Vesting (Deferring Retirement)
Vesting (deferring retirement) postpones receipt of your monthly retirement benefit and/or distribution of your defined contribution (DC) account until a later date. Vesting your account may eliminate penalties of an early retirement. It may also protect a death benefit greater than the value of your contributions and interest for your beneficiary.
You may request a refund even if you are eligible to vest and receive a monthly benefit. This may be beneficial if you are currently working in another state that has regulations requiring the forfeiture of vested benefits prior to purchasing out-of-state service. By requesting a refund and not a retirement benefit, you will only receive your contributions and interest, forfeiting your lifetime monthly retirement payment and death benefit.
Different membership classes have different eligibility requirements for vesting. See Becoming Vested for more information on the eligibility requirements.
If you are a Class T-C, Class T-D, Class T-E,
Class T-F, Class T-G, and Class T-H member, you have a defined benefit (DB)
component to their retirement. Your contributions and interest for the DB
component will earn 4% interest compounded annually under certain membership
criteria. You do not need to contact
PSERS if you terminate Pennsylvania public school employment and choose to vest
your account, which will happen automatically once you reach the vesting
eligibility requirements. You will need
to contact PSERS when you are ready to begin receiving your retirement
benefit. Click here for information on the retirement process.
Important Note about Deferring Your Retirement
The Internal Revenue Service (IRS) mandates
that retirement benefits begin to be distributed by April 1 of the calendar
year following the year in which a terminated vested member reaches their
Required Beginning Age or when an active member terminates service after having
attained their Required Beginning Age.
The IRS defines the Required Beginning Age as 70 1/2 if a member was
born on or before June 30, 1949, or age 72 if a member was born on or after
July 1, 1949.
Your PSERS retirement calculation will ensure that the IRS-defined Required Minimum Distribution (RMD) threshold is met. If you do not begin receiving your RMD, the IRS may impose a 50% penalty tax on the amount not distributed as required. If you have questions regarding RMD, we encourage you to seek advice from your tax consultant or the IRS.