SECTION 3 Other Circumstances of Service
Reciprocity
Reciprocity is a special relationship that exists between LACERA and certain public retirement systems located in California. It is designed to protect retirement benefits when public service employees transfer to other public service jobs within a specified time. Under reciprocity there is no transfer of funds or service credit between reciprocal systems.
Reciprocal systems include, but are not limited to the other 19 county retirement systems in California governed by CERL, the California Public Employees Retirement System (CalPERS), the California State Teachers Retirement System (CalSTRS), and the Judges Retirement System I and II (JRS).
Requirements for establishing reciprocity:
- You must become a member of a reciprocal agency within six months after terminating from LACERA, or vice versa.
- Your employment at one public agency must terminate before employment at the next public agency begins. Overlapping service, including vacation or sick time, may disqualify you for reciprocity.
- You must leave your contributions on deposit with LACERA while your employment is covered by a reciprocal retirement system, or vice versa.
- You must apply for retirement from each system separately (in writing) and retire from each system concurrently (on the same day).
Establishing reciprocity provides the following advantages:*
- Your contribution rate in the new system may be based on your entry age into the first system.
- Your years of service earned under each system may be combined and applied to retirement requirements for vesting and years of service credit.
- When calculating your retirement allowance, each system may use your highest final compensation, regardless of under which system it was earned.
Under reciprocity, each system will provide you with a separate benefit payment, based on your age and years of service credit in that system.
*Specifications of reciprocity may vary according to the requirements of each system.
Terminating Service
If you leave County service for any reason prior to retirement there are several options to consider regarding your future eligibility for retirement benefits:
If you are vested and do nothing:
- You automatically become a deferred member.
- Your contributions will remain on deposit and continue to earn interest.
- Once you meet the minimum requirements, you become eligible for retirement.
- No action is required on your part until you decide to apply for retirement.
If you are not vested and do nothing:
- Your contributions will remain on deposit and continue to earn interest.
- You are not eligible for future retirement benefits from LACERA.
- Your contributions may be withdrawn at any time (unless you return to County service or become employed in a reciprocal retirement system within six months).
- No action is required on your part until you wish to withdraw your contributions.
Whether or not you are vested:
- You may establish reciprocity if you leave your contributions on deposit with LACERA and enter employment with a reciprocal agency within six months.
- Your contributions will remain on deposit and continue to earn interest.
You may withdraw your accumulated contributions from LACERA:
- Such a withdrawal terminates your membership and forfeits any and all rights to future retirement benefits from LACERA (including disability benefits).
- If you withdraw, you may elect either:
- To have LACERA issue a check directly to you (minus 20 percent mandatory federal withholding tax and any applicable California state tax)* or
- If you are under age 70.5, you may defer taxes on the funds by rolling them over to an IRA or other employer’s qualified plan.
If you are over age 70.5 you are not eligible to roll the funds over. LACERA will issue a check to you minus 25 percent mandatory federal withholding tax and any applicable California state tax.*
*Mandatory withholding tax per U.S. Code Title 26. If you reside in California, you may elect not to have state tax withheld; however, if you do not make a state tax withholding election, we will withhold an additional 2 percent in California state income tax (or 2.5 percent If you will reach age 70.5 by the end of the calendar year). If you are under age 59.5, federal and state penalties for early withdrawal may apply.
Mandatory Distribution
The law requires LACERA to begin paying a monthly retirement allowance to any member who reaches mandatory distribution age having left County service with his or her accumulated contributions on deposit with LACERA. The payment of a deferred retirement allowance becomes mandatory on April 1 of the year following the year in which the member reaches age 70.5.
LACERA must notify a deferred member who reaches age 70 that he or she is eligible to apply for a deferred retirement allowance. If the member is located but does not retire, LACERA will begin paying the member an Unmodified Retirement Allowance beginning April 1 following the year in which he reaches age 70.5. If the member cannot be located, all of his or her accumulated contributions will be deposited in the Member Reserve Account.
Members are required to notify LACERA of any change of address.
Returning to Service*
A deferred safety member who returns to County employment working three-quarter time or more in a safety position is automatically reinstated in his former plan. The returning member retains his or her service credit.
A deferred general member who returns to County employment working three-quarter time or more in a safety position is automatically placed in the safety plan that was in effect at the time he or she initially became a general member. A member who does this assumes dual membership status.
A deferred member who returns to a permanent position of less than three-quarter time may file a written election to return to active membership; this may be done at any time. The written election must specify whether the member also chooses to purchase service credit for any County service not previously credited prior to the date of his or her election. The purchase may begin at any time prior to the member’s effective date of retirement. The election to return to active membership is irrevocable; active membership will remain in effect until the member terminates or dies.
The contribution rate for a member returning from deferred status is based on the entry age in effect at the time he or she became a deferred member.
*Rules also apply to members who entered a reciprocal retirement system after terminating County service.
Restoring to a Prior Plan
A safety member who previously terminated service, subsequently withdrew his or her accumulated contributions, and later returns to County service may restore to his or her previous Plan, provided all his or her withdrawn contributions are redeposited, along with the interest those contributions would have earned had they been left on deposit.
Once restoration is complete, membership continues as if unbroken; the member’s prior service credit is restored. The returning member will be credited for any excess contributions made prior to completion of the restoration, plus interest. A contribution rate based on the member’s nearest age at the time of reentry into LACERA will apply.
Restoration for Reciprocal Safety Members*
Certain current or former safety members whose principal duties consist(ed) of active law enforcement or firefighting may be eligible to redeposit contributions they had previously withdrawn from LACERA or a reciprocal retirement system, even if the time between systems exceeded six months. The redeposit (in the first system) restores membership in the individual’s previous LACERA or reciprocal system’s (whichever is the first system) retirement plan.
Eligibility Requirements for Reciprocal Safety Member Restoration:
- Must be an active member of LACERA (or the reciprocal retirement system) at the time of the redeposit
- Must be employed by a law enforcement agency or fire department
- Principal duties must consist of active law enforcement or firefighting, either presently or while a member of the reciprocal system
*Specifications of reciprocity may vary according to the requirements of each system.
Dual Status
Dual status refers to a member who has accrued service credit both as a general member and a safety member. This occurs when a general member changes job classifications and becomes eligible for safety membership, or vice versa.
At retirement, members with dual status receive a combined retirement allowance based on service credit earned in each category of membership. Separate general and safety benefit amounts are calculated and added together to determine the member’s total retirement allowance.
Double Account
A member who has earned service credit in a contributory plan and in Plan E maintains a double account with LACERA. Double accounts are established when a member has earned both:
- Service credit in a contributory plan
- A minimum of ten years of service credit in Plan E
Eligibility to retire from each plan is determined independently, based on the requirements of each plan. Service credit earned in one plan cannot be used to meet the requirements of the other plan.
If a member with a double account is eligible to retire for service from Plan A or B, but has not met the minimum age requirement for Plan E, he or she may retire from Plan A or B.* Plan E retirement benefits automatically become effective on the date of the member’s 55th birthday.
*The total amount of service credit accrued under all LACERA plans counts toward the County retiree health care subsidy; certain eligibility rules apply.
Transferring to Plan E
Safety members may not transfer to non-contributory Plan E.
6/16/09