Former Employee Distribution Options

Once you leave State employment, you have a variety of options and are eligible to take a distribution at any time.

Wait to take a distribution

If you choose to leave your money invested in RIC after you leave employment, no forms are necessary.Ā  When you leave stateĀ employment, your money may stay fully invested in RIC until you decide to take income or reach theĀ IRS required beginning dateĀ for required minimum distributions (RMD).Ā Ā 

Income options (taxable)

To request a distribution,Ā call your provider directly.

You may take income in one or any combination ofĀ options shown below.

  • Total lump sum distribution (inactive providersĀ may have surrender charges)
  • Partial lump sum distributions
  • Systematic/periodic payments (flexible)
  • Lifetime payments (irrevocable)

If you wish to take a distribution from any provider other than those listed above, you will need to complete theĀ RICĀ Distribution Form. Call theĀ inactive providerĀ to ask if they also require their own distributions form and if withdrawal restrictions or penalties will apply.

Required Minimum Distributions

The IRS requires that you begin taking annual minimum distributions by the IRS required beginning date.Ā 

If you fail to begin taking your requirement minimum payments on time, you will be subject to an IRS penalty on the amount you should have taken.

Your provider will calculate your required minimum distribution amount upon request. You may elect to receive the entire value of your account or you may receive periodic payments over your life expectancy. If you do not elect a lifetime payment option, you have the option to take more than your required minimum amount at anytime.

To request a distribution, please contact your provider.

Tax Treatment of distributions

  • 457 Pretax Assets
    Taxable distributions of pretax 457 assets are taxed as ordinary income and reported on an IRS 1099 Form. 457 assets have no penalties for qualified withdrawals prior to age 59 1/2.

  • 401a Pretax Assets
    Taxable distributions of pretax 401a assets are taxed as ordinary income and reported on an IRS 1099 Form and may be subject to an IRS 10% penalty prior to age 59 1/2.Ā 

  • 457 Roth (post-tax) Assets
    Roth contributions are tax-free at distribution but the earnings (if any) are tax-free only if qualified.

    "Qualified" distributionsĀ of Roth assetsĀ require all the following

    • You have a distributable event
      • Separation of employment
      • Age 70 Ā½, death
      • Eligible cash out (small accounts)
    • You have held your account for 5 years or longerĀ and
    • You are either 59 Ā½ or older, disabled, or deceased

Purchase IPERS credits

When you file for IPERS benefits in retirement, you may request a transfer RIC pretax 457/401a money to IPERS to purchase eligible service credits. This is a non-taxable transfer. Other tax-advantaged accounts such as IRAs, 401(k)s, 403(b)s, etc., may also be options for funding an IPERS purchase.

To explore the possible benefits of purchasing IPERS and determine your eligibility, review Service Purchase on the IPERS website. If you have questions, contact IPERS toll free at 800-622-3849 (281-0020 in Des Moines) or email them atĀ Info@ipers.org. If IPERS approves your request to purchase, they will send you a cost quote.

You may request to rollover your RIC pretax 457/401a money to make the purchase. Simply forward to us (fax 515-281-5102) your IPERS Rollover/Transfer form and a copy of your IPERS cost quote; we will request the rollover from your provider. RIC will send you a copy of your rollover paperwork (signed by RIC) and your provider will send you a check for the amount you requested. Forward the check and the IPERS forms to IPERS within 60 days to complete the purchase.

Rollovers

Once you leave state employment you have the option to roll over all or a portion of your RIC assets. This is a non-taxable event. Please Note: 457 money rolled out of RIC loses its ā€œno age limitationā€ status.

  • Pretax 457/401a assetsĀ may roll to an eligible IRA at any financial institution or a 457, 401(k), 401(a), 403(b), 403(a), or SEP plan.
  • Post-tax Roth 457 assetsĀ may roll to a eligible Roth IRA or other 457 Roth plan.

If you wish to request a rollover,Ā contact your provider