Withdrawing or Rolling Over All of Your Contributions and Interest
If you are an inactive member, your contributions and the interest that has accrued on your contributions, may be withdrawn at any time unless you have already returned to active membership or established reciprocity between SamCERA and another retirement system.
Factors to Think About Before Deciding to Withdraw Your Funds
Before making your decision to withdraw, compare the amount that you would receive as a refund to the amount of a lifetime monthly benefit for which you may be (or may become) eligible. Also, keep the following in mind:
- A withdrawal will terminate your SamCERA membership. If you make a cash withdrawal, you must withdraw all of your funds, your service credit will be gone, and you will no longer be eligible to apply for any future retirement benefits, including disability benefits, unless you return to active membership. Upon return to active service, you will have the option of redepositing your contributions and interest, and any interest that would have been credited to your account since the date of your withdrawal.
- A withdrawal may not be the best option for you. If you are vested, are eligible for a SamCERA retirement benefit or disability benefit, or can establish reciprocity with your next employer, you may want to re-consider your options.
How Do I Withdraw My Funds?
Withdrawals from SamCERA can be received in two ways. All or a portion of your funds that are being withdrawn can be directly rolled over to IRA or another employer’s qualified plan or can be paid in a check made directly out to you, or a combination of both. The choice you make will affect the taxes that you owe and when you must pay them.
SamCERA will withhold for California state and federal taxes on any check written directly to you. In addition, tax penalties for early withdrawal may apply.
Depending on your tax status, you may owe more or less in California state and federal taxes than what was withheld by SamCERA. You may file for a refund or pay the additional amount, as applicable, owed to the IRS and California when you file your incomes tax returns.
SamCERA encourages you to consult a tax advisor before deciding how to receive your withdrawal of funds. SamCERA does not offer tax advice.
If you elect to withdraw, carefully read and complete the “Disposition of Retirement Contribution Form” available by clicking here and elect either:
- Cash Withdrawal: To have SamCERA make a payment directly to you (minus mandatory federal withholding tax and any applicable California state tax).
- Rollover: You may defer taxes on the funds by rolling all or part of them over directly to an IRA or another employer’s qualified retirement qualified plan. (If you are over age 70.5, you are not eligible to roll the funds over.)
- Cash Withdrawal, Then Rollover: If you receive a lump sum payment and then decide you would rather roll over your funds, you may roll over your withdrawal within 60 days from the date of the payment by depositing your funds in an IRA or in another employer’s qualified plan. However, you will only be rolling over the amount that was not withheld for federal and state taxes.
Additional Note on Cash Withdrawal: If you withdraw and later return to active membership with SamCERA, you may redeposit your contributions and interest to restore your service credit.
Required Minimum Distribution
Internal Revenue Code (IRC) § 401(a)(9) requires individuals who reach age 70.5 having left active service with their contributions on deposit to begin taking a distribution from their SamCERA retirement plan. When you reach age 70.5 and your contributions are still on deposit, you can either elect to retire or to withdraw your accumulated contributions.