You may have an employee leaving soon for a job in the private sector or an organization that does not participate in VRS. It’s important they understand how their decisions at separation can affect future VRS benefits, including retirement, life insurance, disability and long-term care coverage.
Two Key Choices at Separation
Taking a Refund
- Taking a refund cancels VRS membership and ends eligibility for all future VRS benefits.
- An employee who later returns to a VRS-covered position will be rehired under the retirement plan for that position at the time of rehire.
- Refund requests are submitted through myVRS.
Becoming a Deferred Member
- Employees who leave a VRS-covered position and do not take a refund become deferred members.
- If a member is vested, they may be eligible for a future retirement benefit if they meet the age and service requirements of their retirement plan.
- Member contributions earn 4% annual interest.
- If the member returns to VRS-covered employment, contributions and service credit are added to their record. In many cases, they remain in the same retirement plan.
Benefit Coverage After Leaving
Whether an employee takes a refund or becomes a deferred member, the following coverages will end:
Life insurance
- Employees may convert their group coverage to an individual policy within 31 days of leaving employment if the employee leaves employment before they are eligible for retirement.
Long-term care coverage through VLDP or VSDP
- Employees have 60 days to decide whether to continue coverage. They will be billed directly for the premiums going forward.
COV Voluntary Group Long-Term Care Insurance
- Coverage can continue if employees continue paying their premiums.
- Deferred vested members age 75 and under may apply for coverage.
Before the Employee’s Last Day
Encourage employees to take these steps before leaving:
1. Create or update their myVRS account.
- Use a personal email address and phone number.
- Confirm mailing address, email and phone number are current.
2. Review beneficiary information.
- Beneficiaries for defined benefit plans and life insurance can be updated in myVRS.
- Beneficiaries for defined contribution plans are updated through DCP Account Access.
3. Point employees to the Leaving Employment webpage.
What About Money in a VRS Defined Contribution Plan?
Leaving money in a VRS defined contribution plan may be a cost-effective option for employees who are separating from VRS-covered positions.
Refer employees to the appropriate Leaving Employment Guide, which explains reasons for keeping money with VRS, including low fees, tax-efficient growth and available investment options:
