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CMERS

Frequently Asked Questions - Active Member

The following is a list of subject areas which you can use to find answers to some commonly asked questions. You can navigate to each group of questions by clicking on the desired subject area.


Contributions Questions

Can I make a partial withdrawal of my MERF contributions?

No. Upon termination of employment, an employee may only apply for a full refund or rollover of his/her contributions and interest.

Is there a penalty for withdrawing my contributions?

No if the member chooses to roll over the distribution into a qualified account. Otherwise the Internal Revenue Service (IRS) requires CMERS withhold 20% from your refund if you do not roll over the funds to a qualified retirement plan or IRA and other taxes and penalties may apply.

If I elect to receive a refund of my contributions, will I receive the matching contributions paid by my employer to CMERS?

No. Employer contributions remain in the Retirement System for payment of future retirement benefits for career employees. Since Employee and Employer accounts are maintained separately, you will not reap the benefit of monies paid to the Retirement System by your employer until you begin receiving a monthly retirement allowance. The employer rate of contribution to the Retirement System is adjusted periodically to reflect the necessary funding to provide future benefits.

Why must I wait at least sixty days in order to receive a refund of MY contributions from the Retirement System?

The sixty-day period generally provides CMERS with sufficient time to receive and process your individual contribution (payroll) information provided to us by your former employer. This period of time insures that you are paid all of your contributions. Additionally, such payments are only made during and at certain times of the month.

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Divorce Information

I have been served with divorce papers and I think my spouse wants to have a part of my pension benefit. What do I need to do?

First, the moment that you believe a divorce or legal separation is possible, you and your legal representative should review the section of this website dealing with divorce specifically the section dealing with domestic relation order guidelines. There are many considerations involved with regard to a division of pension benefits and CMERS must have a court order in order to divide the pension benefit. CMERS is not subject to the federally mandated QDRO requirement: state statutes provide for the establishment of a Plan Approved Domestic Relations order (PADRO). CMERS has developed a guidance paper that provides instructions on the requirements for such an order.

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Purchasing Additional Creditable Service

Why are certain types of creditable service appear to be more expensive than other types to purchase?

State law specifies how the cost of each type of creditable service that may be purchased is calculated. Most additional service purchases must be paid for entirely by the member.

Are rollovers from other retirement plans accepted to purchase retirement service credit?

No. At the present time you cannot use pre-tax money from an eligible retirement plan or an eligible IRA to purchase creditable service.

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New Employment

I'm leaving the City to work for another municipality or department not covered by CMERS. What are my options?

There are three options available to members leaving CMERS.

  • 1. Refund of Contributions

    Members who terminate service (other than by death or disability) may withdraw all their contributions from the date of hire, with interest calculated for the period of membership. The contributions being withdrawn will be credited with an annualized simple interest rate determined by state statute currently set at 5%.

    If you do withdraw contributions, you waive all claims and entitlements for all retirement and pension related benefits for the period of membership for which the withdrawal is made.

    If you do not chose to roll the amount over, tax-deferred contributions and accumulated interest credited to your account are taxed upon withdrawal. The Internal Revenue Service (IRS) requires CMERS withhold 20% from your refund if you do not roll over the funds to a qualified retirement plan or IRA. In addition, the IRS imposes a special penalty tax on early distributions, such as a lump sum distribution, received before the plan participant reaches age 59. This special penalty tax of 10% of the taxable portion of the distribution is applied in addition to the regular income tax.

  • 2. Direct Rollover

    All or part of the refund you receive from the CMERS System may be eligible for rollover by you or CMERS to a traditional IRA or an eligible employer plan. An "eligible employer plan" includes a plan qualified under section 401(a) of the Internal Revenue Code (IRC), including a 401(k) plan, profit-sharing plan, defined benefit plan, stock bonus plan, and money purchase plan; a 403(a) annuity plan; a 403(b) tax-sheltered annuity; and an eligible 457(b) plan maintained by a governmental employer (governmental 457 plan). After December 31, 2007, your payment can be rolled over to a Roth IRA subject to the same limits that apply to rollovers from a traditional IRA to a Roth IRA.

    You can roll over the distribution by reinvesting it as stated above within 60 days of receiving the distribution. The amount rolled over is not taxed until you take it out of the IRA or employer plan. You have up to 60 days to roll over the eligible portion of your distribution. If you elect not to roll over when the distribution is made and later (within the 60 days allotted) decide to roll over, you must find other money to replace the 20% that was withheld.

    Such rollovers must be approved in advance by CMERS. Please contact the office of CMERS for further information.

  • 3. Leave Dollars in CMERS (for vested individuals only)

    A vested individual, as defined, has at least five years of actual (not just vested) service upon termination of membership before age 55. A terminated vested individual is entitled to a service retirement commencing on the member's retirement age.

I understand the three options but do you think I should withdraw my retirement contributions or leave them in?

The correct answer to this question is totally up to the member and is usually dependent on three things: (i) whether you anticipate a return to employment covered by either the State or a CMERS retirement systems; (ii) whether you have accumulated five years of retirement service credit; and (iii) your age. The best way to give a general answer is as follows: If you are reasonably sure that it is unlikely you will ever accumulate five years of service credit, you may be better served by withdrawing your contributions due to the fact that, with less than five years of service credit, you do not qualify for a monthly benefit. If you have accumulated five years of service you should consider how long it will be before you will be eligible to receive a monthly benefit. If you are "vested" and near retirement age, you may wish to consider leaving your contributions in the Retirement System so that you may receive a monthly benefit when you become eligible. However, this decision is very dependent on personal circumstances.

If I quit my job with the City, can I transfer my contributions and service credit to another State or municipal retirement plan?

It depends. You may be able to transfer your service credit and contributions to that system from CMERS. Requests for these transfers and questions concerning transfer of credit should be forwarded in writing to CMERS.

I am leaving my current employer for a new position with another municipality that does participate in MERF. Do I have to complete a new CO-931? Do I have to do anything to transfer my contributions to my new employer?

Yes. Every new employee must complete a CO-931 upon commencement with a new CMERS employer. The member does not have to do anything about transferring contributions. Upon retirement, all employee contributions and service credit will be combined.

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Death and Survivor Benefits for Active Members

I am an active member of CMERS. If something should happen to me, what will be available for my spouse and children upon my death?

If you should die before you retire, death benefits may be due to your survivor(s). It is important for you to know that as a CMERS member you can, in some instances, influence the type and amount of benefits which may be available to your survivor(s). Should you become seriously ill or injured, or have a life threatening condition, you or someone on your behalf should contact the CMERS Unit as soon as possible, either directly or through your personnel office. The municipality where you were employed should be notified of your death as soon as possible.

If you are not married or if your spouse is not eligible to receive monthly benefits, your designated beneficiary (who could be your spouse) will receive a lump-sum payment. The amount will equal your contributions plus 5% annual interest credited annually from July 1, 1983 or the July 1st following date of entry into the plan, whichever is later.

What is the difference between a primary beneficiary and a contingent beneficiary with regard to death benefits?

The primary beneficiary is the person or persons selected to receive the death benefit (contributions and interest) in the event of your death. The contingent beneficiary is the person or persons selected to receive the benefit if the primary beneficiary is not alive at the time of your death. Please do not confuse a contingent beneficiary with a contingent annuitant which is an individual who receives may receive part of your monthly pension benefit when it is in pay status.

As an active member of CMERS, do I need to submit a Beneficiary Designation?

Yes. All active members need to maintain a current beneficiary designation with CMERS. CMERS will pay all sums payable under the Plan by reason of an active member's death prior to retirement in accordance with statutory provisions:

  1. To the member's designated beneficiary. If no designated beneficiary, then CMERS will pay the sums to these individuals in the following order:
  2. To the member's surviving spouse. If no spouse;
  3. To the member's surviving children (including adult children), in equal shares; if no children;
  4. To the member's surviving parents, in equal shares; if no living parents;
  5. To the member's estate.

I'm an active CMERS member. Can I name both my spouse and my children as a primary beneficiary?

Yes, you can name your spouse and children as primary beneficiaries. However, such a designation requires your spouse's notarized signature in the "Consent to Spouse" in order to be valid - even if you want to leave the benefit to your children. When more than one person is named, the benefit will be divided equally.

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Pre Retirement Issues

I'm planning on retiring soon. Does CMERS provide insurance?

No, CMERS does not provide Life, Health, or Dental Insurance. However, if you currently maintain insurance through your employing City, you may elect to continue it after your retirement. Please discuss your insurance options with your Employer.

When should I contact CMERS concerning my anticipated retirement?

An individual considering retirement should contact the human resource or benefit office of the municipality they last worked for at least 2-3 months in advance of the intended retirement date. Do not contact CMERS directly. The municipality will provide you with the necessary retirement application and supporting forms.

Do I actually have to work the last day of my employment before the effective date of retirement or can I use sick or vacation leave for the day?

Nothing in the retirement laws or regulations requires that you actually work the last working day before the effective date of your retirement. However, your municipality or employer may have different criteria with regard to your separation from service. We suggest you contact your Human Resource or Benefits office for more specific information.

I am terminating my employment and going to another job. When should I apply for my monthly retirement benefits?

If you are no longer working in a position covered by CMERS and are otherwise eligible for a retirement benefit, as a general rule you should apply for your monthly benefit as soon as you become eligible, whether you will be in receipt of an unreduced service retirement allowance or early, reduced benefits. Historically, post-retirement benefit increases have significantly reduced, or completely eliminated the difference between the amount of your benefit should you begin reduced benefits as soon as possible as opposed to delaying the payment of your benefits until a later date.

Will I qualify for an unreduced retirement benefit when the sum of my age and creditable service equal 85?

No. Under current law, there is no "rule of 85" (meaning your service plus age equals 85) to receive an unreduced, service retirement allowance.

Which optional payment arrangement should I elect at retirement?

The optional payment arrangement you elect at retirement is a personal decision. In making this decision, you should consider your financial needs, the possible financial needs of your spouse or beneficiary, if any, your health and the health of your beneficiary. Your decision should never be based on what other members have previously done but rather what is right for you.

May I change the beneficiary or optional payment plan I selected at any time during the retirement process or after retirement?

You can change your payment option, annuitant or beneficiary for a monthly survivor benefit or payment option at any time prior to cashing your first retirement check but no later than the 25th of the month following the month your first check is mailed. After this time, you will not be allowed to change your payment option for any reason including death or divorce. If you have chosen the 10 year or 20 year certain option benefit you may name a new contingent annuitant if your designated contingent annuitant has died (CMERS requires a certified copy of the death certificate). As a retiree, you can change your beneficiary for the guaranteed refund (if applicable) at any time by completing and submitting the proper form to CMERS.

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Investment Questions

Can I borrow money from my retirement account now and pay it back later?

No! Under state law, your retirement account has no provisions for withdrawal under any circumstance, including mortgage down payment or college education.

Who invests my retirement money?

The State Treasurer is the principal fiduciary for Connecticut Retirement Plans and Trust Funds (CRPTF). The Treasurer is responsible for prudently managing the retirement funds for approximately 160,000 teachers, state, and municipal employees who are pension plan participants and beneficiaries as well as academic programs, grants, and initiatives throughout the State.

The CRPTF's asset mix is established by the Treasurer, with approval by the Investment Advisory Council, based on (1) capital market theory, (2) financial and fiduciary requirements, and (3) liquidity needs. The Treasurer has detailed investment and performance information on her website with regard to pension monies. The link is: http://www.state.ct.us/ott/aboutpension.htm.

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