Other Circumstances of Service
Reciprocity
Reciprocity is a special relationship that exists between LACERA and certain public retirement systems 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), systems with reciprocal agreements with 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, in writing, for retirement from each system separately 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, your future eligibility for retirement benefits depends on your vesting status.
If you are vested and leave County service with your retirement contributions on deposit with LACERA:
- You automatically become a deferred member.
- Your contributions will continue to earn interest.
- Once you meet the minimum age requirement, 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 leave County service with your retirement contributions on deposit with LACERA:
- Your contributions will 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 establish reciprocity in another retirement system).
- No action is required on your part until you wish to withdraw your contributions.
Whether vested or not, you may establish reciprocity if you leave County service and:
- Leave your contributions on deposit with LACERA, and
- Enter employment with a reciprocal agency within six months of leaving County service.
If you 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 to either:
- Have LACERA issue a check directly to you, minus 20 percent mandatory federal withholding tax and any applicable California state tax (federal and state penalties for early withdrawal may apply if you are under age 59.5). or
- Defer taxes and roll your funds over to an IRA or other tax-qualified plan if you are under age 72.
If you are over age 72, you are not eligible to roll the funds over. LACERA will issue a check to you minus the mandatory federal withholding tax and any applicable California state tax.
Required Minimum Distribution
Internal Revenue Code (IRC) § 401(a)(9) requires individuals who reach age 72 having left County service with their contributions on deposit to begin taking a distribution from their LACERA retirement plan.
In accordance with IRC requirements and applicable retirement law, this means those individuals must either elect to retire or to withdraw their accumulated contributions.
LACERA must begin paying a retirement allowance to a deferred member who:
- Reaches age 72
- Left County service with his or her accumulated contributions on deposit with LACERA
If a member meeting the above conditions fails to apply for a deferred retirement allowance and elect a Retirement Option, LACERA will calculate and pay a monthly retirement allowance based on the Unmodified Option.
Note: Rather than apply for retirement, a deferred member age 72 may elect to withdraw his or her accumulated contributions. By taking such action, however, the member terminates his or her membership and forfeits all rights to future retirement benefits from LACERA, including disability and healthcare benefits.
LACERA will refund the accumulated contributions of a non-vested individual who:
- Reaches age 72
- Left County service with his or her accumulated contributions on deposit with LACERA
The payment of a retirement allowance or a refund of accumulated contributions becomes mandatory on April 1 of the year following the year in which the individual reaches age 72. Those who fail to take the required minimum distributions may be subject to IRS penalties.
LACERA must notify an eligible member or former member who reaches age 72 and has contributions on deposit that he or she is eligible to apply for a retirement allowance or a refund of accumulated contributions. 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 member of General Plan A, B, or C who returns to County employment working three-quarter time or more automatically becomes an active member of his or her Plan upon returning to service (even if the member entered a reciprocal retirement system after terminating County service). The returning member retains his or her service credit.
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. 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 service.
The contribution rate for a member returning from deferred status is based on the entry age in effect at the time of the member’s most recent election of deferred status.
*Rules also apply to returning members who entered a reciprocal retirement system after terminating County service.
Restoring to a Prior Plan
A member who previously terminated service, subsequently withdrew his or her accumulated contributions, and later returns to County service may restore to his or her former 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.
The member will default to Plan G upon returning to service with the same employer. Once restoration is complete, the member’s prior service credit is restored and membership in the prior plan continues as if unbroken.
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.
In most situations, Plan E members are not eligible to restore membership in a prior contributory plan. However, certain Plan E members who were not properly informed about restorations and who meet the following specific criteria are permitted to restore:
- Terminated from a contributory Plan
- Withdrew their contributions
- Subsequently returned to County service prior to July 1, 1991, and fulfilled either of the following conditions:
- Elected Plan E, or
- Returned to a different contributory plan and later transferred to Plan E
To be eligible, your LACERA record must contain no evidence you were notified of the opportunity to restore membership in your prior contributory Plan by redepositing your accumulated contributions. Each claim will be considered on a case-by-case basis.
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 safety member changes job classifications and becomes eligible for general 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.
Transferring to Plan E
Members of Plan A, B, or C may not transfer to non-contributory Plan E.