As a member of OPERS you make a mandatory contribution every paycheck. Your employer also makes a much larger contribution. These funds are invested by OPERS with the expectation you will one day be eligible to receive a monthly lifetime retirement benefit.
While working for an OPERS employer, you may not take a withdrawal or loan from the contributions paid to OPERS. Retired members who already receive a monthly benefit cannot withdraw any contributions paid to OPERS.
Leaving employment prior to retirement? You have options
In most cases you do not have to take out your contributions. If you have at least eight years of credited service, you may be able to vest and receive a future retirement benefit. If you do not have enough service to retire or vest, you can leave your contributions in the OPERS Plan. In either case, should you return to work with a participating employer, you will pick-up where you left off.
- Could receive a future lifetime benefit.
- Service remains in place.
- Pick-up where you left off if you return to OPERS employment.
- Remain under the rules in place at the time of your original employment.
- No lifetime benefit.
- Service is canceled out, including prior service.
- You give up any monthly payment OPERS would have made toward your health insurance at retirement.
- If you return to OPERS employment, you will start as a new OPERS member with no service.
- You will be under the rules as of your most recent hire date.
Often, a retirement benefit over one’s lifetime has a greater value than the amount of contributions paid.
When taking a withdrawal, you will receive a one-time payment of all your employee contributions into OPERS less applicable taxes and penalties. No interest or increased value is paid on employee contributions. The employer contributions always stay in OPERS.
- You must have ended employment before your withdrawal can be processed.
- You cannot return to work for any OPERS employer for four months after your termination. This mandatory waiting period can only be waived if the member is terminally ill, under certain circumstances.
- At the earliest payment may be made in the fifth month after separation.
Applying for Withdrawal
Contact OPERS to request a Withdrawal Packet. Packets will only be mailed to the name and address we have file. If your information has changed, you must first update your name and/or address. The packet will contain instructions, information and the forms needed to process your withdrawal.
- Member signatures need to be original and in ink when submitted to OPERS.
- We suggest collecting employer and financial institution signatures before signing the forms as the withdrawing member. Copies of signatures from the employer and financial institution will be accepted.
- All forms and documents must be submitted together, or your application will be rejected. A checklist is provided to review needed documents.
Once your forms are approved, we will mail you a letter with more information and an estimated payment date. At the earliest payment may be made in the fifth month after separation. An additional form will be sent to you if you have enough service to be eligible for a lifetime benefit. You must waive this benefit to continue your withdrawal.
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.
A withdrawal may be subject to taxes if it is not rolled over to another tax-deferred account. For payments made directly to you (not rollovers), OPERS is required to withhold 20% for federal taxes and, for Oklahoma residents, 4.75% for state taxes. You may indicate on Form A (included in the Withdrawal Packet) to have additional taxes withheld. A 1099-R will be mailed to you the following January.
If you are under age 59½ at the time you take a withdrawal, you may be subject to a 10% federal tax penalty for early withdrawal. This tax penalty is in addition to regular federal and state income taxes and would be assessed when you file your taxes.
A Special Tax Notice with more information on taxes and full or partial rollovers will be included in the packet.
Returning to Work with an OPERS Participating Employer
Returning to work within four months after your termination will make your withdrawal application invalid. You will be required to pay back the full amount of any ineligible withdrawal payment plus applicable interest. It is your responsibility to let OPERS know if you return to work with any participating employer.
Repaying a Withdrawal To Reinstate Service Credit
If you return to work for an OPERS participating employer after withdrawing contributions, you will begin your new job as a new OPERS member. This means you will start with no service credit and be under the plan rules based on when you were most recently hired.
However, you may restore your service credit, if eligible, through a withdrawal payback. This will also move you back under the rules in place as of our original date when you first joined OPERS. Use our Withdrawal Payback Calculator to estimate the cost and start the process.