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Leaving Employment

Consider Now

  • Life insurance can be continued within 31 days of ending employment.
  • If you're vested, you are guaranteed a retirement benefit.
  • If you're not vested, you need to withdraw within five years.
  • You can withdraw after 31 days.
  • If you withdraw, a direct rollover is the best way to avoid federal taxes and penalties.
  • The Retirement System does not have member contact information.
    Inactive members should complete and return an address form.

 

Life Insurance

Life insurance ends when you leave or move to a position not covered by KPERS.* However, you can continue your coverage on your own. You have until 31 days after you end employment to submit your form.

You have two options.

  • Individual whole life insurance
  • Portable group term life insurance

*Note: KP&F members do not have basic life insurance coverage. KPERS members moving to a Board of Regents position keep their life insurance coverage.

The Minnesota Life Conversion and Portability Election forms explain the benefits and costs.
Questions? Talk to your designated agent or contact Minnesota Life.

 

Guaranteeing Your Benefit (Vesting)

"Vesting" means you have earned enough service credit to guarantee a retirement benefit, even if you leave employment. Vesting is important when deciding whether to withdraw.

Retirement System

You are vested when you have...
KPERS Tier 1 5 years of service
KPERS Tier 2 5 years of service
KP&F Tier I 20 years of service
KP&F Tier II 15 years of service
Judges At election or appointment

Six months or more is rounded up for vesting. Example: 4.5 years rounds up to 5 years.

If you have participated in more than one Retirement System, you may be able to combine
years of service credit towards vesting.

 

If You Are Vested
You are guaranteed a monthly retirement benefit for the rest of your life if you leave your contributions in your account. Often, if you have a significant amount of service, your benefit is more valuable than your actual contributions. If you keep your contributions with the Retirement System, you can apply for retirement benefits when you become eligible. They will continue to earn interest and you can withdraw at any time if you change your mind.

If you do not withdraw, and you return to covered employment, you will immediately become an active member again and keep your service credit.

If You Are Not Vested
You are not guaranteed a retirement benefit. You need to withdraw your account within five years. After five years, your contributions stop earning interest and you forfeit your service credit.

If you do not withdraw or retire and you return to employment within five years, you will immediately become an active member again and keep your service credit.

 

Withdrawing Your Contributions

You can apply to withdraw anytime 31 days after you end employment. If you withdraw, you will give up all Retirement System rights, benefits and service credit. Employer contributions made on your behalf stay with the Retirement System.

You can receive your contributions and interest as a direct payment to you or roll over the amount into an eligible retirement plan. The decision to withdraw could affect your financial future, especially if you have many years of public service and accumulated contributions. Seek professional tax advice before withdrawing.

Options for Withdrawing Your Contributions

Option #1

Roll your contributions over into an eligible retirement plan. This option
allows you to defer paying taxes later.

  • 457(b) deferred compensation plan
  • 403(b) tax-sheltered annuity
  • 401(k) plan,
  • Traditional or Roth IRA
Option #2
 Have your contributions paid directly to you. You will owe federal taxes
and possibly a 10 percent federal penalty.

Reasons to Rollover Contributions Instead of Taking a Direct Payment

  • Preserve your past efforts toward saving for retirement.
  • Keep from paying taxes right away, giving your money more time to compound.
  • Avoid paying federal penalties for early distribution.

The Withdrawal Process

  1. Complete an Application for Withdrawal of Contributions. You can download one from our forms page,
    get one from your designated agent or call our office at 1-888-275-5737 to receive one by mail.
  2. Your designated agent completes the employer part of the form if you recently left employment.
  3. Once we receive your completed application, please allow four weeks for payment.
  4. KPERS will send you a 1099-R tax form the following January for your federal income tax return.

 

Keep Your Beneficiary Current

It's important to keep your beneficiary current. Beneficiaries receive your account balance, or your spouse can receive a monthly benefit if you meet the criteria.

Naming a Beneficiary
Designation of Beneficiary form

 

Keep Your Address Up-to-Date

It's important to keep your address information current with us. While you are working, we send important information through your employer. When you leave employment, we send information directly to you. Send a completed address form to the Retirement System when you leave employment and anytime your address changes.

Change of Address form

 

When You Can't Withdraw

In some cases, you are still considered employed and cannot withdraw. Talk to your designated agent
about your options.

  • Leave of absence
  • Military service
  • Move to a position not covered by KPERS with the same employer

 

For Correctional KPERS Members

You will now become a regular inactive KPERS member. Regular KPERS age and service requirements will apply when you retire. Your benefits will have a greater reduction for early retirement.

You must work in a Group A or B position at least three years immediately before retirement and retire the first day of the month following your last day on the payroll to be eligible for Correctional age and service requirement.