Returning to Membership Before Retirement
If you are rehired by a participating employer after you terminated employment, you will rejoin CCCERA unless you are rehired in an ineligible position. Service credit starts accruing just as it did during your previous membership on the first day of the month following your rehire date.
If you took a refund when you left, you can either re-deposit the contributions and interest you withdrew, thus re-establishing your retirement account and your original service credit, or do nothing and start your service credit from your current membership date.
Deferred PEPRA Members Returning to Membership: If you deferred your retirement benefit when your earlier employment ended (left your contributions and interest in your account), your funds are still earning interest. The contributions and service credit you earn after your rehire will be added to your deferred service credit to build a higher benefit when you retire. Your contribution rate will be the flat percentage rate for all members in your tier and you will return to your current employer’s benefit tier.
RE-DEPOSITS AFTER REEMPLOYMENT
A re-deposit re-establishes your retirement account to pre-termination levels. You return the contribution amounts you withdrew, plus the interest the funds would have earned during your absence from membership. Once these funds are re-deposited into your account, your original service credit is reinstated.
Re-depositing restores your retirement service credit to original amounts. As your career continues, you have these credits to build on, giving you a higher benefit when you retire. (More service credit at retirement equals a higher benefit.)
For the service you are restoring, you must re-deposit your contributions, plus all the interest that would have accrued if your funds had been left at CCCERA. (You do not have to replace the funds your employer contributed for you. Those funds are still on deposit with CCCERA.) Your re-deposit will reinstate your previous service credit in whichever tier you left, regardless of your current membership tier.
Members leaving CCCERA and establishing reciprocity with other CERL systems, PERS agencies, or other reciprocal employers are not able to take a refund. Regardless of the option you choose, if your funds are left on deposit, you will be paid interest on your account until you withdraw the money in a lump sum, or begin taking a monthly benefit.
RE-DEPOSITS AFTER A DOMESTIC RELATIONS ORDER
If you are required to divide accumulated service credit due to a divorce or domestic partnership dissolution court-ordered settlement, you may be able to reinstate (purchase) the service credit awarded to your former spouse/domestic partner with a re-deposit, under specific circumstances.
Since separate accounts are created for both individuals, re-depositing contributions and interest may be possible for both the active member and/or the non-member (former spouse/domestic partner), in order to restore each account to pre-DRO levels. For example, non-members may only re-deposit contributions and interest previously refunded to the active member, and considered community property.
Active members may re-deposit contributions and interest forfeited to the non-member, only if the non-member takes a refund. The active member must re-deposit the funds within five years of notification that a refund was taken and no later than 120 days after retirement.
If a non-member takes a refund of court awarded contributions and interest, the non-member permanently relinquishes all rights to any retirement benefits, potential re-deposits, or service credit purchases.
Each dissolution is different, so be sure to speak with a retirement counselor to verify your options. More information on this subject is available in the Divorce or Partnership Dissolution section of your benefit handbook and on our website.
RE-DEPOSIT PAYMENT OPTIONS
Re-deposits must be for the entire amount of previous service. However, you can pay the amount owed in installments. You can re-deposit your funds by:
- Lump sum payment
- Combination of both methods
- Post (after) tax payroll deduction
- Trustee to trustee transfer, called a “rollover”
You can decide to and complete a re-deposit any time up to 120 days past your date of retirement. If you are unable to complete your re-deposit for any reason (including disability or death), the contributions plus interest paid so far will be refunded and service credit will not be reinstated.
The maximum time frame for re-deposit contracts is five years, regardless of the amount of service to be reinstated. However, your contract cannot extend longer than the time of the original service you are redepositing.
Members who leave membership and take a refund of contributions and interest are eligible to re-deposit those withdrawn funds, if the member returns to membership with CCCERA at a later time. Members leaving to work in other CERL systems, PERS agencies, or other reciprocal employers are not allowed to take a refund, if they continue working in a reciprocal agency. If the member returns to membership with CCCERA, he/she can choose to re-deposit the refunded contributions, thus regaining service credit that was earned during the prior membership.
A rollover is a transfer of your contributions and interest from one qualified plan into another qualified retirement plan or IRA (Individual Retirement Account). A direct rollover means the money transfers directly from plan to plan, thus deferring possible tax liability until you withdraw the funds. A qualified retirement plan is enacted under Internal Revenue Service Codes 401(a), 403(a), 408 (a) or 457(b).
Employer plans are not required to accept rollovers. Be sure to find out what types of distributions your designated plan accepts, and what restrictions on subsequent distributions may apply, before you make arrangements. For example, CCCERA only accepts 457 plan (deferred compensation) trustee-to-trustee transfers. Contact CCCERA to find out what your re-deposit will cost and to discuss your payment options.