You don't have to withdraw your TCDRS account just because you're leaving your job. In fact, there are a lot of good reasons to leave your money in TCDRS:
- Your account continues to grow at 7% compound interest.
- Upon retirement eligibility, you will receive a lifetime monthly benefit.
- If you've completed four years of service, you remain eligible for a Survivor Benefit.
Watch this short video to learn more about your options.
WATCH: On the Road to Retirement: Job Changes
You have three options when leaving your TCDRS-covered employer.
Option 1: Keep Your Money in TCDRS
To keep your money in your TCDRS account, all you have to do is keep your account information up-to-date with us. We need your current address and your current beneficiary information.
Your money will earn interest for as long as you keep it in TCDRS.
However, there is a limit to how long you can keep your money in your TCDRS account. The IRS requires you to start taking money out of your retirement account when you reach age 72. If you're vested by that time, you can choose to get a monthly benefit, which will include employer matching. If you're not vested, you can withdraw your money.
Option 2: Roll Over Your Account
You can avoid paying taxes or penalties by rolling your money over into another tax-deferred retirement account. These accounts include traditional IRAs or your new employer's retirement plan (if it allows rollovers). However, you lose employer matching with any rollover and you forfeit your lifetime benefit.
To roll over your account, you need to fill out a Withdrawal Application (TCDRS-11). When you complete the application, choose the direct rollover option and provide the name of the plan or account into which you're rolling your money.
We will send you a check made out to the financial institution you designate two to four weeks after we receive your application.
The following January, we will send you an IRS Form 1099-R detailing how much money you rolled over. You'll need to file your 1099-R with your income tax return.
Option 3: Withdraw Your Account
If you choose to withdraw your money from TCDRS, you may want to check with a tax professional or the IRS first. Your withdrawal will be subject to a minimum 20% withholding for taxes, you may face a 10% withdrawal penalty at tax time and your withdrawal could significantly affect your income taxes. Read our Special Tax Notice (TCDRS-87) to learn more about tax implications with withdrawals.
In addition, withdrawing your TCDRS account means you lose employer matching and forfeit your lifetime benefit from that account.
Before you withdraw your money, it’s a good idea to talk to a financial professional about how a withdrawal will affect your personal tax situation.
To start the withdrawal process, you need to fill out a Withdrawal Application (TCDRS-11). When you complete the application, choose the withdrawal option.
We will send you a check made out to you for the total amount of your account balance, minus the tax withholding, two to four weeks after we receive your application.
The following January, we will send you an IRS Form 1099-R detailing how much money you withdrew and any taxes you withheld. You'll need to file your 1099-R with your income tax return.
Changing Your Mind
Once you cash or deposit your withdrawal check, your withdrawal is final. You cannot take back your decision.
However, if you have not cashed or deposited the check, you can cancel your withdrawal within 60 days from the date on the check. To cancel, send the check back to TCDRS and ask us to void the check.
Once we have received or voided your check, we can restore your TCDRS account.