PERSI Retirement Options: Payment Options, Refund and Buyback

Updated October 2, 2026. Quick answer: The Public Employee Retirement System of Idaho (PERSI) application offers six payment choices: Regular Retirement, Options 1 and 2 with a contingent annuitant, Option 3 with a higher benefit until Social Security full retirement age, and Options 4A and 4B. The option can be changed only within five business days of the first payment, except for one statutory case after a later marriage, covered below. The application is due no earlier than six months and no later than thirty days before the retirement date. A Base Plan account withdrawal returns contributions plus interest, and cancels all credits toward retirement.

Who this applies to and what PERSI says decides eligibility

This page reads three PERSI documents: the Applying for Retirement page, the Account Withdrawal and Buyback page, and the Retirement Application Kit (form RS1000). It covers which monthly payment option to elect, when to apply, whether a spouse must sign, and what happens to the account if the member leaves instead of retiring.

On who can retire and when, PERSI says only that “When you are eligible for retirement depends on your months of credited service, your age, and whether you are a general member, a public safety officer, a member with mixed general and public safety officer service, or an elected or appointed official”. It adds that “There are several types of retirement, each with its own eligibility requirements”. The documents read do not set out the ages or service thresholds themselves, so the retirement age for any particular member has to be taken from PERSI directly. The statute does set them. Idaho Code 59-1341 says: “A vested member is eligible for service retirement as indicated below, based upon his service retirement ratio.” The ratio is the member’s years of credited service as a police officer or firefighter divided by total years of credited service. The section sets the eligibility age at 65 for a ratio of 0.000 to 0.100, 64 for 0.101 to 0.300, 63 for 0.301 to 0.500, 62 for 0.501 to 0.700, 61 for 0.701 to 0.900 and 60 for 0.901 to 1.000. It adds a grandfather rule: “A person who was an active member on June 30, 1985 shall be deemed to have a service retirement ratio of 1.000 either if the member was a police officer or firefighter on that date and continuously thereafter to retirement or if at the time of retirement the majority of the member’s credited service has been that of a police officer or firefighter.”

Start with an official PERSI estimate

An estimate is a precondition, not an option. PERSI says: “If you are ready to retire, contact the PERSI Answer Center for an official estimate, which entails a review of your account to determine your options”. It is specific about which estimates do not count: “The estimate from your annual statement or from a PERSI workshop is not acceptable for this purpose”. The consequence is stated plainly: “If you do not have an estimate from PERSI, PERSI cannot accept your application and you may need to fill out the forms again”. The application kit repeats the point: “You must contact PERSI for a retirement estimate before completing and submitting these forms”.

In the signature section the applicant states that “I have been provided an estimate of the dollar values of the retirement allowances available to me under that retirement option”.

PERSI also describes how the benefit itself is set: “your monthly retirement benefit is based on your date of retirement and the following formula”. The formula appears on the page as a graphic that the archived text of the page does not carry, so this page does not restate it and does not compute a benefit amount. The statute does state the rates. Idaho Code 59-1342(1) covers “The annual amount of accrued retirement allowance for each month of credited service for which a member was not classified as a police member or firefighter” and says that, “effective June 30, 2000, the annual amount of accrued retirement allowance shall equal two percent (2%) of the member’s average monthly salary.” Subsection (2) covers “each month of credited service for which a member was classified as a police member or firefighter” and says that, “effective June 30, 2000, the annual amount of accrued retirement allowance shall equal two and three-tenths percent (2.3%) of the member’s average monthly salary.” Each rate applies per month of credited service of that kind, and the same section also sets minimum benefits and an upper limit.

The kit instructions add that “You can meet with a PERSI Retirement Counselor to better understand your options”.

The six retirement options and what each does for a survivor

The application lists six choices in Section 3, and the kit instructs: “Select only one retirement option”.

The table keeps to what the application says. The amount of each reduction is not stated in the documents read, and PERSI’s own estimate is where those dollar figures come from.

Regular Retirement, Option 1 and Option 2

Regular Retirement is described this way: “Provides a benefit to me for my lifetime. Payments stop upon my death”. No monthly payment continues to anyone after the member’s death, but a one-time death benefit can still be owed. Idaho Code 59-1361(2) says: “The death benefit of an early or service retired member shall equal the excess, if any, of the member’s accumulated contributions at the time the member retired over the aggregate of all retirement allowance payments ever made to the member, the member’s named contingent annuitant, and the optional death benefit recipient, if any.” Once payments received equal the accumulated contributions at retirement, that excess is zero.

Option 1 changes that. The application says it provides “A reduced benefit payment to me as long as I live, and then the same benefit payment to my surviving contingent annuitant as long as they live”. Option 2 is the same structure at a lower survivor level: “A reduced benefit payment to me as long as I live, and then one-half of the benefit payment to my surviving contingent annuitant as long as they live”.

The documents read do not say by how much any reduction is, so the comparison between Options 1 and 2 cannot be priced from them; it has to come from the PERSI estimate. The statute fixes the principle, not the percentage. Idaho Code 59-1351(1) says the service retirement allowance “shall be converted into an optional retirement allowance which is the actuarial equivalent of such other allowance.” It also bars Options 1 and 2 in one case: “Option 1 or 2 may not be chosen if initial monthly payments would be less than that amount set forth in, or pursuant to, section 59-1343, Idaho Code.” Section 59-1343 sets that amount: “Unless the retirement board establishes a different level by rule, benefit payments of less than twenty dollars ($20.00) per month shall be commuted into an actuarially equivalent single sum.” The general trade-off between a single-life payment and a survivor payment is discussed in single life versus joint and survivor.

Option 3, Option 4A and Option 4B: the Social Security options

Option 3 is built around Social Security. The application describes it as “An increased benefit payment until Social Security Full Retirement Age (SSFRA) and a reduced benefit payment thereafter”. The reduction after that age is defined as follows: “The after-SSFRA benefit payment will be my initial PERSI benefit payment less the Social Security estimate increased by Cost of Living Adjustments (COLAs)”. The statute words the reduction more loosely than the application. Idaho Code 59-1351(1)(c) says that “the difference between the two (2) amounts approximately equaling the governmental old-age benefit becoming payable at such date as estimated by the board.” So the statute treats the Social Security offset as an estimate by the board, not an exact subtraction.

Option 3 is lifetime only, so it does not provide for a survivor. Options 4A and 4B add one. Option 4A provides “A reduced Option 3 benefit payment to me as long as I live, and then the same benefit payment to my surviving contingent annuitant as long as they live”. Option 4B provides “A reduced Option 3 benefit payment to me as long as I live, and then one-half of the benefit payment to my surviving contingent annuitant as long as they live”.

These three options carry an extra document requirement. The application instructions state: “If you select option 3, 4A, or 4B, you must also submit form RS127, Social Security Quote Certification”. The statute adds an age limit that the application text does not mention. Idaho Code 59-1351(1)(c) says “Option 3, which is available only if the member retires before the date of the social security normal retirement age for that member,” and 59-1351(1)(d) says the same of Option 4: “Option 4, which is available only if the member retires before the date of the social security normal retirement age for that member,” A member who retires at or after that age therefore has no Option 3, 4A or 4B.

What is irrevocable and the five business day window

The option is not changeable at leisure, but PERSI’s documents allow a short window after payments begin. The signature section says: “I understand that I can only change my retirement option within five (5) business days of receiving my first retirement benefit payment”. The instructions say the same thing: “Your retirement option can only be changed within five (5) business days of receiving your first retirement benefit”. The member acknowledgment adds the method: “I can change my retirement option only by notifying PERSI in writing no later than five business days after the receipt of my first retirement benefit payment”.

The PERSI documents read do not describe any other route to change an option later, but the statute does. Idaho Code 59-1351(6) says: “Not later than one (1) year after the marriage of a retired member, the member may elect option 1, 2 or 4 to become effective ninety (90) days after the date of such election, provided the member’s spouse is named as a contingent annuitant”, and either that “The member was not married at the time of the member’s retirement” or that “The member earlier elected option 1, 2, 4A or 4B, having named the member’s spouse as contingent annuitant, and said spouse has died or has waived all survivor benefits as provided in subsection (2) of this section”. Outside that case, a member who wants a change should treat the five business days as the deadline and confirm the procedure with PERSI.

A related rule concerns the survivor. The spouse’s acknowledgment on the application reads: “I understand that I will not be entitled to survivor benefits unless I have been listed on the final retirement application as a contingent annuitant for retirement options 1, 2, 4A, or 4B”. The contingent annuitant is described as “This is the individual that you appoint to receive a continuation of your retirement allowance following your death”. The statute adds two events that end a survivor option early. Idaho Code 59-1351(2) says: “Should the named contingent annuitant under option 1 or option 2 either predecease a member retiring on or after October 1, 1992, or waive all survivor benefits pursuant to a domestic retirement order approved under section 59-1320, Idaho Code, upon notification to the board, the member’s benefit on the first day of the month following the death of the contingent annuitant or approval of the domestic retirement order, as applicable, will thereafter become an allowance calculated pursuant to section 59-1342 or 59-1346, Idaho Code, whichever was applicable on the date of retirement, in addition to any postretirement allowance adjustments which may have accrued from that time.” For Option 4 the same subsection converts the benefit to the Option 3 allowance instead. It closes: “The benefit changes under this subsection shall be available only to members whose last contribution was made after June 30, 1992.”

When a spouse must sign

A married applicant does not elect alone. The application has a separate signature block for the spouse, and the spouse certifies: “I consent to my spouse’s decision to receive benefits under the designated retirement option, including the named contingent annuitant”. The instructions confirm it: “If you are married, your spouse must sign in the right column”.

The application also requires the signing to take place before a notary: “This section must be signed before a notary”. The general rules on waiving a survivor benefit are covered in spousal consent to waive a joint and survivor annuity.

Deadlines to apply and what has to go with the application

Two dates matter. The kit allows early filing: “Complete the forms in this kit to apply for PERSI retirement up to six (6) months prior to your retirement date”. The submission instructions give both ends: “no earlier than six (6) months and no later than thirty (30) days prior to your retirement date”. A late filing has a stated cost: “Failure to timely submit a complete Application for Retirement and all required documentation may result in your retirement benefit being delayed”.

Dates work differently for the retirement date itself. PERSI says “Your retirement date will always be the first day of a month”. For a deferral, “If you defer starting your retirement or leave employment prior to being age-eligible for retirement benefits, your retirement date will be the first day of the month you choose to begin receiving retirement benefits”. The statute, Idaho Code 59-1344, ties payment to the first of the following month: “A service retirement allowance or early retirement allowance shall become payable to a member on the first of the month following his ceasing to be an employee while eligible for service retirement or early retirement”.

The kit lists required documents. For an option with a contingent annuitant, the list includes “If retirement option 1, 2, 4A, or 4B is selected, proof of the Contingent Annuitant’s age and Social Security number”. On divorce, “PERSI must review the final divorce decree for all divorces that occurred while you were a PERSI member and require a division of your retirement account”. PERSI states: “PERSI requires a completed Retirement Application Kit in order to retire and begin receiving your benefit”. On divorce the statute sets the method. Idaho Code 59-1320(1) says: “The executive director of the public employee retirement system or his designee upon receipt of a copy of a domestic retirement order, shall determine whether the order is an approved domestic retirement order and shall notify the member and the alternate payee of the determination within ninety (90) days.” For a retired member, the same section says “the form of payment previously elected by the member under section 59-1351, Idaho Code, cannot be changed by a domestic retirement order,” with one exception for a waiver of survivor benefits.

Working after the application: when benefits begin and when they stop

Retirement benefits depend on a clean separation. In the application the member acknowledges that “my retirement benefits will not begin until I have terminated all employment with employers participating in the PERSI, FRF, JRF, or ORP retirement plans”. PERSI also warns about the reverse: “if you return to work for a PERSI employer in a PERSI-eligible capacity, your retirement benefits will be suspended”. The statute is harsher for an early retiree. Idaho Code 59-1356(1) says: “If an early retired member, except as provided in subsection (6) of this section, is reemployed with an employer participating in the public employee retirement system of Idaho within ninety (90) days from retiring, or the early retired member is guaranteed reemployment with an employer participating in the public employee retirement system of Idaho, the member shall be considered to have continued in the status of an employee and not to have separated from service. Any retirement allowance payments received by the retired member shall be repaid to the system and the retirement shall be negated.” The same subsection adds: “A retired member is not considered to have separated from service if he continues performing services for an employer participating in the public employee retirement system of Idaho in any capacity, including but not limited to independent contractor, leased employee, or temporary services.”

The documents read do not define what a PERSI-eligible capacity is, so a member planning any return to public work should ask PERSI about the specific job first. The statute does define the term. Idaho Code 59-1356(2) says that, except in cases listed in subsections (3) through (6), “when a retired member meets the definition of an employee as defined in section 59-1302(14)(A)(a), Idaho Code, any benefit payable on behalf of such member shall be suspended”. Section 59-1302(14)(A)(a) defines that employee as “Any person who normally works twenty (20) hours or more per week for an employer, or a schoolteacher who works half-time or more for an employer and who receives salary for services rendered for such employer”.

Leaving instead of retiring: the Base Plan account withdrawal

A member who leaves covered employment before retirement has a different decision. PERSI defines the withdrawal this way: “An account withdrawal (separation benefit) is a lump-sum payment of the money you contributed to the PERSI Base Plan, plus the interest accumulated on your contributions”. On what it excludes: “It does not include employer contributions”.

On eligibility, PERSI says “You are eligible for a Base Plan account withdrawal if you were an active member and have terminated PERSI-covered employment”, and “You must be an inactive member to withdraw your funds”. “You are not eligible if you are working for a PERSI employer, even part-time, or are on a leave of absence”. Idaho Code 59-1359(c) widens the rule for the same employer: “An inactive member is not considered to have separated from employment if he continues performing services for the same employer in any capacity including, but not limited to, independent contractor, leased employee, or temporary services.” PERSI also says: “There are no loan or hardship withdrawal provisions for the PERSI Base Plan”. Two statutory rules go beyond the page. Withdrawal is not always a choice: Idaho Code 59-1359(b) says “A separation benefit shall automatically be payable three (3) years after a person becomes an inactive member if the inactive member is not a vested member, has accumulated contributions of less than one thousand dollars ($1,000), and has been separated from employment and is not reemployed or reinstated by the same employer within ninety (90) days.” And a quick return costs the money back: 59-1359(a) says “If the person who received a separation benefit is reemployed or reinstated by the same employer within ninety (90) days or is guaranteed a right to employment or reinstatement with the same employer, the person shall repay to the system any separation benefit paid.”

The cost of taking a withdrawal is spelled out: “When you withdraw the funds in your Base Plan account, you cancel all credits toward your retirement”. “If you have enough service to qualify for a monthly benefit at retirement, you also cancel your eligibility for that benefit”. PERSI adds: “PERSI recommends you consult with a tax advisor before taking or repaying an account withdrawal”.

The documents read do not state a vesting period, whether interest stops or continues for a member who leaves contributions in the plan, or a spousal consent requirement for a withdrawal. Those are listed below as not settled, except that Idaho Code 59-1302 answers two of them. Vesting: the statute defines a vested member as “an active or inactive member who has at least five (5) years of credited service”. Exceptions follow, judged at the member’s separation from service: certain elected or appointed officials, state department heads and exempt employees of elected state officials, with the list closing “and (d) Was not covered by a merit system for employees of the state of Idaho”. Such a member “is vested without regard to the length of credited service.” Interest: accumulated contributions, the amount a withdrawal returns, “means the sum of amounts contributed by a member of the system, together with regular interest credit thereon.” Regular interest, in the same section, “means interest at the rate set from time to time by the board.” For the general comparison of taking a refund versus leaving the money alone, see pension refund versus leaving it.

How a withdrawal is processed

“To process a withdrawal, you must submit a Base Plan Account Withdrawal Form”. A timing rule applies: “no refund will be paid before the employer submits the employee’s final salary information and provides a termination date through the regular transmittal”.

The tax withholding is automatic unless the money is moved directly. PERSI states: “PERSI is required by law to withhold federal taxes of 20% on withdrawal payments of tax-deferred contributions and interest unless you roll over your funds directly to another eligible retirement plan or IRA”. It adds: “you may be required to pay a federal tax penalty of 10% on your tax-deferred contributions and interest”. The IRS rules behind those two points are summarized further down.

Buyback: reinstating withdrawn service

A member who withdrew and later returns to covered work has a way back. “If you return to eligible public employment, you will begin accruing service again; however, you may also buy back your past credits”. PERSI describes who qualifies: “If, after receiving your account withdrawal, you become employed by a PERSI employer in an eligible capacity, you may be eligible to buyback, or reinstate that previously withdrawn service credit”.

The price is defined by a formula in words: “The cost to reinstate the service credit is the amount of the separation benefit, plus all interest that would have accrued had the account withdrawal not occurred”. The documents read do not give a deadline for a buyback, an interest rate, or an installment option, so none of those are described here. The statute prices the buyback and leaves the rate to the board. Idaho Code 59-1360 says: “After again becoming an employee the member may reinstate previous credited service by repaying to the retirement fund the full amount of all prior accumulated contributions provided such repayment includes payment of interest as determined by the board.” That section states no deadline and no installment option.

To start: “To initiate a buyback, contact the PERSI Answer Center”. For general buyback arithmetic, see the pension buyback calculator, with inputs taken from PERSI’s own quote.

The Choice 401(k) Plan is separate from the Base Plan

PERSI also runs a Choice 401(k) Plan with separate withdrawal rules. “If you are no longer employed by a PERSI employer, you are able to make a withdrawal from your PERSI Choice 401(k) Plan account”. “If your account balance is greater than $1,000, you can leave your money in the plan”. This page concerns the Base Plan; the documents read say nothing further about the 401(k) account.

How the benefit is taxed, as PERSI states it

On monthly benefits, the State of Idaho tax withholding form says: “Generally, your PERSI benefit is taxable income”. On withholding, “You may choose to have Idaho taxes withheld from your monthly PERSI benefit”. For Idaho’s treatment of pensions in general, see Idaho retirement taxes and does Idaho tax pensions.

What the IRS adds on tax

A refund or lump sum from a public pension is a distribution, so the IRS rules apply on top of PERSI’s own. On withholding, the IRS says that a taxable eligible rollover distribution paid to you “is subject to mandatory income tax withholding (generally at a rate of 20%), even if you intend to roll it over later”, and that if you roll it over yourself “you’ll have to add funds from other sources equal to the amount withheld”. PERSI’s own page describes a direct rollover as the way to avoid the 20% withholding on a Base Plan withdrawal. The rollover clock, if the money is paid to you: “you have 60 days from the date you receive it to roll it over to another eligible retirement plan”.

On early distributions the IRS says “the law imposes a 10% additional tax on certain early distributions from certain retirement plans”. Its list of exceptions includes “Distributions made to you after you separated from service with your employer after attainment of age 55” and “Distributions made to a qualified public safety employee from a governmental plan”. Whether an exception fits a particular refund depends on your own plan and facts, so confirm it with a tax preparer before you take one.

What this page could not settle

• A lump sum or partial lump sum at retirement is not described in the three PERSI documents read, so this page does not cover one. The only lump sum the documents describe is the Base Plan account withdrawal.
• The amount of the reduction for each contingent annuitant option and for Option 3 is not stated in the documents read, so no option comparison is computed here. The PERSI estimate supplies those figures.
• The benefit formula appears on the Applying for Retirement page as a graphic that does not appear in the archived text, so it is not restated.
• Retirement ages and service requirements for each member category are not stated in the documents read. Idaho Code 59-1341 states the service retirement ages (see the eligibility section above).
• A vesting period, interest on contributions left in the plan, and whether a spouse must consent to a Base Plan withdrawal are not stated in the documents read. Idaho Code 59-1302 supplies a five year vesting rule with exceptions and says the interest rate is set by the board (see above); the withdrawal section, 59-1359, states no spousal consent condition.
• A deadline, interest rate or installment option for a buyback is not stated in the documents read. Idaho Code 59-1360 states no deadline or installment option and leaves the interest rate to the board.
• The size and timing of cost-of-living adjustments are not stated in the documents read. The application mentions COLAs only in describing how the Option 3 benefit after Social Security full retirement age is calculated. Idaho Code 59-1355 does state them. Each year’s factor turns on the ratio of the consumer price index to the year before. Where that ratio is not more than 101%, “the inflation factor shall be such ratio or ninety-four percent (94%), whichever is greater”. Otherwise “the inflation factor during such adjustment year shall be one hundred one percent (101%)”. A higher factor needs both approval and funding: “the board, with legislative approval, may put into effect a greater factor which is no more than such ratio or one hundred six percent (106%), whichever is smaller, if it finds the value of the actuarial assets of the system to be no less than its actuarial liabilities, including those created by the increased factor”. On timing, “An adjustment year shall extend from March through the following February.” And “The adjustments provided under this section shall in no event reduce a benefit payment below its initial amount.”

Common mistakes

• Applying without an official PERSI estimate: the annual statement and workshop estimates are not accepted, and PERSI cannot accept the application.
• Treating the option as changeable for years: the application allows a change only within five business days of the first payment.
• Choosing Option 3, 4A or 4B without the Social Security quote certification, which the instructions require.
• Filing later than thirty days before the retirement date, which can delay the benefit.
• Withdrawing the Base Plan account without weighing that it cancels all retirement credits and any monthly benefit eligibility.
• Taking a withdrawal paid to the member instead of a direct rollover and then facing 20% federal withholding.
• Returning to a PERSI employer in an eligible capacity after applying, without checking first, when benefits are suspended.

Related on this site: Idaho retirement taxes, does Idaho tax pensions, pension refund versus leaving it, pension buyback calculator and public pension retirement decisions by system.

Sources

• PERSI, Applying for Retirement: https://www.persi.idaho.gov/members-1/applying-for-retirement/
• PERSI, Account Withdrawal and Buyback: https://www.persi.idaho.gov/members-1/account-withdrawal-and-buyback/
• PERSI, Retirement Application form RS1000: https://www.persi.idaho.gov/docs/forms/RS1000.pdf
• IRS, Topic no. 413, Rollovers from retirement plans (irs.gov): https://www.irs.gov/taxtopics/tc413
• IRS, Topic no. 558, Additional tax on early distributions from retirement plans other than IRAs (irs.gov): https://www.irs.gov/taxtopics/tc558

Sources: the primary documents linked above, read on October 2, 2026. General information from each system’s own published materials, not legal, tax or financial advice. Your own member statement and the system’s current rules decide your benefit, and a pension counsellor at the system or a fee-only adviser is the right place to confirm anything consequential.