Job Change & Leaving IPERS-Covered Employment

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If you leave IPERS-covered employment but aren’t ready to retire, you have options. IPERS lets you make the decision that best suits you. 

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No matter when you leave IPERS-covered employment, you are always entitled to 100 percent of your own contributions and interest earnings. If you are vested, you can receive a portion of your employer’s investment based on your years of service. 

Option 1: Leaving Funds with IPERS

If you leave IPERS-covered employment before you retire, you may leave your money in IPERS until you are ready to retire. Or you may:

  • Roll your money over to another qualified retirement plan. 
  • Take a refund. 

If you leave your money with IPERS, it will continue to earn interest. Make sure to keep your contact information up-to-date so we can reach you, as necessary, with important information about your benefits. 

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Option 2: Take a Refund

When you take a refund, you end your membership in IPERS. This isn’t always in your best interest. IPERS recommends you contact us before you apply for a refund. We can help you understand all your options.

There are two ways to make a rollover. You can:

  • Have IPERS transfer the refund money directly to another qualified retirement plan.  
  • Send your refund to another retirement plan yourself.

If you make a direct rollover, you can avoid mandatory income tax withholdings, defer income tax liability, and, if applicable, avoid a 10% early-distribution tax. 

Lump-Sum Distributions 
Generally, all taxable amounts paid in a lump sum are subject to a mandatory 20% federal withholding tax if they are not directly rolled over to an eligible retirement plan. If you are an Iowa resident, you will be subject to withholding on the taxable portion, unless you qualify for an exemption or complete a direct rollover to an eligible retirement plan. The IPERS refund application contains further details about the Iowa exemption.  

Things to Consider

Every member’s situation is different. IPERS employees are not financial planners, but here are a few reasons it might make sense to leave your money with IPERS. 

  • You plan to return to IPERS-covered employment in the future. If you decide to return to IPERS-covered employment, you retain the service credits you earned before you left IPERS-covered employment. 
  • Your new employer’s retirement plan may have a waiting period before you are eligible to participate. Consequently, you may not be able to roll your money from IPERS into your new plan until the waiting period ends.
  • You do not have another account or cannot roll your IPERS contributions into another account.
  • You aren’t sure what to do. While you decide, you can leave your money in IPERS and let it earn interest. If you decide later that you want to take a refund, you may.
  • You don’t want to worry about managing your investment. The investment professionals at IPERS manage your assets, so you don’t have to worry about making investment decisions. 
  • You want IPERS death and disability benefits. If you leave your money with IPERS, your beneficiary(ies) may receive benefits upon your death. If you are vested and become eligible for Social Security disability or Railroad Retirement disability benefits, you are also eligible for IPERS disability benefits.

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