Leaving Contributions With OPERS
If a member terminates employment and wishes to withdraw his or her share of the accumulated contributions, the member can do so provided that:
- The member and member’s Retirement Coordinator properly complete an Application for Withdrawal form and file it with OPERS as soon as possible after termination.
- The member is not reemployed by an OPERS employer within 4 calendar months from termination date. This is a mandatory 4-month waiting period that can be waived only if the member is terminally ill, under certain circumstances.
Taxation of Withdrawn Contributions
The following is not intended to be tax advice. OPERS strongly encourages a member to seek the advice of a competent professional tax adviser before requesting payment of withdrawal.
Member contributions that were paid to OPERS by state employees after January 1, 1989, will be taxable in the calendar year in which the withdrawn contributions are received. A member who withdraws contributions which are taxable must have the mandatory taxes (currently 20% federal and 5% state tax) withheld from the payment made to them by OPERS unless the contributions are rolled over. The withdrawn contributions must be reported as income on the individual’s income tax return. Individuals who withdraw taxable contributions will receive a 1099 Form at the end of the calendar year.
The receipt of a member’s contributions may be subject of an early distribution penalty (currently 10%). The additional tax is imposed only in certain conditions and does have exceptions. For more information, consult IRS Publication 575 and as with all tax matters, consult a competent tax adviser.
Rollovers (Also see IRS publications 575 & 590)
NOTE: All members applying for withdrawal in OPERS will receive Tax and Rollover information and a Rollover Application no less than 30 to 60 days prior to the date scheduled for payment of the withdrawal.
A member who wishes to withdraw his or her share of accumulated contributions and who is not eligible to vest can expect to receive payment during the FIFTH month following the date of termination if all appropriate paperwork is on time and in order. OPERS will mail either:
- a Withdrawal Letter if the contributions are not taxable or
- a document entitled Important Tax Notice if any portion of the contributions are taxable.*
*approximately 2 months before the scheduled payment.
Cancellation of Payment
Application For Withdrawal (Form 515-118W)
The member’s mailing address on Part 1 must be accurate! If the address changes within the 4-month waiting period, he or she must do so in writing, with an original signature. This can be accomplished by letter or by completing a Change of Address form.
Members who have withdrawn their contributions and later become employed by a participating OPERS employer may restore service credit lost due to the withdrawal. To do so, the member must meet the eligibility requirements for membership and, on becoming a member of OPERS again, pay OPERS the sum of the accumulated contributions withdrawn plus interest at 10% per year. This repayment will entitle the member to the service credit he or she would have received as if there had never been a withdrawal of contributions. The member’s payment to this System can be made in a lump sum payment or through a payroll deduction for up to 60 months, with additional interest. See your Retirement Coordinator for details. Repayment of withdrawn contributions may be made one time only. Any further withdrawals cannot be repaid.