What are the tax consequences if I take a refund of my retirement contributions?

Your contribution and any interest that you receive from your account are subject to federal tax income (with exception of any contribution made prior to January 12, 1988). When processing a refund of your retirement contributions the Retirement Office is required to withhold 20% of the taxable portion of your refund for federal tax. The 20% tax payment is required only if the refund is made directly to the member. To defer tax payments, you must make a direct rollover of your retirement funds to an Individual Retirement Account (IRA), or another type of retirement account with a financial institution. With a direct rollover, no tax is withheld and the entire portion of your refund is transferred. If you have both taxable and nontaxable contributions you may accept receipt of the nontaxable refund without tax consequence and the taxable portion maybe rolled over.

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1. Am I required to become a member of the Retirement System?
2. How much does a member contribute to the Retirement System?
3. What happens to the money I contribute to the System?
4. Can I borrow money from my retirement account now and pay it back later on?
5. Can I receive a refund of my contributions and will I get the interest on those contributions?
6. When am I eligible to retire?
7. What are the factors used to determine my retirement allowance?
8. What is the maximum retirement allowance that I can receive?
9. Are there any additional benefits to which I am entitled?
10. What does the term “vested” mean? When am I considered vested?
11. Can I purchase creditable service earned in another Massachusetts Retirement System?
12. Will prior years of creditable service affect my membership date or contribution rate in the Leominster Contributory Retirement Board?
13. How is creditable service achieved?
14. Is regular compensation the same as total compensation?
15. What are the group classifications within the Retirement System?
16. What are the different options I can chose from when I retire?
17. If I leave my job what happens to my contributions?
18. Is there any time limit after your termination for requesting a refund of your contributions?
19. Can a member who is vested and who terminates employment be eligible for a refund?
20. If I terminate my employment and leave my money in the retirement system can I retire at a later date?
21. What are the tax consequences if I take a refund of my retirement contributions?
22. If I die before retirement, what happens to my money?