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. Additionally, if you return to Massachusetts public service on or after April 2, 2012, you will be subject to the pension reform changes included within Chapter 176 of the Acts of 2011 (which was signed into law on November 18, 2011). These changes include, but are not limited to: 
      • A new age factor table that will require you to work longer for the same or a similar benefit that you would receive under today’s table.
      • An increase in the salary average period used in the retirement benefit calculation formula from 3 years to 5 years.
      • An increase in the minimum retirement age from age 55 to 60.

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 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 (see below). To comply with IRS rules, however, the MTRS must send you a refund of your account no later than April 1 of the year after the year in which you turn age 70-1/2. You will be subject to taxes on the money you receive.
    • If you have at least 10 years of creditable service at the time you leave service, you may be eligible to leave your funds on account until you attain a certain age. If, at the time you leave service, you have at least 10 years of creditable service, and your effective membership date is:
      • before April 2, 2012, and you are under age 55, you may leave your funds on account until you attain age 55, at which time you may then apply for a retirement allowance.
      • on or after April 2, 2012, and you are under age 60, you may leave your funds on account until you attain age 60, at which time you may then apply for a retirement allowance.
    • If you 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.
    • Under certain circumstances, your account will not earn interest and you will not be entitled to receive all of the accumulated interest. Provided you are not subject to any forfeiture provisions due to criminal conviction, the amount of interest you are entitled to receive is based on three factors: whether your leaving service was voluntary or involuntary, how much creditable service you have, and your effective membership date.

If your effective membership date is on or after January 1, 1984, and you leave (or left) service by:

    • RESIGNING VOLUNTARILY, and you have:
      • less than ten years of creditable service, you will receive interest at the rate of 3% on your accumulated total deductions.
      • ten or more years of creditable service, you will receive interest at the regular rate at which it has been credited to your account (in other words, the actual amount of interest you have accrued).
    • BEING INVOLUNTARILY TERMINATED, you will receive interest at the regular rate at which it has been credited to your account (in other words, the actual amount of interest you have accrued).

If your effective membership date is before January 1, 1984, you will receive interest at the regular rate at which it has been credited to your account (in other words, the actual amount of interest you have accrued).

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

Go to Step 2: Understand the tax issues