Mississippi PERS Retirement Options: Payments, PLSO and Refund

Updated October 2, 2026. Quick answer: The Public Employees’ Retirement System of Mississippi (PERS) offers seven base options plus, if eligible, a Partial Lump Sum Option (PLSO) of 12, 24 or 36 months of the Maximum Retirement Allowance. A PLSO lowers the monthly benefit and the COLA for life and is final once cashed or deposited. Options 3 and 4B cannot be changed after retirement. A refund ends membership and service credit. Vesting takes 4 years if hired by June 30, 2007, and 8 years after that. The COLA is 3 percent, simple at first, then compounded.

More on public pension systems, topic by topic: Mississippi PERS COLA, Mississippi PERS returning to work and Mississippi PERS disability retirement.

How PERS builds the benefit and which tier applies

The Public Employees’ Retirement System of Mississippi covers state agencies, public schools, community and junior colleges and universities, as well as counties, cities and other participating political subdivisions. This page works from the Member Handbook (revised November 8, 2024) and the Retiree Handbook (revised February 26, 2026), which describe general rules and say the laws and administrative rules prevail if there is a conflict.

The monthly check comes from a formula, not the account balance. “Your monthly benefit amount is based on your average compensation, years of service, and the benefit payment option selected at retirement.” “The formula for calculating service retirement benefits is 2 percent of your average compensation multiplied by creditable service years up to 25 or 30 (based on your Retirement Tier).” Years beyond that count 2.5 percent each. Tier is set by hire date: “Hired June 30, 2007, or earlier” for Tiers 1 and 2, “Hired July 1, 2007, through June 30, 2011” for Tier 3, and “Hired July 1, 2011, or later” for Tier 4. Tier drives vesting, retirement age and the PLSO threshold. Members who became members on or after March 1, 2026 fall outside all four tiers. Section 25-11-115, as amended by H.B. 1 (2025) as sent to the Governor, says “Any member who became a member of the system on or after March 1, 2026, shall not be eligible for a partial lump-sum distribution”, and its amended Section 25-11-111 sets a retirement annuity that “shall be equal to one percent (1%) of the average compensation for each year of creditable service” for that group.

Vesting and when a member can retire

Vesting is the line between a refund-only exit and a lifetime benefit. For those hired on or before June 30, 2007: “You have 4 years of membership service to be vested.” For the two later groups: “You have 8 years of membership service to be vested.”

Service retirement for Tiers 1 to 3: “You can retire with 25 years of creditable service at any age or age 60 and vested.” For Tier 4: “You can retire with 30 years of creditable service at any age or age 60 and vested.” “An actuarial reduction applies under Tier 4 if you retire before age 65 with less than 30 years of creditable service.” The statute measures the reduction by the smaller of two shortfalls. Section 25-11-111(f) says the allowance is “reduced by an actuarial equivalent factor for each year of creditable service below thirty (30) years or the number of years in age that the member is below age sixty-five (65), whichever is less”.

The seven base options: what each pays and what a survivor gets

“PERS provides seven base options from which to choose at retirement, plus, if eligible and desired, a Partial Lump Sum Option (PLSO) to add to a base option.” The baseline is the single life annuity: “The Maximum Retirement Allowance Option provides the highest possible monthly benefit for life available to you at retirement.” “No monthly benefits are payable to any beneficiary.” “If the total monthly retirement benefits paid before your death is less than your contributions and interest, the remainder will be refunded to your designated beneficiaries.”

“Option 1 provides you with reduced monthly benefits for life compared to what you would receive under the Maximum Retirement Allowance Option because your contributions are pro-rated over your actuarial life expectancy, which could increase the available refund amount for beneficiaries.” “PLSO is not available with this option, regardless of eligibility.”

The survivor shares come from the handbook’s comparison chart. Option 2: “Reduced benefit for life for you, beneficiary receives your same monthly amount for life after your death, unless limited by IRC Section 401(a)(9)”. Option 3: “Reduced benefit for life for you, beneficiaries each receive 50 percent of your monthly amount for life after your death, unless limited by IRC Section 401(a)(9)”. Option 3 continues: “If one beneficiary dies, your remaining beneficiary receives 100 percent of the monthly benefit for life.” Option 4: “Reduced benefit for life for you, beneficiary receives 75 percent of your monthly amount for life after your death”. Option 4A: “Reduced benefit for life for you, beneficiary receives 50 percent of your monthly amount for life after your death”. Option 4B: “Reduced benefit for life for you, after your death beneficiaries receive your same monthly amount for up to 10, 15, or 20 years from your effective date of retirement”.

A computed example from an assumed $1,500 monthly benefit after the option reduction, not a PERS figure: an Option 4 survivor would receive 75 percent of it, a computed $1,125 a month, an Option 4A survivor 50 percent, a computed $750 a month, and each Option 3 beneficiary half, a computed $750 a month. The reduction from the Maximum Retirement Allowance depends on ages and actuarial factors the pages read do not give, so a PERS estimate is the only source for the real reduced amount. For the lump sum side of the same choice, see pension lump sum versus monthly annuity.

What is irrevocable and what can still change

For Option 2: “You may not change your beneficiary once selected unless he or she dies or unless you divorce and your spouse is named as beneficiary. If so, you may apply to Pop-Up to the Maximum Retirement Allowance Option.” For Option 3: “You may not change your beneficiaries once selected.” The Retiree Handbook states the outer limit: “If you selected Option 3 or Option 4B at retirement, you cannot change your option after retirement”. Only the Maximum Retirement Allowance Option and Option 4B say “You may change your beneficiaries at any time.”

The Pop-Down Provision “allows a retiree who selected the Maximum Retirement Allowance Option or Option 1 to change to Option 2, Option 4, or Option 4A” for a new spouse. The deadline is short: “The retiree must apply for this provision within one year of the date of the marriage.”

Before retirement the election is more flexible. “Elections made on the Advanced Application do not restrict options available to you at retirement. The option selection and beneficiary designation may be changed at any time prior to retirement by filing an updated Advanced Application.” “If you make application and then decide not to retire, PERS simply requires submission of a written notice from you to rescind your application.”

The Partial Lump Sum Option and rollover

“The Partial Lump Sum Option (PLSO) is available to eligible members in addition to the selected base option.” “By electing to receive a PLSO distribution, your monthly benefit and Cost-of-Living Adjustment (COLA) will be reduced for your lifetime.” “Seek assistance from a financial advisor and/or a tax professional to help you decide if selecting the PLSO is the right choice for you and your retirement needs.”

“The PLSO is available to first-time retirees who are entering service retirement.” Tiers 1 and 2: “You are eligible for PLSO with 28 years of creditable service or age 63 and vested.” Tier 3: “You are eligible for PLSO with 28 years of creditable service.” Tier 4: “You are eligible for PLSO with 33 years of creditable service.”

The size is a choice of three: “At retirement, you may elect a PLSO distribution in an amount equal to either 12 months, 24 months, or 36 months of your Maximum Retirement Allowance.” “Your PLSO distribution will be a single payment”.

On payment: “The PLSO distribution can be paid directly to you by check, or, if you prefer, part or all of the distribution may be rolled over to another eligible retirement account.” “Generally, 20 percent of a PLSO distribution paid directly to a retiring PERS member will be withheld for federal income taxes.” “All PLSO distributions are considered final once cashed or deposited.” Before age 55 (age 50 for police officers, firefighters, and emergency medical technicians), “the Internal Revenue Service may impose an additional 10 percent federal tax penalty on the distribution”.

The reduction comes from a factor table. “Factors effective July 1, 2018 (Factors are subject to periodic change based on actuarial experience.)” The row for age 60 reads “60 0.9297 0.8594 0.7892”, meaning 0.9297 for a 12-month PLSO, 0.8594 for 24 months and 0.7892 for 36 months.

A computed example from an assumed $2,000 monthly Maximum Retirement Allowance, not a PERS figure: an eligible retiree aged 60 taking the 12-month PLSO gets 2,000 multiplied by 12, a computed $24,000. The monthly benefit becomes 2,000 multiplied by 0.9297, a computed $1,859.40, a reduction of a computed $140.60 a month. The lump sum divided by that reduction is a computed 170.7 months, about a computed 14.2 years. With the 36-month PLSO the lump sum is a computed $72,000, the monthly benefit is a computed $1,578.40 (2,000 multiplied by 0.7892), the reduction is a computed $421.60 a month, and the break-even is a computed 170.8 months. The calculation ignores the COLA reduction, taxes and any return on the lump sum. For the general method, see pension lump sum versus monthly annuity.

Refund or leave the contributions in PERS

“An inactive member retains his or her membership and the right to future benefits, either as a refund of contributions and interest or, if vested, as a deferred retirement benefit.” The statute sets the starting age for that deferred benefit: Section 25-11-111(b) says the member “shall be entitled to receive a retirement allowance, beginning upon his attaining the age of sixty (60) years”. “Refunding your account contributions means losing your membership in PERS as well as the accompanying service credit. You also waive and relinquish all accrued vested rights.”

The refund is all or nothing: “You cannot receive loans, partial refunds, or hardship withdrawals of your contributions. However, upon termination from employment, you may apply for a full refund of your contributions.” “Member contributions plus accumulated interest are refunded to members who choose to withdraw their contributions following termination of covered employment.” “Employer contributions are not credited to individual member accounts and are not payable to members through refunds.” On timing, “PERS will issue your refund after final wages and contributions are posted to your account, but no later than 90 calendar days from the date of termination from covered employment”, counted from the later of that date or the date PERS receives the completed form. The statute states the clock only from receipt: Section 25-11-117(1) says the refund “shall be paid within ninety (90) days from receipt in the office of the retirement system of the properly completed form requesting the payment”.

Undoing a refund is possible but slow. “You may repay the refund immediately upon reentering covered service; however, you must be a contributing member for at least eight years to restore the associated creditable service and to qualify for certain statutory benefits.” The eight years is the statute’s requirement only for members who joined between July 1, 2007 and March 1, 2026. Section 25-11-117(3), as amended by H.B. 1 (2025) as sent to the Governor, requires “at least four (4) years after the member’s reentry into state service” for earlier members, “at least eight (8) years after the member’s reentry” for that later group, and for a member who became a member on or after March 1, 2026 says “the member shall not be eligible to repay any portion of amounts previously received as a refund”. “The cost to repay a refund includes the gross amount of the refund plus non-refundable interest for each year beginning with the date of the refund, based upon rates established by the PERS Board of Trustees.” The statute describes the charge as “regular interest covering the period from the date of refund to the date of repayment”, lets a member “repay all or part of the amounts previously received as a refund”, and applies repayment “beginning with the most recent service for which refund has been made”. For the general trade, see pension refund versus leaving it.

Taxes are the member’s responsibility. “If you terminate employment and elect to receive a refund of contributions and interest paid directly to you, 20 percent (or more upon your request) will be withheld for federal income tax from the taxable portion of your refund.” On the early-distribution tax: “If you withdraw contributions before you reach age 55 (age 50 for policemen, firemen, and emergency medical technicians)”, the IRS may add a 10 percent federal tax. For a rollover: “A rollover is the tax-deferred transfer of all or part of your contributions and interest to another eligible plan or retirement account.” “In addition to Form 5, Member Refund Application, you must complete Form 5C, Rollover Distribution Election, to request a rollover of contributions.”

Buying service credit and repaying a refund

“Prior to retirement, a vested member may purchase at actuarial cost up to 10 years of eligible non-covered service.” The ten-year cap is narrower than that sentence suggests. Section 25-11-109(10), as amended by H.B. 1 (2025) as sent to the Governor, gives “a maximum of ten (10) years creditable service” for “Any service rendered as an employee of any political subdivision of this state, or any instrumentality thereof” that did not take part in PERS, that did not elect retroactive coverage, or whose coverage was excluded, and requires the member to pay “the actuarial cost as determined by the actuary” for each year. “Service credit may not be purchased after you retire, and beneficiaries are not eligible to purchase service credit on behalf of a deceased member.”

“Funds remitted directly by you for purchase of service are not tax-deductible at the time of purchase, but are considered after-tax contributions.” “These funds will be treated as tax-deferred funds and will be taxed when distributed to you.” “Before you begin your payback, you will need to obtain an official refund payback cost by contacting PERS.” For whether a purchase is worth the price, see the pension buyback calculator.

Cost-of-living adjustment

“Retirees and beneficiaries who have been receiving benefit payments for at least one full fiscal year (July 1 to June 30) are eligible to receive an annual Cost-of-Living Adjustment (COLA).” The statute adds a hire-date condition. Section 25-11-112(1) covers a “member who became a member of the system before March 1, 2026”, and Section 25-11-112(9) says “A member who became a member of the system on or after March 1, 2026, is not entitled to the additional annual benefit under this section”. “The COLA is equal to 3 percent of your annual base benefit for each full fiscal year of retirement prior to the year in which you reach age 55 (Retirement Tiers 1 through 3) or 60 (Retirement Tier 4), plus 3 percent compounded for each fiscal year thereafter, beginning with the fiscal year in which you turn age 55 (Retirement Tiers 1 through 3) or 60 (Retirement Tier 4).” The statute counts the years differently from the handbook’s wording: for members who joined on or after July 1, 2011, Section 25-11-112(1)(b) counts full fiscal years in retirement “before the end of the fiscal year in which the member reaches age sixty (60)”.

A computed example from an assumed $750 monthly base benefit, not a PERS figure for any member: the Retiree Handbook illustrates its calculator with “a member who retired at age 52, has been retired for 16 full fiscal years, and is receiving a gross monthly base benefit of $750 under each Retirement Tier”. For Tiers 1 through 3 that member reached age 55 after 3 full fiscal years and has 13 years since, so the COLA is 750 multiplied by 12, multiplied by the sum of 3 percent for each of the 3 years and the handbook’s 46.85 percent compounded rate for 13 years, a computed $5,026.50. For Tier 4 the age is 60, so 8 years come before and 8 after: 750 multiplied by 12, multiplied by 3 percent for each of 8 years plus the 26.68 percent compounded rate for 8 years, a computed $4,561.20. The rates come from the handbook’s COLA table, and a retiree’s own figure comes from PERS.

“You may irrevocably elect to receive your COLA in 12 equal monthly installments. If you do not make that election, your COLA will be paid annually in one lump sum payment on or about December 15.” The statute sets the election and the default payment month. Section 25-11-112(3) says a retiree may elect by “irrevocable agreement in writing filed in the Office of the Public Employees’ Retirement System no less than thirty (30) days before July 1 of the appropriate year”, and otherwise the additional benefit “shall be paid in one (1) payment in December of each year”.

Mississippi tax on PERS benefits

“Retirement benefits are not subject to Mississippi State Income Tax; however, benefits paid by PERS to you as a resident of another state may be subject to taxation in that state.” For the wider picture, see Mississippi retirement taxes and does Mississippi 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 PERS’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”. The PERS handbooks say a PLSO or a refund may be rolled over to another eligible retirement account, and the IRS rules apply to that rollover. 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

• The pages read do not give the option reduction factors by age for Options 1, 2, 3, 4, 4A and 4B, so the real reduced monthly benefit comes from a PERS estimate.
• The pages read do not state whether a spouse must consent to a refund, a PLSO or the choice of a single life option.
• The pages read do not state the rate of interest on member accounts, which they place in a Board regulation, or the current member contribution rate.
• The pages read do not state whether purchased service credit counts toward vesting.
• The pages read give the Tier 4 actuarial reduction as a factor without a table.

Common mistakes

• Treating a joint and survivor beneficiary as changeable later; for Options 2, 4 and 4A the beneficiary can change only on death or divorce through Pop-Up, and Option 3 cannot change beneficiaries.
• Taking a PLSO without comparing the monthly and COLA reduction; the handbook says both are reduced for life and the distribution is final once cashed or deposited.
• Assuming a refund can be taken in part; the handbook says there are no loans, partial refunds or hardship withdrawals.

Related on this site: Mississippi retirement taxes, does Mississippi tax pensions, pension lump sum versus monthly annuity, pension refund versus leaving it and public pension retirement decisions by system.

Sources

• PERS of Mississippi, Member Handbook: https://www.pers.ms.gov/Content/Handbooks/Member_Handbook.pdf
• PERS of Mississippi, Retiree Handbook: https://www.pers.ms.gov/Content/Handbooks/Retiree_Handbook.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.