Navigator
Counseling Tips for Employees Leaving VRS-Covered Jobs
You may have an employee leaving soon for a position in the private sector or an organization that does not participate in VRS. It’s important the employee understands the impact of certain decisions – namely whether to become a deferred member or take a refund – will have on future VRS benefits, including group life insurance, disability and long-term care coverage.
Taking a Refund
Taking a refund cancels VRS membership and eligibility for any future benefits. An employee who comes back to work for a VRS-participating employer will be rehired under the currently applicable retirement plan for that position.
Members request refunds in myVRS.
Becoming a Deferred Member
Becoming a deferred member means leaving funds with VRS. If vested, the member may be eligible for a future retirement benefit. (Deferred member contributions receive annual interest at 4%.) Also, if the member returns to VRS-covered employment, contributions and service credit will be added to their member record. In many cases, the returning member will remain in the same retirement plan as before.
Under both scenarios – deferring membership or taking a refund – life insurance, disability and long-term care coverage will end.
- Employees can convert their life insurance to an individual policy within 31 days of leaving.
- They also have 60 days to choose whether to continue any Virginial Local Disability Program (VLDP) or Virginia Sickness and Disability Program (VSDP) long-term care coverage they may have. Employees will pay the premiums for these benefits moving forward.
- Coverage under the COV Voluntary Group Long-Term Care Insurance Program will continue, if members continue to pay their premiums. Deferred vested members aged 75 and under are eligible to apply for coverage in the program.
Before Their Last Day
- Encourage your employees to create a myVRS account, using their personal email address and phone number. They should update their contact information and ensure their mailing address, phone number and email address remain current.
- They should confirm beneficiary information is correct. Members can update beneficiaries for defined benefit plans and life insurance through myVRS. Beneficiaries for defined contribution plans can be updated through Account Access.
What About Money in a VRS Defined Contribution Plan?
Leaving money in their VRS defined contribution plan may be a cost-effective option for members who are separating from their VRS-covered positions.
Refer employees to the appropriate Leaving Employment Guide:
- Leaving Employment Guide for the Commonwealth of Virginia 457 Deferred Compensation and Virginia Cash Match plans (for plans 1 and 2).
- Hybrid Retirement Plan: Defined Contribution Component Leaving Employment Guide.
- Commonwealth of Virginia Optional Retirement Plans: Leaving Employment Guide.
The Leaving Employment Guides explain several reasons participants might decide to keep their money with VRS, including low fees, tax-efficient compounding and a variety of available investment options.
