Withdraw Your ERS Retirement

If you are vested and separate from state employment, you can leave your account with ERS or process a withdrawal of your retirement contributions. If you decide to leave your account with ERS, be sure to contact ERS to start the retirement process when you are first eligible. If you are not vested and separate from state employment, you will have the option to withdraw your ERS Retirement. 

Groups 1, 2 and 3 members have a retirement account balance that accrues 2% interest every year. Group 4 members have a retirement account balance that accrues 4% interest every year with potentially an additional 3% interest based on ERS’ investments over a five-year period, this is called gain-share.  When you are eligible to retire and contact us, we will start the retirement process so you can begin receiving the annuity you earned while working for the state.

After ERS processes your withdrawal, you will be enrolled in Group 4 and will not be reinstated to your previous retirement group if you return to state employment. You will have different retirement eligibility and annuity calculations. You also will not be able to purchase withdrawn service credit unless you are a member of another retirement system that participates in the Proportionate Retirement Program.

Your options:

  • Leave your funds at ERS, where they’ll continue to accrue 2% interest each year (members of State of Texas Retirement Groups 1, 2 or 3) or 4 - 7% interest each year depending on gain share (Group 4). If you’re already vested or return to work with the state and become vested, you will get a monthly annuity when you retire with ERS. 
  • Withdraw your entire account balance.
  • Roll over your entire account balance to a qualifying account.
  • Take part of the balance as a withdrawal and roll over part of it to a qualifying account.

If you decide to withdraw your account balance as a direct payment:

  • After we verify your last employment date and approve your withdrawal disclaimer, it takes an additional 15 days before we mail your withdrawal check.
  • Direct deposit is not a payment option. If you don’t opt for a full rollover, ERS will mail your check to the address you provide. ERS will notify you by email when you can expect your check. If we don’t have an email address for you, we will notify you by U.S. mail.
  • Your payment will be taxed at a mandatory 20% and depending on your age you may be subject to an additional 10% when filing taxes for the next year.

If you roll over your funds:

When you leave state employment, you can move your money to another retirement account (like an individual retirement account (IRA) or qualified employer plan) without being taxed 20% up front. If you process a direct rollover:

  • You can request to roll over all of the funds in your account or request a partial rollover, in which a portion of the funds are rolled over to a qualified pre-tax account and the other portion is paid directly to you. Any portion paid directly to you is subject to taxes.
  • Direct deposit is not a payment option. ERS will mail your check to the payment address you on have on file.
  • Your withdrawal won’t be taxed in the current year and no income tax will be withheld if you roll over the entire taxable amount. Your money will be taxed later when you take it out of the IRA or the employer plan.
  • The nontaxable portion (any contributions made to your account post-tax) of your withdrawal is not an eligible rollover distribution and can’t be rolled over to another retirement account.
  • Your withdrawal check will be made out directly to your IRA or qualified employer plan. Your withdrawal can’t be rolled over to a Roth IRA, SIMPLE IRA or education IRA, because these IRAs are not considered Traditional IRAs.

Withdrawal process and general timeline

You can apply to withdraw your funds at any time after you leave state employment, but ERS will not process your withdrawal payment request until the following three requirements are met:

  • Your last employing agency must report your last date of service to ERS. Your agency is responsible for notifying ERS of this date.
  • You must be off state payroll for at least 30 days.
  • ERS must receive and approve your signed and notarized withdrawal disclaimer.

Once your last employing agency reports your last date of service, it has been at least 30 days since your last date of state service, and ERS has received and approved your withdrawal disclaimer, it takes an additional 15 days before we mail your withdrawal check. We will notify you via email or U.S. mail when you can expect to receive your check.

These are the steps to withdraw your retirement account after you stop working for the state:

  1. Sign in to your ERS OnLine account. (If you don’t have an account, you can register for one.)
  2. Select “Withdraw My Retirement Account" under My Retirement Information.
  3. Click “Request A Retirement Account Withdrawal" (located on the next page).
  4. Follow the steps outlined on the next four pages.
  5. Finish on the Review & Confirm page by checking the box that you understand the consequences of withdrawing your account and clicking “Submit.”
  6. ERS will email or mail you the Retirement Account Withdrawal Disclaimer form.
  7. Sign the form in the presence of a notary, have it notarized and send it back to ERS.
  8. Once ERS approves the signed and notarized disclaimer form and verifies your last date of state service, we will mail a check to you within 15 days or roll your funds over to your qualified pre-tax account.

You can track the status of your payment in your ERS OnLine account. ERS works with the Comptroller of Public Accounts (CPA) to process your payment.