Hampshire County Retirement System
Inactive Members
FACT SHEET: INACTIVE MEMBERS - What you need to know about your Member Contributions and your Annuity Savings Account
According to our records, you are no longer contributing to the Hampshire County Retirement System (HCRS). This may be as a result of several different situations that provide you with different opportunities regarding the disposition of your Annuity Savings Account.
Please READ carefully and notify HCRS of your situation accordingly.
If you are actively employed by a HCRS employer…. Contact HCRS immediately! As an active employee, there may be an error regarding your contributions that needs investigation and correction.
If you are on military leave of absence…. Contact HCRS to insure you receive creditable service. Upon your return to active employment, your employer may be responsible for your contributions and creditable service for your military time.
If you are on an authorized leave of absence (other than military)…. Contact HCRS to insure continuation of your membership and beneficiary rights. Upon your return to active employment, your contributions and creditable service should resume.
If you were injured while in the performance of your duties and have filed or intend to file a workers compensation claim….
Notify HCRS immediately and request a copy of your accident report to be sent to HCRS. If your injury has resulted in a total and permanent disability, you may be eligible for an accidental disability retirement. Contact HCRS staff for further information and guidance regarding disability retirement benefits.
DO NOT for any reason request a withdrawal of your retirement contributions. A withdrawal terminates your membership rights and forfeits any potential claim for a disability retirement allowance.
If you have terminated your employment, but are employed with another Massachusetts public employee retirement system….
Contact HCRS and request a transfer of your contributions and service credit to your new or other Massachusetts Public Employer Retirement System and/or contact your new/other retirement system and advise them that you have prior or concurrent service and contributions with HCRS.
Do Not request a withdrawal of your retirement contributions. By law, HCRS must transfer your membership to your other Mass. public employer.
If you have terminated your employment, but may be re-employed or you intend to seek other employment with another Massachusetts public employer…..
You may continue your membership as an inactive member by leaving your contributions with HCRS. As an inactive member, you retain your membership rights (i.e. contribution rates, service credit). Upon re-activation of Massachusetts public employment your membership will be activated and service credit will be transferred to your new employer.
If you do not become re-employed with a Massachusetts public employer, you may apply for a withdrawal of your retirement contributions at a later date. However only interest accrued within 2 years of your termination is subject to withdrawal.
If you have terminated your employment, but have at least 10 years of creditable service…..
You may be eligible to receive a monthly retirement allowance if you are age 55 or older. If you are under age 55, you may choose to defer your retirement benefit until age 55 or later. Please notify HCRS if you choose a deferred retirement.
If you have terminated employment with all Massachusetts public employers, do not have any workers compensation claims pending, and do not intend to return to Massachusetts public service….
You are eligible to apply for a withdrawal (refund) of your contributions or a direct "rollover" of your tax-deferred contributions to an IRA or other qualified plan. Contact HCRS for an application for withdrawal.
If you choose a refund instead of a direct "rollover", there will be a 20% Federal tax withholding and if you are under age 59 ½ , you may be subject to a 10% penalty for early distribution when you file your taxes.
Upon taking a withdrawal or direct "rollover" of your contributions, you terminate all membership rights and benefits. If you again establish membership in a Massachusetts public employee retirement system, you may be eligible to "buy-back" your prior creditable service.
What happens to your annuity savings account if you do nothing….
You will remain an inactive member and your annuity savings account will continue to accrue interest for 10 years following your termination date. Annually, we will attempt to contact you regarding the disposition of your account. After 10 years of inactive membership, your annuity savings account will be closed and transferred to the pension reserve fund. Although you may subsequently be eligible to withdraw or transfer your contributions after 10 years, you will be off our "radar". Unless you have specifically notified us that you choose to defer your retirement allowance, we will assume that your account has been abandoned and we will no longer attempt to find or contact you or your beneficiaries.
What are the advantages of taking a withdrawal of contributions?
If you are no longer employed or intend to seek a position with a Massachusetts public employer, and you are not eligible (10 years creditable service) for retirement benefits… it is possible to earn a better return on your retirement funds by choosing a direct "roll-over" to an IRA (individual retirement account) or other "Qualified Retirement plan". However, there is investment risk with other retirement plans.
The interest rate that is accrued to your annuity savings account is at a low "passbook savings" rate, currently 0.60%. Although interest continues to accrue to your account, interest that accrues after 2 years of inactive membership is not refundable to member.
What are the disadvantages of taking a withdrawal of contributions?
Upon taking a withdrawal of your contributions, you terminate your membership rights and benefits as Massachusetts public employee. Should you obtain another position with a Massachusetts public employer in the future, you may re-purchase your creditable service but your contribution rate will be based on your new membership date (which may be higher than your current contribution rate).
Your contributions are currently tax-deferred, unless you choose a direct roll-over to an IRA or other qualified plan, you will lose that tax benefit. There is a 20% Federal withholding and if under age 59 ½ you may also be subject to a 10% penalty for early distribution. If you do not immediately reinvest into another retirement fund, it is likely to cost more to do so in the future.