EXCESS CONTRIBUTIONS IN POLICE PENSION FUND TIER I AND TIER II (ARTICLE II AND IIA)

If a member has twenty (20) years of service or more and no shortage, an application may be made for a refund of any excess funds in the member's pension fund account. Should no request be made by the time of retirement, the excess will be multiplied by the member's actuarial factor and the pension allowance will be increased for life by the actuarial value of the excess.

A Refund of Excess is the return of any funds in your Pension Account above the amount required on your 20th Anniversary. Refunds of Excess are not taxable up to the limit of your actual contributions. When all of your contributions have been refunded and your Pension Account consists solely of interest and/or 414H contributions, any excess amount over the amount required on your 20th anniversary refunded to you is a taxable distribution. All taxable distributions are subject to a 20% withholding tax as of January 1, 1993. The withholding tax is credited toward the payment of the tax on the distribution. All members under the age of 59 1/2 are also subject to a 10% penalty on the distribution. You will receive a 1099 from the Comptroller’s Office at the end of the year for full payment of the distribution.

Members retiring are eligible to Roll Over their taxable distribution into an IRA and thereby avoid the 20% withholding and 10% penalty.