Two choices
| Leave your money with PSRS | Take a refund | |
|---|---|---|
| What you get | A monthly benefit for life once you're eligible (for example at 60) | Your contributions, purchase payments and interest |
| Your service | Kept | Given up |
| Needs | Vested: 5 years | No agreement for future covered work |
Vesting
You're vested after 5 years of service. Handbook p. 26, Vested Membership
If you are not vested and are out of covered employment for five consecutive school years, your membership terminates and interest stops. Handbook p. 26, Membership Termination Before Retirement
Refunds
If you end covered employment and are not under agreement for future covered employment, you can take a refund of your contributions, purchase payments and interest through the preceding June 30, forfeiting your service. Employer contributions aren't refundable; no partial refunds or loans. You can file 30 days after your last day; payment within 60 days after PSRS receives a complete application. Handbook pp. 24-25, Refund of Your Contributions and Interest
Taxes on a refund
20% federal withholding on the taxable portion (if $200 or more) unless directly rolled over; a 10% penalty may apply before 59 1/2 (generally not if you separate in or after the year you reach 55). Contributions before July 1, 1989 aren't taxable. Handbook p. 25, Income Taxes on Refunds
Coming back
If you return to covered work, you can reinstate service you gave up with a refund. See buying service credit. Handbook pp. 28-32, Reinstatements, Purchases and Service Transfers
What the handbook says
- You're vested after 5 years of service. If you leave vested, you can keep your money with PSRS and claim a monthly benefit when you're eligible.Handbook p. 26, Vested Membership; After Vesting
- If you leave before vesting and stay out five school years in a row, your membership ends and interest stops.Handbook p. 26, Membership Termination Before Retirement
- A refund pays back your contributions, purchase payments and interest, but not your employer's contributions, and you give up your service. You can file 30 days after your last day.Handbook pp. 24-25, Refund of Your Contributions and Interest
- PSRS withholds 20% federal tax from the taxable part of a refund you don't roll over, and a 10% penalty may apply if you're under 59 1/2.Handbook p. 25, Income Taxes on Refunds
Questions
What happens to my PSRS money if I leave teaching?
If you're vested (5 or more years), you can leave it with PSRS and claim a monthly benefit when you're eligible. Or you can take a refund of your own contributions and interest and give up your service.
Do I get my employer's contributions back?
No. A refund pays back only your contributions, purchase payments and interest.
Can I buy back refunded service later?
Yes. If you return to PSRS-covered work, you can reinstate refunded service by paying it back with interest.
Source: PSRS Member Handbook, 2026-2027 (as of September 2026), pp. 24, 25, 26, 28, 29, 30, 31, 32. Last reviewed .