Leaving NMERB work before you retire: refund, or wait?

• You are vested after five years of earned (contributory) service. Service you buy (allowed service credit) does not count toward vesting.Member Handbook 2025, p. 12, When am I vested?; NMERB web page Service Credit
• If you leave before retiring, you can take a refund of your own contributions plus interest, but it must be the whole amount. Employer contributions are not refunded. Interest follows the five-year Treasury note rate as of March 31 each year.Member Handbook 2025, p. 10, Refunds and Rollovers
• A refund paid to you rather than rolled over has 20% withheld for tax and may owe a 10% early-withdrawal penalty. If vested, you can instead leave your money in and draw a pension once you meet your tier's rules.Member Handbook 2025, p. 9, Terminating Employment; p. 10; p. 17, Deferred Retirement

Taking a refund

After terminating employment (not by retirement) you may request a refund of your member contributions plus interest; you must take the whole amount. Employer contributions are not refundable. A refund forfeits your service credit and tier status. Within 90 days of termination your employer must certify you are no longer working. Interest is based on the five-year Treasury Note rate as of March 31 each year; none on contributions paid before July 1, 1971. A direct rollover to an IRA or plan avoids tax; otherwise 20% is withheld and a 10% early-withdrawal penalty may apply. No refund after the effective date of retirement. Member Handbook 2025, p. 10, Refunds and Rollovers; pp. 10-11, Withdrawn Service Credit

When you withdraw your contributions you forfeit your service credit and your tier status. If you refunded and have no service credit on or after July 1, 2010, reinstating withdrawn service puts you under the latest eligibility rules at the time of purchase. If you leave contributions on account and return later, you keep your service credit and tier. Member Handbook 2025, p. 10, Refunds and Rollovers; pp. 10-11, Withdrawn Service Credit; NMERB web page Inactive Members (See which tier am I in?)

Withdrawn service may be reinstated (all or part) by repaying the amount withdrawn plus interest at the rate set by NMERB, by lump sum and/or rollover; no payment plans; not after retirement. Member Handbook 2025, pp. 10-11, Withdrawn Service Credit; NMSA 1978, §22-11-33(C)

Leaving your account in

With five or more years (or five combined with NMPERA reciprocity) you may leave your account inactive and apply later. If eligible to retire, there is no advantage in deferring beyond age 60, as the benefit does not increase beyond that age in inactive status. Benefits you could have received before your application is received are forfeited. Member Handbook 2025, p. 17, Deferred Retirement The pension is figured with the usual formula on the service you had when you left, and if you die before it starts, see survivor benefits.

Benefits must begin by the IRS required beginning date: April 1 after the year the member reaches 72 (70 1/2 if reached before Jan. 1, 2020) or terminates employment, whichever is later. Member Handbook 2025, p. 9, Required Minimum Distribution; NMERB web page Inactive Members

To see what a pension later would pay, enter the date you'd start it in the calculator with the years you had when you left, and tick "the years above are what I'll have on my retirement date". See buying service credit for repaying a refund.

Questions