Refunds and Rollovers
Taking a refund means you close your retirement account by withdrawing or rolling over all of the contributions and interest you made while a member of CCCERA. You will no longer be entitled to a benefit from CCCERA, even if you are disabled in the future.
You will receive your contributions and interest within three months, after your refund request is received. However, if your contributions were made with pretax dollars, you will now owe income tax on the distribution, unless you make a direct rollover of the funds into another tax deferred retirement account, such as an IRA.* There may be a 10 percent additional tax if you are under age 59½ unless you separated from service after age 55 (age 50 for IRS qualified public safety employees). See your benefit handbook or refer here for more information about rollovers, also called trustee-to-trustee transfers.
- If you start working for an employer who offers reciprocity with CCCERA within six months, you cannot take a refund of your contributions.
- If you return to membership with CCCERA, and have previously taken a refund, you will not have previous retirement service credits to build upon, unless you re-deposit the withdrawn amount, plus interest.
If you decide to request a refund, you must fill out and return a Distribution Election Form (Form 207) to CCCERA. Your refund will not include the contributions made by your employer on your behalf. Your refund will be your contributions and interest, only. You must have terminated employment with a CCCERA employer at least 45 days before you are eligible for a refund. Refunds are not allowed if you became ineligible due to a job status change (such as part-time, less than 20 hours per week or temporary) but are still working for a participating employer.
The way you receive your refund is very important as tax liability may be an issue. Be sure to check with your tax professional before taking a refund. You can request a refund of your contributions and interest, even if your original choice was deferred membership, (unless you are working for a reciprocal employer), or until you begin taking a retirement benefit. If the refund is sent directly to you, under IRS regulations, you may immediately incur a tax liability, unless you make a rollover deposit into another qualified tax deferred plan.
*The tax withholding on refunds, by federal law, is a mandatory 20%, since refunds are considered distributions. The 20% helps cover you or your beneficiary’s federal income tax. State tax withholding of 2%, to cover state income tax, is optional.