CalPERS

FAQs - Refund of Member Contributions

If I permanently separate from employment due to a layoff situation or for any other reason, am I required to take a refund of my contributions?

No, you're not required to withdraw your retirement contributions which would terminate your CalPERS membership. You can leave your contributions in your CalPERS account and continue to earn interest regardless of the number of years of service credit you have. You can elect to retire, if eligible, or request a refund at a later date, but must make a decision to refund or retire, prior to the year you attain age 70.

If you're at least age 50 and have five years of service credit, you can immediately apply for a service retirement to receive a monthly lifetime benefit. If you have at least five years of service credit, but are not age 50, you can leave your contributions on deposit and apply later for retirement.

Note: If you separate from CalPERS and join another publicly-funded California retirement system, you cannot withdraw your CalPERS contributions until you separate from employment with the other system.

I'm having financial problems right now and would like to take a loan against my retirement contributions. Can I do this?

Unfortunately, even if you're going through a financially difficult period, you cannot borrow against your retirement contributions. Your contributions must remain in your account to fund your future retirement benefit. If you permanently separate from all CalPERS covered employment, and also from employment with another publicly funded retirement system, you can take a full refund of your CalPERS account.

I permanently separated from employment and I want a refund of my contributions. How do I obtain a refund?

As a State of California member, you probably received a form (STD-687) from your employer which is used to report your separation and make the election to either receive a refund or leave the funds on deposit with CalPERS. If you completed this form and submitted it to your employer, they will notify us of your election. If you did not submit this form to your employer, you can download the CalPERS refund package (PDF) now or Contact Us to have one mailed to you.

Once your completed election form is received, your refund will be processed, provided your employer has also notified us of your separation. Only the contributions you make, or that your employer makes on your behalf, are refundable. You can withdraw your contributions as long as you're not in employment as a member of another publicly-funded California retirement system. For additional information, you can download the publication When You Change Retirement Systems (PUB 16) (PDF) or Contact Us to have it mailed to you.

How can I find out the status of my refund?

You'll need to call CalPERS to get the status.

I am a State Second Tier member. What happens when I separate from employment?

State Second Tier members don't pay retirement contributions, so no refund is paid upon separation from employment. If you have at least 10 years of service credit, you can apply for service retirement when you reach age 55. A service retirement allowance is a monthly benefit payable for life.

Can my refund be rolled over to an IRA?

If the refund is paid prior to the calendar year you attain age 70, the entire taxable portion of your refund can be rolled into an IRA or another eligible defined contribution plan. If the refund is paid in the calendar year you attain age 70 or later, a percentage of the taxable portion of the refund will not be eligible for rollover due to the federal required minimum distribution regulations.

What is a Required Minimum Distribution?

A Required Minimum Distribution (RMD) is federal legislation designed to prevent individuals from keeping funds in a tax deferred account, such as an IRA or Defined Benefit plan, indefinitely. This legislation requires that you begin to take at least a minimum amount out of the account beginning with the year you attain age 70. However, because the laws governing a CalPERS account do not permit a partial refund, the member must elect to retire or take a refund of their contributions and interest during the year in which they attain age 70.

How do you arrive at the RMD amounts?

IRS maintains the Uniform Lifetime Factor Table for the disbursement period of the taxable portion of your contributions. The taxable portion of your contributions as of December 31 of the previous year is divided by the appropriate factor to arrive at the RMD amount. If you do not refund until 2 or more years after you attain age 70, the RMD amount computed for the refund year will be multiplied by the number of RMD disbursements that should have been paid thus far.

Do you withhold Federal income tax from a refund payment that is not rolled into an IRA or other eligible savings plan?

If the refund is paid prior to the calendar year you attain age 70, the taxable portion of your refund is subject to mandatory 20 percent federal tax withholding. If paid in the calendar year you attain age 70 or later, you can elect to have federal tax withheld at 10 percent for the portion deemed required minimum distribution only. The portion not deemed required minimum distribution will be taxed at the mandatory 20 percent.

Do you withhold State income tax from a refund payment that is not rolled into an IRA or other eligible savings plan?

Whether the refund is paid prior to attaining age 70 or later, State income tax withholding is optional. If you make this election, the withholding amount is 2 percent of the taxable portion of the refund. State income tax will automatically be withheld if you live in California and you do not make an election.

Will my refund be reported to the IRS?

Yes. We will issue you a Form 1099R by January 31 of the following calendar year that you can use for filing your taxes. Be sure to keep us informed of your current address until you receive the Form 1099R.

Can I receive both a retirement allowance and a refund of contributions?

No, once you receive a refund, your membership in CalPERS is terminated and you are no longer entitled to retirement, health, or death benefits. Therefore, it's very important to carefully consider whether you should elect a refund since your decision cannot be changed once the payment is issued. However, there is an exception for a limited number of State employees who have Second Tier and First Tier service. If you are a vested member under State Second Tier and have contributions under First Tier, you can refund the First Tier contributions and retire as a State Second Tier member.

What if I elect a refund and then change my mind?

If you contact us prior to the issue date of your refund, you can request to cancel the refund. If your request is received too late, you cannot cancel the refund. However, if you return to work for a CalPERS-covered agency or another publicly funded retirement system, you may be able to redeposit your withdrawn contributions and restore your service credit.

What if I move before I receive my refund?

CalPERS will mail the refund to the address you put on the election form. If that address is no longer valid, you must contact us immediately to prevent the check from being sent to the wrong address.

Will you accept a faxed election form?

Yes. You can fax your refund election form to (916) 795-3988.

Dated: 09-17-2014