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Terminating PERA-Covered Employment
Upon ending PERA-covered employment, you may:
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Withdraw your member contribution account. |
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Leave it with PERA for a future refund or monthly benefit. |
Withdrawing Your PERA Account
When you withdraw your PERA account, you forfeit any future right to a
PERA benefit. Distributions prior to retirement eligibility or age 65
include:
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Contributions you made to the account. |
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A matching amount equal to
50 percent of your contributions (100 percent if you are eligible
for retirement) and
interest*. |
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The amount paid for any purchases
and interest* earned. |
*The
interest rate is set by the PERA Board and is subject to change
annually. Currently, the interest rate is 5 percent
compounded annually.
To withdraw your account, you must
review the Terminating PERA-Covered Employment booklet and
complete the Rollover Request or Refund
Request form attached to the back of the booklet. You can print or order
the booklet now, or call PERA at 303-832-9550 or 1-800-759-7372 to
request a copy.
Distributions
Methods
Distributions
may be made as:
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A payment to you. |
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A direct rollover to an Individual Retirement Account (IRA)
or an eligible employer plan. |
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A combination of both.
(Partial, early, or hardship refunds are not permitted by law.) |
Taxes on Refunds
All contributions you made after July 1, 1984, and
interest earned on the account are tax-deferred and subject to federal
and state income tax when you receive a distribution of the account. Also,
if you are under age 55 when employment is terminated and the account is withdrawn before age
59½, the tax-deferred portion of the account is subject to a 10 percent IRS early
withdrawal tax penalty in addition to the regular income tax.
If you request that the distribution be paid to
you, PERA is required to withhold 20 percent for federal income tax if the tax-deferred
portion of the account is $200 or more. You may request additional withholding for
federal income tax; however, PERA does not withhold for state income tax.
You may
continue the tax-deferred status of the money and avoid both the 20 percent withholding
and 10 percent IRS early withdrawal tax penalty if you request a direct rollover of
the account into an IRA or an eligible employer plan.
Federal Tax Withholding if You Have a Foreign
Address
Under the United States IRS Code Section 1441,
all pension payments or refunds are subject to U.S. tax at a
30 percent rate. This tax is imposed on the gross amount paid and is collected by withholding on that amount.
If your address is outside of the United
States, you must complete one of the following forms for federal
income tax withholding:
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If you are a U.S. citizen (even
though you reside outside of the United States) you must
provide to PERA an IRS Form W-9, Request for Taxpayer
Identification Number and Certification. The only
purpose of this form is to gain your certification that
you are a U.S. citizen; PERA is not requesting you to
obtain a new Taxpayer Identification Number.
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If you are a foreign person (a
nonresident alien), you must provide to PERA an IRS Form
W-8BEN, Certificate of Foreign Status of Beneficial
Owner for United States Tax Withholding to:
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Establish that you are a foreign
person;
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Claim that you are the beneficial
owner of the income for which Form W-8BEN is being
provided; and
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Claim a reduced rate of, or
exemption from, withholding as a resident of a
foreign country with which the United States has an
income tax treaty (if applicable).
Additional information is available
from the United States Internal Revenue Service
(1-800-829-1040 or www.irs.gov) in Publication 519
titled, U.S. Tax Guide for Aliens.
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Colorado PERA is required by law to withhold
30 percent from any benefit payments you are to receive if Form
W-9 or Form W-8BEN is not received. If you should have any
questions about your tax status, please contact your tax
adviser.
Click
on the IRS links below for assistance with completing these
forms.
Instructions
for Form W-8BEN
Instructions
for Form W-9
Leaving An Account With PERA
You may want to leave your member account with
PERA, especially if you anticipate returning to PERA-covered employment or if
you are vested (have at least five years of service credit). The account will remain
tax-deferred, continues to accrue interest, and may be withdrawn at anytime.
If you leave an account with PERA until reaching the age and
service credit requirements for retirement eligibility or age 65, you may request a lifetime monthly retirement benefit
or a lump-sum payment of the account plus an amount equal to 100 percent of
your member contributions and interest.
If you choose to receive a future retirement benefit, you should plan to apply for it about 90 days before the date
you are eligible to begin
receiving a benefit. To determine eligibility date or to request an estimate of future
benefits, e-mail PERA's Customer Service
Center.
Always keep PERA informed of any address change.
Making Direct Payments in Lieu of
Contributions
A vested member who
terminated PERA-covered employment prior to July 1, 2003, may want to make
direct payments to PERA in lieu of member contributions. By doing this, when the member's
age and years of service credit plus years of direct payments equal the service or reduced
service retirement requirements, he or she is eligible to apply for a benefit. These
payments will not increase service credit or HAS, but may allow the member to begin
receiving a retirement benefit sooner. For more information, contact PERA's Customer
Service Center at 303-832-9550 or 1-800-759-7372.
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