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“Should I Refund My ASRS Account?”

Obviously, this is a complex question. The short answer: your financial situation is unique to you, and you should proceed however is best for your situation. But how do you know “what’s best for me?” Let’s look at some basic information that may help point you in the right direction.

First off, just because you leave your current employer doesn’t mean you need to refund your retirement account. You have options. Hundreds of employers are members of the Arizona State Retirement System, meaning it’s possible to get a job at a new employer and keep building your pension. And, contribution rates are set by the ASRS, not employers – no matter which employer you work for, if they’re part of the ASRS, the percentage withheld from your paycheck will remain consistent.

And if you do end up at a new employer who isn’t part of the ASRS? You still don’t need to refund your account if you don't want to - it’s completely up to you. Generally this decision is based upon a combination of your age and years of service with the ASRS. For example, if you’re age 50 with at least 5 years of service, you may decide to take a reduced early retirement. (To get a better picture of where you stand, you can log into your secure myASRS where you can estimate retirement options and refund amounts.)

Alternatively, you may decide to leave your money with the ASRS. What’s the benefit of leaving your money with the ASRS if you’re no longer able to contribute to it? For starters, you could still receive a small monthly lifetime pension when you hit retirement age. Also, it would mean you would still be eligible for health insurance coverage through the ASRS when you retire, and perhaps a premium benefit that would help lower monthly health insurance costs.

The most important thing is that, should you decide to request a refund of your account, you have a clear understanding of your options and any related implications. Some things to be aware of that may not be readily known by most;

- Taxes may need to be withheld from your refund, depending upon how you decide to receive the money

-You may need to report your refund on your on taxes as income and pay the required income taxes

- Should you rejoin or start contributing again to the ASRS after refunding, you’ll basically be restarting your “retirement clock” back to zero. That also means not being grandfathered into any rule changes that may have occurred since you initially joined.

For example, we sometimes see teachers requesting refunds at the end of each school year as a way to receive money for the summer. While this may make financial sense for some, others find themselves caught off guard when they believe they’ve reached retirement age yet don’t meet the eligibility criteria to retire.

So, if you’re asking yourself, “should I refund my account?” make sure to do your due diligence. Visit the Refund page of AzASRS.gov for additional information, analyze your account in the secure MyASRS area, and if questions still remain, seek us out - our trained staff is here to help guide you into the best decision for you.

Written by Nathaniel Brengle, Strategic Communications

This article appeared in "Financial Horizons " (Q3-2018) , a publication of the ASRS

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