Continuing to earn service time
Even if you’re not vested when you leave your job, you may want to keep your money in TCDRS, in case you take a job with another TCDRS employer or a job covered by a proportionate retirement system, such as one for the state, a city or a school district. This will enable you to continue saving for your retirement while working for your new employer. You may even be able to count current — or past — military time, you earn with your new employer, toward your TCDRS retirement eligibility. See our Service Time page for more information.
You don’t have to withdraw your account just because you’re leaving your job. 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.
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.
You may also be able to count service time you earn with another TCDRS employer or from military service toward your retirement eligibility. If you work for the state, a city or a school, the time you earn in those retirement systems can also count. Our Service Time page can tell you more about your options.
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.
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.