When you end employment with an IPERS-covered employer, you are allowed to take a refund of your accumulated contributions. If you are vested, you also will receive a portion of your employers’ accumulated contributions. This amount is the percentage calculated when your years of service are divided by the applicable denominator. The applicable denominator is 30 for Regular members and 22 for Special Service members. The percentage cannot exceed 100%. 

Refunds are not be sent automatically when you leave IPERS-covered employment. You must submit an Application for IPERS Refund. You can generate the refund application in My Account, or you can call IPERS and request to receive the application by mail.

If you take a refund

When you take a refund, you forfeit all membership rights, including any further benefit claims upon IPERS for the period covered by the refund. Generally, the only way to reinstate a period of service covered by a refund is to return to covered employment, become vested and complete a service purchase. Limited exceptions apply to people who are reinstated following an employment dispute and people who qualify for Social Security Disability or Railroad Retirement Disability Benefits. If you are in one of these groups, contact IPERS for more information.

If you end IPERS-covered employment, take a refund and return to covered employment within 30 days of the termination, IPERS will notify you that you can pay back your refund and restore the related service credit. If you do not pay the refund back within 30 days of the notification and you later wish to restore service credit for the refunded period, you must complete a service purchase at retirement. 

Although the law allows you to take a refund of your contributions if you leave IPERS-covered employment, it may not always be in your best interest. IPERS recommends contacting us before initiating this request. We can help you understand all your options.

Rollovers

Federal law allows you to roll over the pretax portion of a refund or lump-sum retirement benefit (known as an actuarial equivalent) to a traditional Individual Retirement Account (IRA) or an eligible retirement plan, which includes plans qualified under section 401(a) of the Internal Revenue Code. In some cases after-tax amounts are also eligible for rollover transfers.

Lump-sum distributions

Generally, all taxable amounts paid out in a lump sum are subject to a mandatory 20% federal withholding tax if not directly rolled over to an eligible retirement plan. If you are an Iowa resident, you will be subject to 3.8% withholding on the taxable portion, unless you qualify for an exemption (or make a rollover). The IPERS refund application contains further details about the Iowa exemption. You can generate the refund application in My Account, or you can call IPERS and request to receive the application by mail.