Leaving your WRS-participating employer doesn’t mean your retirement assets must leave WRS. Withdrawing retirement assets when you change employers may hurt your future retirement security. Whether you have a pension account and a 457 account or just one or the other, your options when leaving service are:
- Leave your money in your existing WRS Plans
- Roll your money to an eligible plan, whether an IRA or a new employer plan
- Take a refund or distribution of your money
- Begin drawing a pension benefit if you are retirement eligible
You are not required to make an immediate decision regarding your retirement assets with WRS.
Leave Your Money on Deposit: In most WRS pension plans, you may leave your money on deposit if your balance is at least $1,000. If you return to work for a participating employer in the same plan, in most cases you will resume earning service credit. No action is required to leave your money on deposit. If you are vested, you can apply for a lifetime monthly retirement benefit once you reach the retirement eligibility age for your plan.
In most WRS pension plans, your account balance will earn interest at a rate set by the WRS Board, which is 3% as of 2017. While this will not increase your benefit at retirement age, it allows you to defer making a decision regarding your account while your account balance grows at a modest interest rate. In some WRS pension plans, your account balance is doubled in a lump-sum payout to your beneficiary if you die before retirement.
Review your pension plan handbook for complete details for your plan. Some WRS pension plans do not accrue interest for some or all inactive members. Some plans do not allow members to resume earning service credit if they return to the plan after leaving. Members of the Public Employee Plan Tier I, who leave before vesting will be in Tier II if they return to service in the Public Employee Plan.
Apply for Retirement: If you are a vested, retirement eligible member at the time you leave employment, you can apply for your retirement benefit. If you are an inactive member who becomes retirement eligible and does not intend to return to work for a WRS-participating employer, consider applying for your retirement benefit as soon as you are eligible. Your lifetime retirement benefit will not grow beyond what you earned when you were working for a WRS-participating employer.
Rollover: Although consolidation of retirement assets to a qualified retirement plan may be convenient, if you are vested and elect a rollover, you are giving up a lifetime monthly pension benefit when you reach retirement age. Take into consideration any fees, investment quality and fiduciary responsibility of the potential new plan to which you are considering rolling your money. It may be an advantage to keep retirement assets in an employer plan, as employer plans typically have a lower fee environment than the retail sector, such as IRAs. You can roll your pension account to your WRS 457 account. However, you must have a balance of $200 for a rollover request.
If you are eligible for and elect a rollover, you will receive only the employee contributions in your account (including any employer "pick-up" of employee contributions), plus accrued interest. The amount does not include any employer contributions.
Refund: A refund decision should be made carefully, as it is usually very difficult to recover the lost retirement security. If vested, you are giving up a lifetime monthly pension benefit. A refund is irreversible. If you return to a WRS participating employer, you will start over. In some WRS pension plans, you may be eligible to redeposit previously refunded money, but it will cost you more than what you withdrew.
If you have a total of 48 or more months of contributions in the Wyoming Retirement System (WRS), you must obtain an official benefit estimate from WRS before you may take a refund on your account. Please contact WRS to obtain the forms required.
Refunds are reported as taxable income in the calendar year the money is paid and will add to your taxable income for the year. The additional income could potentially move all of your taxable income to a higher tax rate. In addition to ordinary income tax, in most cases a member under the age of 59 ½ will incur an additional 10 percent tax on the taxable amount withdrawn. WRS is required to withhold 20 percent of a refund for federal tax withholding.
If you are eligible for and elect a refund, you will receive only the employee contributions in your account (including any employer "pick-up" of employee contributions), plus accrued interest. The amount refunded to you does not include any employer contributions.
Members of Public Employee Plan Tier I who take a refund or rollover will be in Tier II if they return to work. Any redeposit they make will apply to their Tier II benefit and will not reinstate their Tier I status.
If you leave employment with your WRS-participating employer, consider the benefits of leaving your money in your WRS 457 Deferred Compensation account:
- You continue to direct how your assets are invested, and you can roll other eligible plans into the WRS 457 Plan.
- The WRS Board administers the Plan with a commitment to providing low fees and best-in-class investment options.
- You have a Stable Value fund, available only in employer retirement plans, geared toward capital preservation and the potential for higher returns than money market funds.
- Pre-tax balances can be converted to post-tax (Roth) balances at any time.
- You can take partial distributions or set up revocable periodic payments of qualified balances at any time, providing you do not return to work with the employer with whom you contributed.
- You can delay taking taxable distributions from pretax balances until the year in which you reach 73 years of age.