Leaving TCRS: refund or keep it?

Short answer: you can take back your own contributions and interest (not your employer's) after a 4-month wait, which ends your TCRS membership. Or, once vested at 5 years, leave them in and start a pension at retirement age. A refund is taxed: see taxes. Coming back later? Your plan depends on whether you kept membership. For the earliest start dates, see early retirement, or try an example in the calculator.

Taking a refund

On separation a member may refund their own contributions and interest (employer contributions are not refundable); doing so ends TCRS membership and forfeits all benefits. Teachers must wait four months after separation unless dismissed for budget reasons, paid on a continuous 12-month basis, or moved out of Tennessee (file a Waiver of Refund Waiting Period form). 20% of the taxable portion is withheld for federal income tax. Legacy Member Guide p. 8, TCRS Refunds Following Separation

Hybrid Plan: Same as Legacy: refund of member contributions and interest only, ends membership; four-month wait for teachers unless an exemption applies; 20% federal withholding on the taxable portion. Hybrid Member Guide p. 7-8, TCRS Refunds Following Separation

Leaving your money in

Once you're vested (5 years of service), you can leave your contributions with TCRS and start a pension at retirement age. Legacy Member Guide p. 3, Vesting

A member who is not vested loses TCRS membership if out of covered employment more than seven consecutive years (Legacy guide) / seven years or more (Hybrid guide), or on taking a refund. Contributions earn interest for seven years after leaving, then stop. Someone who lost membership can reestablish the lost service on returning, but enters the plan open to new hires at that time. Legacy Member Guide p. 3, Vesting; Hybrid Member Guide p. 4, Vesting; Separation from Service guide p. 2-3, Lost and Refunded Service

If you come back after losing Legacy membership, you join the plan open to new hires then: the Hybrid Plan. See Which plan.

The Hybrid 401(k)

The 401(k) part is an individual account, not a pension: what it pays depends on what goes in (employer 5%, member 2% default) and investment results, minus fees. Members pick investments (default: a target date fund near the year they turn 65), are always fully vested, and can take withdrawals after separation; withdrawals before 59 1/2 may owe a 10% federal early distribution tax; required minimum distributions start the year after age 73. This site does not project the 401(k). Hybrid Member Guide p. 11-14, 401(k) Plan; Managing the 401(k) Account Following Termination of Employment or Retirement

Taxes on a refund are on Taxes.

From the sources

• If you leave, you can take a refund of your own contributions and interest (not the employer's). A refund ends your membership and all future TCRS benefits.Legacy Member Guide p. 8, TCRS Refunds Following Separation
• Teachers must wait four months after leaving before a refund is paid, unless laid off for budget reasons, paid on a 12-month basis, or moved out of Tennessee. 20% of the taxable part is withheld for federal tax.Legacy Member Guide p. 8
• If you're vested and leave your contributions in, you keep your right to a benefit when you reach retirement age. If you're not vested, membership lasts seven years after you leave; after that interest stops and the service is lost.Legacy Member Guide p. 2; Separation from Service guide p. 2-3

Questions