Leaving City Employment
and Refunds

Refunds (Withdrawing Your Deposits)

If your employment terminates with all participating TMRS cities, you may choose to - but do not have to - apply for a refund of your total member deposits plus interest.

Leaving City Employment Before Vesting

If you leave your city before you are vested (after five or 10 years of service, depending on your city's plan), and do not go to work for another TMRS city, you may leave your member deposits with the System for up to 60 months and keep your TMRS membership. After the 60-month period, your membership terminates. If you go to work for a public employer who participates in the Proportionate Retirement Program, the 60-month limit does not apply. If you leave your member deposits with TMRS, your deposits will stop earning interest after the 60-month period. Therefore, at that time, you should apply for a refund of your member deposits and interest. You can roll over your refund into an IRA or other eligible retirement plan for income tax purposes. See this page for more on rollovers.

If you stop working for one TMRS city, but become employed by another TMRS city (before withdrawing your member deposits), your membership in TMRS has not terminated. You cannot withdraw your member deposits and interest.

If you leave employment with a TMRS city and go to work in a position covered by one of the retirement systems that participates in the Proportionate Retirement Program, you may withdraw your member deposits, but you should be aware of the value of your TMRS service credit under the Proportionate Retirement Program.

Leaving City Employment After Vesting

If you are vested, you may leave your member deposits with TMRS until you are eligible and choose to retire. Your deposits continue to earn interest.

Refunds are processed weekly. A refund cannot be processed until your final member deposit to TMRS is received and credited to your account. The city's report transmitting your final deposit must be received by TMRS before your refund can be paid. Once your application and the city's report are received, your refund will be processed for payment.

[back to the top]
[return to Benefits Summary Page]

IMPORTANT: You cannot take a partial refund; if you withdraw your member deposits and interest, you must withdraw the entire amount.

Q:	What is Vesting?
A:	In most TMRS cities, you are vested when you earn five years of service credit. Some cities require 10 years to vest. Once you are vested and you reach the necessary age requirements, you may retire and receive a monthly retirement benefit for the rest of your life. If you leave your city job after you are vested and leave your member deposits with TMRS, you keep your rights to a retirement benefit. Your TMRS deposits will continue to earn interest, and when you meet the necessary age and service credit requirements, you can retire from TMRS. Remember, you can only receive the city's matching funds if you retire and receive a monthly retirement benefit.
Q:	If I choose to take a refund, do I receive the city's matching funds?
A:	When you receive a refund, you receive your member deposits and interest but not the city's matching funds. The only way you can receive the city's matching funds is to retire and receive a monthly benefit payment. If you cease to be employed by one TMRS city, you can choose to receive your member deposits and interest - only if you do not become employed in another TMRS city within 30 days. If you do take a job with another TMRS city before 30 days after you leave your first city, you cannot receive a refund. You must continue your TMRS membership and leave your member deposits and interest in your member account to earn retirement credit.
Q:	Can I refund part of my member account and leave the rest in TMRS?
A:	If you choose to receive a refund of your member deposits and interest, you must refund all of your account. You must also stop employment and your membership with all TMRS cities to receive a refund. Remember that a refund does not include the city's matching funds.
Q:	If I stop working for a TMRS city and I am not vested, why should I consider leaving my member deposits with TMRS?
A:	If you might return to work for a TMRS city or in a job covered by one of the retirement systems that participates in the Proportionate Retirement Program within 60 months, you should consider leaving your member deposits in TMRS. Your member deposits continue earning interest as paid by TMRS during the 60-month period, and the service credit you have earned still counts toward retirement. Also, if you take a refund, you lose the city's matching funds.
Q:	What is the city's report and when does the city have to submit it to allow me to get my refund?
A:	Each city sends TMRS a monthly payroll report, which must be received by TMRS by the 15th of the month following the month being reported. The monthly report shows each member's individual deposit for the month. After the city has submitted the report to TMRS, the report information must be added to the member's account before any refunds can be issued. Example: The city certifies on your refund application that your last deposit will be June 6. The city has until July 15 to submit the June payroll report to our office. Once the report has been filed with TMRS, the information must then be posted to the member's account before any refunds can be issued.
Q:	How long does it take to get my refund?
A:	Refunds are paid by TMRS six to eight weeks after you were last paid by the city, provided TMRS receives everything from your city on time. TMRS processes refunds every Wednesday. A refund cannot be processed until your final member deposit to TMRS is received and credited to your account. The city's report transmitting your final deposit must be received by TMRS before your refund can be paid. Once your application and the city's report are received, your refund can be processed for payment. If you have a user ID and password for MyTMRS, you can track the status of your refund.
Q:	Why does TMRS take out 20% of my refund for taxes?
A:	TMRS is a tax-deferred retirement plan. This means you have not paid income taxes on your member deposits. The IRS requires TMRS to withhold taxes on refunds, unless you roll the funds over to another tax-deferred plan or IRA (Individual Retirement Account). If you withdraw your member deposits and interest before you turn age 59½, you may owe an additional 10% tax penalty to the IRS. However, if you leave city employment in the year you turn 55, or later, and withdraw your member deposits and interest, you will not owe the additional 10% tax penalty. See "Special Tax Notice Regarding Plan Payments" attached to your TMRS refund application form.

NOTE: Member deposits made before January 1, 1984 were taxed at the time of deposit. Any amount refunded to you based on those deposits will not be taxed at the time of payment.

For more information on leaving your TMRS city, click here.

[back to the top]
[return to Benefits Summary Page]