Leaving Job Before Retirement
Members who leave their job before retiring may be eligible to receive a refund of their annuity savings account. This refund includes accumulated contributions plus statutory interest, provided the member is not subject to pension forfeiture due to a criminal conviction or misappropriation of funds.
Refunds Based on Service
10 or More Years of Service
Members with at least 10 years of creditable service — whether they voluntarily or involuntarily terminate public service — will receive 100% of the regular interest that has accrued in their annuity savings account.
Less Than 10 Years of Service
Members with fewer than 10 years of creditable service will receive 3% interest on their accumulated total deductions.
Please note: If you apply for a refund more than two years after your termination date, you will only receive interest accrued during the first two years after leaving service.
When Members Cannot Request a Refund
You cannot request a refund if you are:
- Already retired
- An active member of any Massachusetts contributory retirement system
- On an official leave of absence
- Receiving workers’ compensation benefits
- Seeking to be restored to your position
- Accepting a position in public service governed by G.L. c. 32
Termination of Membership
Taking a refund of your total accumulated deductions terminates your membership in the retirement system. If you rejoin the system later, you will be treated as a new member, and all benefit rules in effect at that time will apply.
- Vested members (10+ years of service) who withdraw will lose any right to a retirement allowance.
- Members who redeposit a refund and become active again must remain employed for at least two consecutive years to qualify for retirement.
Tax Considerations
Taking a refund may have tax implications:
- Non-taxable portion: Equal to contributions made before January 12, 1988, and buybacks of prior service.
- Taxable portion: Equal to contributions made on or after January 12, 1988, plus accrued interest.
- Federal withholding: 20% of taxable contributions and interest is withheld if paid directly to you.
- Tax deferral: You may roll funds over into a tax-deferred account, such as an Individual Retirement Account (IRA), to avoid immediate withholding.
- Early withdrawal penalty: The IRS may impose a 10% penalty for early withdrawals.
Tip: Consult with a tax professional or attorney before withdrawing funds.
Have Questions?
Find answers to common questions about eligibility, contributions, and retirement benefits.