your account, retirement savings for that period of employment are gone.
- You will retain the rights associated with your PERA membership and will continue earning service credit if you return to PERA membership.
- If you die before your effective date of retirement, your qualified survivors may be eligible for a survivor benefit and in some cases, a lump-sum payment.
- If you choose to receive a monthly benefit, you may be eligible to participate in the PERACare Health Benefits Program and receive a subsidy toward your premium.
Refunding or Rolling Over Your Account(s)
You may do a roll over your PERA DB Plan account(s) to an IRA or eligible employer plan or refund it. If you do a refund/ rollover of your DB Plan account(s), you forfeit any future right to a benefit.
The amount of your refund/rollover will include:
- Your tax-deferred (pre-tax) member contributions.
- Any tax-paid (after-tax) money, if applicable.
- Interest compounded annually (the interest rate is set by the PERA Board and is subject to change annually; currently the interest rate is 3%).
- Money you paid to purchase service credit.
- Matching contributions, if applicable, see below.
Log on to your account to view the tax-deferred and tax-paid amounts in your PERA DB Plan account(s).
PERA benefit structure
You will receive the following match on your contributions and interest if you refund or rollover your account:
- 100% if you are eligible for retirement.
- 50% if you are not eligible for retirement but have at least five years of earned service credit.
If you do not have five years of earned service credit, you will receive a 50% match only on contributions and interest received by PERA on or before December 31, 2010.
Money you paid to purchase service credit is not eligible for a match.
DPS benefit structure
You will receive a 100% match equal to your contributions and interest if you are retirement-eligible, terminated employment on or after January 1, 2001, and you have at least five years of service credit; otherwise no match is included.
You will pay taxes when you withdraw your PERA account, either as an ongoing monthly benefit or as a one-time payment if you refund your account. If you refund, there is a default federal tax withholding of 20% that can be increased using the IRS Form W-4R. If you refund before age 59½, you may also be subject to a federal 10% early withdrawal penalty.Form W-4RTaxes on One-Time Distributions Fact Sheet
Federal tax withholding if you have a foreign address
PERA is required by law to withhold 30% from any benefit payments or refunds you receive if IRS Form W-9 or IRS Form W-8BEN is not received. If you have questions about your tax status, contact your tax adviser.
IRS links or assistance with completing these forms: