Have you considered leaving employment, but are afraid that your LAGERS retirement benefit won’t transfer? If you make the difficult decision of leaving LAGERS covered employment, you have several options available for how your LAGERS benefit can be handled.
- Refund of Employee Contributions – if you terminate employment, vested or not, you may elect to receive a refund of your employee contributions after you leave employment. This is not an option for you if your employer didn’t require contributions from you or if you are eligible to draw a monthly retirement benefit.
When you receive a refund of your employee contributions, it forfeits any future benefit payable to you. However, a refund of contributions may be reinstated if you return to LAGERS covered employment and redeposit the contributions you received plus interest.
- Present Value Lump Sum – if you are vested, have less than 10 years of service and are more than 10 years away from your normal retirement age, you may receive a present value lump sum of your monthly benefit upon leaving LAGERS covered employment. When you receive a present value lump sum, your benefit is considered exhausted and there is no longer a future monthly benefit payable. Also, your future monthly benefit cannot be reinstated once you receive the present value lump sum.
If you choose, LAGERS can directly roll the funds over to another retirement account that you own. By doing this, you will delay immediate taxation and avoid any early distribution penalties.
- Deferred Retirement – if you are vested when you leave employment but not yet retirement age, you may elect to defer your monthly retirement benefit to your normal retirement age. By doing so, you would ensure a steady stream of income during your retirement years.
If you choose, you may begin to draw your deferred monthly retirement benefit up to five years earlier than your normal retirement age. However, the benefit will be reduced by 6% (one-half percent per month) for each year you are younger than your normal retirement age.
- Normal Retirement – if you are vested and have attained your full retirement age, you may begin receiving your monthly benefit once you leave LAGERS covered employment.
So, if you are thinking about leaving LAGERS covered employment and are worried about your LAGERS benefit. Don’t sweat it – your LAGERS benefit provides you with several options.