If you terminate employment with a KCERA plan sponsor prior to retiring, your membership type changes from “active” to “deferred.” There are two categories of deferred members:
- Deferred-vested. A member who terminates with five or more years of retirement or reciprocal service credit. Deferred-vested members have a right to receive a retirement benefit from KCERA when they meet all eligibility requirements.
- Deferred-nonvested. A member who terminates with less than five years of retirement or reciprocal service credit. Deferred-nonvested members do not have a right to receive a retirement benefit from KCERA.
Within a few weeks of your termination, KCERA will mail you a Disposition of Retirement Contributions Form, on which you must decide what to do with your accumulated retirement contributions. Your options include:
- Refund or rollover. KCERA can issue you a lump-sum payment (refund) or transfer your contribution balance to a qualified retirement account (rollover). Taxes and early withdrawal penalties may apply to refunds. There is a 30-day waiting period before your withdrawal request can be processed. Once the funds are disbursed, your KCERA membership ends.
- Keep funds on deposit (deferred-vested member). You can keep your contribution balance in KCERA, where it will accrue interest over time. However, as a deferred-vested member, you are entitled to a future retirement benefit and can apply for retirement once you are eligible.
- Keep funds on deposit (deferred-nonvested member). You can keep your contribution balance in KCERA, where it will accrue interest over time. However, as a deferred-nonvested member, you are not entitled to a future retirement benefit and must eventually withdraw your funds.
- Establish reciprocity. You can establish reciprocity with an eligible retirement agency in California, but certain rules apply. For example, you must keep your contributions on deposit in KCERA to maintain your reciprocal status.
If you do not make an election concerning your contribution balance, your funds will remain on deposit until you provide direction to KCERA. However, if you are rehired by a KCERA plan sponsor before withdrawing your contributions, you will revert to being an active member and become unable to withdraw your retirement funds.