If you terminate your employment with your ACERA participating employer, you will have an important choice to make regarding your ACERA retirement benefits.
You have 4 options regarding your ACERA membership and benefits:
If you’re already eligible to retire, your first option if you leave your ACERA-covered job is to retire. Review our Preparing to Retire section for instructions.
2. Defer Your Retirement
If your active employment terminates, you will no longer be considered an “active” ACERA member. If you don’t immediately retire, you become a “deferred” member, which means that you continue to be a member of the retirement system, but you’re going to defer your retirement to a later date.
When you defer membership, your payment of employee contributions ends and you elect to leave your accumulated employee contributions and interest on deposit with ACERA. In addition, you no longer earn service credit under the plan. Your contributions on deposit with ACERA continue to earn interest, and you can request a refund of your contributions at any time, unless you have established reciprocity with another public agency. Also, if you defer membership and subsequently return to ACERA-covered employment, you will return at your original entry age and tier.
If you are terminating employment, you may elect to defer membership on the ACERA Termination Election of membership Form.
Should I retire or defer my retirement?
If you’re leaving work, and you’re considering whether you should retire or defer your retirement to a later date, here is a list of reasons you may want to consider to deferring your retirement.
Reasons You May Want to Defer Your Retirement
You’re done working here, but you’re not yet eligible to retire. You can be in deferred status while you await retirement eligibility.
You’re going to work for another California public agency. In this case, you can establish reciprocity and take advantage of linking the retirement systems together. More on this below.
You might want to return to work for your employer or another ACERA employer to earn more service credit. If you retire, you can’t return to work and earn more credit toward retirement. But if you defer your retirement and come back later, you’ll start earning service credit again from where you left off.
Reasons You Probably Should Not Defer Your Retirement
You’re already eligible to retire, but you’re waiting for your age factor percentage to increase. If you’re already eligible to retire, and none of the reasons in the previous list apply to you, it’s probably to your advantage to go ahead and retire. Yes, if you defer your retirement and wait for your age factor percentage to increase while you get older (the percentage of your highest working salary you’ll get for each year of service), your retirement allowance will increase due to the age factor percentage increase. However, while you’re waiting, you’re missing out on monthly retirement payments you could be receiving. If you run estimates of both retirement scenarios using the benefit estimator in your online ACERA account, we think you’ll find that the increased retirement allowance later won’t make up for the retirement payments you’re missing now.
Retiring as a Deferred Member
If you become eligible to retire while a deferred member, you may do so.
The retirement allowance benefits available to you through deferred membership vary, based on tier and vesting status, as follows:
Vested members who elect deferred membership become eligible to receive a retirement benefit allowance when they would have become eligible to retire had they remained in county service. Eligibility for retirement varies by tier as follows:
Tiers 1, 2, and 3: Deferred, vested general members can apply for retirement benefits upon reaching age 50 with 10 years of ACERA membership, or upon attaining age 70 without regard to years of service. Deferred, vested safety members may apply retirement benefits after 20 years in ACERA membership or at age 50 with 10 years in membership.
Tier 4: Deferred, vested general members can apply for retirement benefits upon reaching age 52 with 5 years of service credit. Deferred, vested safety members can apply for retirement benefits upon reaching age 50 and 5 years of service credit.
For both general and safety members, your benefit is effective on your retirement date. Your service credit will be calculated as of your deferred membership date and you will not earn service credit during deferred membership; however, your age/service percentage factor will increase up to a certain age determined by your tier and membership status. Once you reach the maximum age factor percentage for your tier, you will not benefit by remaining a deferred member unless you continue to work for a reciprocal agency and are receiving salary increases.
You must apply to retire by filing a service retirement application. Retirement applications must be received no earlier than 90 days before the effective date of retirement and no later than the effective date of retirement.
Non-vested members who elect to defer membership are usually only eligible to receive a lump sum payment of employee contributions and interest on deposit with ACERA. However, there are certain circumstances that could allow you to become eligible for a retirement benefit allowance, as follows:
Attaining age 70. Non-vested, deferred general and safety members age 70 or over are eligible for a retirement benefit.
Your re-entry into membership with ACERA. Non-vested, deferred members who become re-employed with a participating employer, re-enter the ACERA system, and become vested by attaining five (5) years of credited service, may apply for a retirement benefit upon meeting eligibility requirements.
Your employment with a reciprocal agency. Non-vested, deferred members who establish a reciprocal agreement and become vested earning five (5) years of credited service between both retirement systems may apply for a retirement benefit upon meeting eligibility requirements
Your purchase of eligible service credit. Non-vested, deferred members whose eligible service credit purchase results in more than five years of service (combined with current membership) become vested and may apply for a retirement benefit upon meeting eligibility requirements.
Enrolling in Healthcare Coverage From Deferred Retirement
Retiring from deferred status is considered a Status Change Event (a.k.a. Qualifying Event), which means you have a period of 30 days after your retirement date to enroll in healthcare coverage in ACERA’s healthcare plans if you choose. Because of the nature of deferred retirement, your coverage in most cases will become effective on the first of the month two months after your retirement date. So if your retirement date is in June, for example, your healthcare coverage would become effective August 1.
The monthly retirement allowance you receive from ACERA must be large enough to cover the premium costs for the group plan benefits you wish to elect or you cannot newly enroll in our group plans. (This includes your dependents; if your allowance is only sufficient for you to enroll yourself and not your dependents, you cannot enroll your dependents.) Alternatively, you may be able to enroll in an individual plan through Via Benefits. Refer to our page Who Can Enroll in Healthcare Plans? for more information on eligibility to enroll in ACERA’s healthcare plans.
3. Establish Reciprocity With Another Retirement System
Reciprocity is the joining or linking of similarly administered California public retirement systems. Under very specific rules, establishing reciprocity allows employees who move between certain California retirement systems to preserve and enhance their total retirement benefits.
All 1937 Act County Employee Retirement Systems and all Public Employees Retirement System (PERS) agencies have reciprocal agreements. As a result, ACERA has reciprocal agreements with most California counties, the State of California, and many of California’s cities and public agencies.
Benefits of Establishing Reciprocity
There are several benefits to establishing reciprocity if joining ACERA from a reciprocal agency (or leaving ACERA for another reciprocal public employer):
If you are in tier 1, 2, or 3, your employee contribution rate with ACERA is determined using your age of entry in the previous system (if applicable). Since contribution rates are based on a member’s age, this results in a lower employee contribution rate requirement, because you were younger when you joined the previous system (see Tier page for specifics);
Service credit earned in a reciprocal agency is combined with your ACERA service when establishing your vesting rights and eligibility to retire. This means you do not need to “start over” when moving to a reciprocal public employer; and
The highest compensation attained under any reciprocal agency is used by all reciprocal systems to calculate your final average salary and determine your retirement benefit.
Qualifications for Reciprocity
To qualify for reciprocity, you must do all of the following:
Elect to leave your contributions on deposit and defer retirement with your previous employer’s retirement system.
Begin membership in the next system within six months after termination of covered employment in the first system. (Remember that your ACERA membership doesn’t begin until the 1st day of your 2nd biweekly pay period, so it typically does not start on your date of hire.)
Avoid any overlapping service as this may disqualify your eligibility. (See More About Overlapping Service below.)
Retire from each reciprocal retirement system on the same day.
When you complete your ACERA member Enrollment Questionnaire as a new member, you will be asked about your previous experience with public agencies. If you answer that you have left funds on deposit with your previous employer(s), ACERA will send you an election letter explaining the benefits and requirements of establishing a reciprocal agreement with your previous employer’s retirement plan. If you meet the eligibility requirements, you may elect to establish reciprocity by indicating so on the letter and returning it to ACERA. ACERA will mail the letter to you within 30 days of receipt of your ACERA member Enrollment Questionnaire.
Once you establish reciprocity, your election is irrevocable. Thereafter, you cannot withdraw contributions from the previous retirement system unless you terminate ACERA membership with the second system and withdraw your ACERA contributions. In addition, when you get ready to retire, you must file separate retirement applications with each reciprocal system and retire from each system on the same day. You will receive a separate retirement check from each system based on the service earned in that system.
More About Overlapping Service
If there is overlapping service credit between ACERA and a reciprocal system, reciprocity cannot be established. (For example, if a member is on vacation leave at the end of a previous job during the same time that the member begins a new job in an ACERA-covered position and enters ACERA, this would be overlapping service because the member is on payroll for two different employers at the same time.)
However, for members leaving active membership in another retirement system and entering ACERA, ACERA may adjust the date a person becomes an ACERA member to as much as 12 weeks after entrance into service in an ACERA-covered position (with appropriate adjustments to service credit and contributions) in order to prevent overlapping service credit and allow the member to establish reciprocity.
Likewise, for members leaving active membership in ACERA and entering another retirement system, ACERA may adjust the date a member terminates service to as much as 12 weeks prior to the member’s termination from an ACERA-covered position (with appropriate adjustments to service credit and contributions) in order to prevent overlapping service credit and allow the member to establish reciprocity.
We recommend you contact ACERA for further information before getting in an overlapping service situation since exceptions may apply before terminating employment or accepting other employment with a different agency.
Reciprocity for Certain Safety Members (Law Enforcement or Fire Fighting Only)
If you were a safety member (law enforcement and fire fighting only) in a reciprocal agency and you withdrew funds upon termination, you may redeposit funds for either partial or full reciprocal benefits.
Full reciprocity applies if the time lapse between system memberships is six months or less. If you redeposit the prior membership, that system will use the highest compensation earned in either system to compute your benefit calculation. The current system may adjust your contribution level to be based on the age of entry in the previous system if required.
Partial reciprocity applies if the time lapse between system memberships is more than six months. The system in which you redeposited membership will pay an allowance based on final compensation earned in that system. The current system will not make an adjustment to your age of entry.
Reciprocity and Disability Retirement
If you apply for and are granted a disability retirement and you have a reciprocal agreement with one or more retirement systems, the total amount from all systems cannot equal more than what one system alone would have paid if all service had been earned in that system. Therefore, the disability benefit is generally pro-rated based on service. However, benefit amounts may be adjusted further depending on how much each system is paying.
Agencies That Have Reciprocal Agreements With ACERA
California Public Employees’ Retirement System (CalPERS)
California State Teachers’ Retirement System (STERS)**
Judge’s Retirement System I & II**
**ACERA has limited reciprocity
Other Systems/Independent public agencies in California:
Concord City Employees’ Pension Plan
Fresno City Employees’ Retirement System
Los Angeles City Employees’ Retirement System (LACERS)
Sacramento City Employees’ Retirement System
San Diego City Employees’ Retirement System
San Francisco City and County Employees’ Retirement System
City of San Jose Retirement System
Contra Costa Water District
East Bay Municipal Utility District
San Luis Obispo County Employees’ Pension Trust
No Reciprocity With University of California Retirement System (UCRS)
ACERA does not have a reciprocity agreement with the University of California Retirement System (UCRS), so previous employment with UCRS does not qualify you for reciprocity (or service purchase).
If you have questions about other agencies’ reciprocity with ACERA, please contact us.
4. Withdraw Your Retirement Contributions and End ACERA Membership
When you terminate employment, one of your 4 options regarding retirement is to withdraw the employee retirement contributions you’ve paid into ACERA with each paycheck during your career as an ACERA member. To withdraw your contributions, use an ACERA Termination Election of Membership Form. Follow these instructions when completing the form:
Termination/Election of Membership Form Instructions
If you wish to defer ACERA membership…
Elect to defer your membership in Section A.
Return your form to ACERA within 90 days of your termination date.
If you wish to establish reciprocity with another retirement system…
Elect to defer your membership in Section A.
Elect to establish reciprocity in Section B, and note the name of your new employer’s retirement system.
Return your form to ACERA within 30 days of your termination date.
(Note: Overlapping service in two agencies may disqualify you for reciprocity.)
If you wish to end ACERA membership and withdraw your contributions…
Elect to withdraw your contributions in Section C.
Be sure to sign the Waiver of Rights on the form, indicating you agree to waive all rights to future retirement benefits and that you understand the tax-withholding implications of your refund.
Complete Part III of the form—in most cases, your spouse must acknowledge your election.
Decide how you wish your contribution refund to be paid (payment options are noted below).
Return your form to ACERA.
If you elect to end your ACERA membership and withdraw your contributions, the following payment options are available:
Your refund may be paid directly to you in a lump sum. When you choose a lump sum, ACERA is required to withhold federal income tax at the rate of 20% from the taxable portion of all lump sum distribution. ACERA is also required to withhold California state income tax at the rate of 2% from the taxable portion of your distribution unless you elect otherwise. Additionally, if you’re under 59 1/2, both the Federal and State governments may assess penalties for “early withdrawal from a retirement account.” The taxes and penalties may add up to as much as 33%. ACERA cannot pay your refund sooner than 30 days from the date of termination. Expect 30 to 60 days for funds to be disbursed.
Your refund may be paid through a direct rollover to another eligible retirement account. When you choose a direct rollover, your account balance may be disbursed as follows:
Pre-tax contributions and interest may be rolled over into an eligible retirement account, such as an IRA or another employer’s eligible retirement plan.
After-tax contributions may be rolled over into a Roth IRA. You may choose the amounts to be rolled over into each account;
If you choose a direct rollover, payment will be made directly to your IRA, to another employer plan that accepts rollovers, or to another eligible plan.
You may choose to have certain amounts of pre-tax or after-tax funds paid directly to you. Keep in mind that pre-tax disbursements will be subject to tax withholding.