A member who has terminated employment (is no longer working for a TCERA employer), for reasons other than to elect to receive a TCERA retirement, has several options for the handling of funds in the member’s retirement account. Upon notification from the employer that the member has terminated, TCERA will provide the member with a Distribution Election Form, including important required disclosures regarding their options.
Refund - A refund of retirement contributions is a withdrawal of the member’s entire retirement account. A refund terminates all rights to membership in TCERA. The member may not elect to retire or establish reciprocity once a refund is completed.
Cash Distribution - Distribution payable directly to the member. If the member elects a cash distribution, TCERA is required to withhold 20% of the distribution amount for mandatory federal tax withholding.
Rollover Distribution - Distribution payable directly to a qualified financial institution for deposit to an account for the benefit of the member that is qualified and agrees to accept rollover funds. A rollover distribution to an Individual Retirement Account (IRA) or other qualified plan of this nature may defer the payment of income tax on the distribution and avoid the penalties associated with early distributions. Please refer to the disclosure provided as part of the Distribution Election Form for detailed information regarding the tax implications of a distribution.
Deferred Retirement - Members may elect to leave their retirement account funds on deposit with TCERA. Members in deferred status may elect retirement sometime in the future if age and service eligibility requirements are met. This option is of particular benefit to vested and partially vested members, as it keeps the member’s rights to a future retirement intact.
Reciprocal Membership (Inter-system) - Members may choose to establish reciprocity with another public pension plan in California, provided that plan has a reciprocal agreement with TCERA. Reciprocal membership allows a member to “link” retirement benefits with two or more plans, provided certain criteria are met. The member must attain membership in the new plan within six months of terminating employment with the TCERA Plan Sponsor and retirement funds must be left on deposit with TCERA.
Special conditions may apply to members who were terminated due to a lay-off or for members returning from military service. If either of these conditions applies, members should contact the Retirement Office upon return to employment.
Please refer to the TCERA Plan Summary and the Distribution Election Form Disclosures for more details on your options. Members are encouraged to seek professional tax or legal advice on any questions not covered by the disclosures. TCERA cannot provide tax or legal advice to its members.