Can You Cash Out Your CalPERS Retirement?

When there’s a financial emergency, it’s normal to consider all your options. If you’re a member of CalPERS, you may consider making a withdrawal from your retirement. Unfortunately, CalPERS does not allow hardship withdrawals unless you participate in their deferred-compensation plan. You can cash out your CalPERS defined-benefit retirement contributions if you’ve left your position, but that comes with some conditions as well.

TL;DR (Too Long; Didn't Read)

It's possible for you to cash out you CalPERS retirement only if you've left your position or if you sign up for a plan to make hardship withdrawals.

What is CalPERS?

CalPERS is a retirement system for many of California’s public employees. They currently have 1.9 million members with over 2,000 employers throughout the state. CalPERS is a defined-benefit plan. This means that you’re paid a specific benefit when you retire. Your retirement is not based on the amount you contribute. Your retirement benefit is based on your service credits, your final compensation and the language in your contract with your employer. To receive your retirement benefits, you need to have worked for a CalPERS employer for at least five years and be at least age 50 (or age 52 if you started working for your employer after January 1, 2013).

Withdrawing Your Defined Benefit

If you’re leaving CalPERS employment, you can elect to have your contributions refunded in addition to any interest your contributions have earned. The contributions of your employer can’t be refunded to you. If you’re moving to an employer who participates in another California state retirement plan, you might not be able to get your contributions refunded. Instead, your contributions will be rolled over to your new retirement plan.

To get your contributions refunded, you’ll need to contact CalPERS and fill out the appropriate paperwork. Once they receive the paperwork, they’ll process it and send you a check for your contributions plus interest.

Exploring the CalPERS 457 Plan

Some CalPERS employers offer a 457 plan. This is a deferred-benefit plan that is based on your voluntary contributions. CalPERS manages the retirement investments in this plan. If you run into a financial challenge, you may be able to take out a loan, depending on the language in your contract.

The CalPERS 457 plan also allows hardship withdrawals, but only in limited circumstances. One reason you may be allowed to make a hardship withdrawal is if you’re experiencing a difficulty due to an accident or illness, and the hardship isn’t covered by any other resources or insurance. Another reason is if you’ve lost property, and the loss isn’t covered by other resources. They do not allow withdrawals for tuition costs or to purchase a home.

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