Withdrawing your MTRS account
Step 1: Understand the basics (1 of 2)

It is very important that you know what it means to take a refund of your account. Step 1 is divided into two parts, all of which are presented in Q&A format:

1. General issues (what it means to take a refund or leave your funds on account) and
2. Tax issues

After you review the two parts of Step 1, you will proceed to Step 2, where you will access the appropriate downloadable Refund Application.

General issues

Q: What does it mean to take a refund?

When you take a refund:

• Your membership in the MTRS ends and you give up the service represented by the funds in your account as well as any benefit right based on that service credit.
• You receive a lump-sum payment of your retirement contributions, eligible interest and any payments made to purchase past service or RetirementPlus accelerated contributions—subject to federal tax withholding and penalties, if applicable.
• If you return to Massachusetts public service after receiving a refund, you will be considered a new employee and will be subject to the contribution rate that is in effect at the time of your re-employment—and not your “old,” possibly lower, contribution rate. You will not be entitled to the creditable service you previously accumulated unless you choose to repay your refund, plus interest, according to the rules established by the retirement board of the contributory retirement system of which you become a member. Repayment of your prior refund will not allow you to return to your “old” contribution rate

Q: Can I withdraw only a portion of the total in my annuity savings account?

No—we cannot give you a partial refund. We must close out your annuity savings account and pay out the entire balance.

Q: Are there any “hardship” provisions that would allow me to withdraw my money before I terminate my employment?

No—you may only withdraw your account when your Massachusetts public employment is terminated.

Q: What happens if I just leave my funds on account with the MTRS?

If you leave service and wish to leave your funds on account, you do not need to notify us that this is what you are doing. We will simply keep your funds on account and continue to send you annual statements that show your balance and any activity, such as the addition of interest. Please note, however, that although your statement will reflect interest each year, you may not be eligible to receive all of the accrued interest if and when you later apply for a refund.

If, at the time you leave service, you are under age 55 and you have 10 years of creditable service, you may leave your funds on account until you attain age 55, at which time you may then apply for a retirement allowance. For more information on retirement benefits, please go to Retiring from the MTRS.

If, however, you do not take a refund but later return to a position which requires membership in a Massachusetts contributory retirement system, all interest reported on your statements will be credited. Additionally, since you left your money on account, you will be entitled to your “old” contribution rate (the contribution rate in effect at the time you left service) in your new position.

Q: If I leave my funds on account with the MTRS, do I have to report anything to the IRS?

No—the money in your account is not taxable until it is paid to you in a refund or retirement allowance, or paid to someone else as a result of your death.

Q: Are there any circumstances under which my account would NOT earn interest or I would not be entitled to receive all of the accumulated interest?

Yes—the amount of interest you are entitled to is based on several factors, provided you are not subject to any forfeiture provisions due to criminal conviction.

If you became a member:

• BEFORE January 1, 1984, you will receive 100 percent of your interest.
• ON OR AFTER January 1, 1984 and you:
  • RESIGN and have:
    • LESS THAN FIVE YEARS of creditable service, you will receive no interest on your accumulated total deductions.
    • FIVE, BUT LESS THAN TEN YEARS of creditable service, you will receive 50 percent of your accrued interest.
    • TEN OR MORE YEARS of creditable service, you will receive 100 percent of your accrued interest.
  • ARE INVOLUNTARILY TERMINATED, you will receive 100 percent of your interest.

In addition to the above situations, if you apply for a refund more than two years after the date of your resignation or termination, you are eligible to receive the interest accumulated only for the two years immediately following that date. This applies regardless of the amount of creditable service you have or when you became a member of the MTRS.