Have you left your job and need to know your options for your account balance?
Upon termination of employment, a member has three options regarding their retirement account: (1) retire if eligible, (2) leave the contributions in their account until eligible to retire, or (3) take a refund of their account balance.
If a Tier 2 member chooses to take a refund of their account balance, they will receive their individual retirement contributions plus any accumulated interest. Please note that the one percent health insurance contribution paid by Tier 2 members is deposited in a non-refundable trust to fund insurance benefits. Tier 2 members will not receive a refund of any employer contributions or employee contributions made to the insurance fund.
Refunds may be paid directly to the member or can be rolled over to another qualified retirement plan or Individual Retirement Account (IRA). If a member elects to receive a direct payment, KPPA is required to withhold 20% for federal income taxes. The amount withheld is not a penalty tax and will apply toward federal tax liability for the year in which the refund is issued. Additional taxes due to age or other factors may also apply if a member chooses to receive a direct payment.
By taking a refund, members forfeit eligibility for future benefits including health insurance and the $5,000 death benefit.
In order to process a refund of their accumulated account balance, members must complete a Form 4525, Application for Refund of Member Contributions and Direct Rollover/Direct Payment Selection. The member's employer is also required to report the termination date on the monthly report to KPPA. A refund cannot be issued until all information is received. A refund cannot be processed until at least 45 days following the termination date, provided all required information has been submitted by the member and their employer. Members interested in taking a refund of their account balance may download Form 4525 here or call our office to request a copy.
If a member returns to employment with the same employer in any capacity, or a different employer that participates in the same retirement system for which the member has applied for the refund, within 45 days of terminating the employment, the member will become ineligible to receive the refund and will be required to pay back the refund if payment has been issued.
If a member goes to work for a participating employer at a later date, the member may be eligible to purchase their refunded service. The purchase will not reestablish the member's original participation date which determines the benefit tier they are in. Tier 2 members will only receive credit for the months of service they purchase.
Members interested in taking a refund should contact KPPA for more information at 502-696-8800, Toll-Free at 800-928-4646, or complete the request below to obtain a form via mail.
Please, do not include any sensitive information, such as your Social Security Number (SSN), in any email correspondence. If your request requires that you give us confidential information, call our office at 502-696-8800 or 800-928-4646.
Request Refund Paperwork