Keep your account (deferred member)
Leaving the money with VRS keeps service credit and 4% annual interest; a vested deferred member can retire later on meeting age and service rules. Plan 1 Handbook p. 45, Becoming a Deferred Member
A vested member who leaves may defer retirement; the benefit uses service and AFC at the time of leaving. If a deferred member does not apply by April 1 following the year they turn 73, VRS pays the Basic Benefit as required by law. Plan 1 Handbook p. 54, Deferring Retirement; Mandatory Retirement Distribution; Va. Code § 51.1-153(C)
Take a refund
Vested (5+ years) or involuntarily separated for causes other than job performance or misconduct: full refund of the member contribution account. Not vested: refund excludes member contributions your employer paid on your behalf after July 1, 2010, and the interest on them. A refund is irrevocable and cancels membership and eligibility for future VRS benefits. Plan 1 Handbook p. 45, Taking a Refund; Va. Code § 51.1-161(A)
Short answer: once you're vested at 5 years, you can leave your money with VRS and take a pension later. Or you can take a refund of your member contribution account, which is final and cancels future VRS benefits; if you're not vested, it leaves out contributions your employer paid for you after July 1, 2010. A refund is taxed: see taxes. Coming back? See which plan and buying back service. Estimate a deferred pension in the calculator.
Vesting
Vested at five years (60 months) of service credit; required for a retirement benefit in all three plans. Plan 1 Handbook p. 14, Vesting; Plan 2 Handbook p. 14; Hybrid Handbook p. 16
Timing and taxes
Processed after a bona fide break in service of at least one full calendar month in a period you normally would work (summer breaks don't count) and after leaving all positions with that employer. Example: a teacher on an August 1 - May 31 contract who leaves at the end of the contract can be refunded in September at the earliest. Plan 1 Handbook p. 46, Requesting a refund
Paid directly: 20% federal withholding and, for Virginia residents, 4% state; possible 10% IRS penalty before 59 1/2. Can be rolled over to an IRA or qualified plan. Plan 1 Handbook p. 46, Taxes on refunds
A non-vested deferred member must request a refund by April 1 after the year they turn 73 to avoid an excise tax. Plan 1 Handbook p. 54, Mandatory Retirement Distribution
Hybrid Retirement Plan members
Members are always 100% vested in their own contributions and earnings. Employer 401(a) contributions and earnings vest 0% after one year, 50% after two, 75% after three and 100% after four or more years of service credit; purchased or granted service counts. Hybrid Handbook p. 27-28, Vesting and 401(a) Employer Contribution Vesting Schedule; Va. Code § 51.1-169(B)(3)
Distributions may begin after a bona fide break in service of one full calendar month; not required until age 73. Taking a DC distribution does not require a refund of the DB component. Non-vested employer contributions are forfeited. Hybrid Handbook p. 55, Taking a Distribution
More on the Hybrid plan. Coming back to VRS later? Refunded service can be bought back: see Buying service credit.
From the handbooks
- If you leave, you can leave your money with VRS as a deferred member: you keep your service credit and earn interest. If you're vested, you can retire later once you meet the age and service rules.Plan 1 Handbook p. 45, Becoming a Deferred Member
- Vested members, and anyone laid off for reasons other than performance or misconduct, can get a full refund of their member contribution account. Others don't get back contributions the employer paid for them after July 1, 2010.Plan 1 Handbook p. 45, Taking a Refund
- A refund is irrevocable and cancels your VRS membership and all future benefits.Plan 1 Handbook p. 45
- A refund paid to you has 20% federal and, for Virginia residents, 4% state tax withheld, and may carry a 10% IRS penalty before age 59 1/2. Rolling it over defers the tax.Plan 1 Handbook p. 46, Taxes on refunds
- Example: a teacher on an August 1 to May 31 contract who leaves at the end of it can get a refund in September at the earliest.Plan 1 Handbook p. 46, Requesting a refund
- Hybrid members always own their own defined contribution money. Employer contributions vest 50% after two years, 75% after three and 100% after four.Hybrid Handbook p. 27-28, Vesting
Questions
Should I take a VRS refund when I leave teaching?
A refund ends your membership and every future VRS benefit, and it may be taxed. If you're vested (5 years), leaving your money with VRS keeps a pension you can start later.
How soon can I get a refund?
Processed after a bona fide break in service of at least one full calendar month in a period you normally would work (summer breaks don't count) and after leaving all positions with that employer. Example: a teacher on an August 1 - May 31 contract who leaves at the end of the contract can be refunded in September at the earliest.
What happens to my Hybrid savings account if I leave?
Distributions may begin after a bona fide break in service of one full calendar month; not required until age 73. Taking a DC distribution does not require a refund of the DB component. Non-vested employer contributions are forfeited. Members are always 100% vested in their own contributions and earnings. Employer 401(a) contributions and earnings vest 0% after one year, 50% after two, 75% after three and 100% after four or more years of service credit; purchased or granted service counts.
Source: VRS Plan 1, Plan 2 and Hybrid Retirement Plan Handbooks for Members, 07-2026 editions (VRSHB-1 07-2026, VRSHB-2 07-2026, HybridHB 07-2026), Plan 1 Handbook pp. 14, 45, 46, 54; Plan 2 Handbook p. 14; Hybrid Handbook pp. 16, 27-28, 55. Also: Code of Virginia §§ 51.1-153, 51.1-161, 51.1-169. Last reviewed .