Memphis City Retirement System Decisions: Options, Refund (2026)

Updated October 7, 2026. Quick answer: A City of Memphis general employee hired on or after July 1, 2016 is in the 2016 Hybrid Plan: a Cash Balance account plus a Defined Contribution account. Normal retirement is age 65 with 5 years of service, or 25 years with a 5.0% reduction for each year before age 62. After 10 years a leaver gets a monthly benefit at age 60 or may take a refund of employee contributions instead. Under 10 years, the refund is the result. A refund paid to the member has 20% withheld. The summary describes a 75% survivor benefit, not a menu of annuity options.

Which Memphis plan this page covers

This page covers one group in the City of Memphis Retirement System: general employees in the 2016 Cash Balance and Defined Contribution Plan, which the City calls the Hybrid Plan. The City’s summary describes it as “a tax-deferred Cash Balance/Defined Contribution retirement plan qualified under Internal Revenue Code Section 401(a)”, and states that it “is for use by General Employees only”. Police and fire (commissioned officers) have their own summary, which this page does not use.

Membership is mandatory for an eligible full-time employee who “was hired on or after July 1, 2016” or “is a Transferred Participant”. The summary adds: “You cannot participate in the 1948 or 1978 defined benefit plans, nor can you change plans.” A transferred participant had “less than seven and one-half (7.5) years of service with the City” at June 30, 2016. Light, gas and water employees, Shelby County government and the older 1948 and 1978 defined benefit plans are not covered here.

The sources are the City’s Hybrid Plan summary, its refund application packet, its Hybrid Plan frequently asked questions (June 2022) and a 2018 benefits guide, all published on the City’s Total Rewards site and read on October 7, 2026. If the summary conflicts with the ordinance, “the ordinance, as amended from time to time, will govern”. State tax treatment is on Tennessee retirement taxes and does Tennessee tax pensions; the state system is on Tennessee TCRS retirement decisions.

The decisions in the order they come up

The choices in the documents read are when to retire, whether to leave contributions in the plan or take a refund, how to invest the Defined Contribution account, and whether to roll an outside 457(b) balance in.

The summary describes no choice among annuity types, so the survivor column reports death benefits.

What goes into the two accounts

The summary says each general employee is “required to make a contribution to the Cash Balance portion of the Plan equal to two percent (2%) of compensation”, and “required to make a contribution to the Defined Contribution Plan portion of the retirement plan equal to six percent (6%) of his/her compensation”. The City contributes 1.5% of compensation to the Defined Contribution account. The 2018 guide describes the same split: “Employee contributions will be a combination of 2% of salary in a Market Based Plan and 6% of salary in a 401 (a) Plan”. Compensation excludes overtime.

The City’s Cash Balance allocation rises with service: 3% of compensation under 5 years, 5% from 5 years to under 10, 7% from 10 to under 15, 10% from 15 to under 20, and 13% at 20 or more. The Cash Balance account also earns “an interest credit based on the Plan’s return on assets for the plan year less one percent (1%)”. A computed example from an assumed $50,000 salary, not a Memphis figure: the 2% employee Cash Balance contribution is a computed $1,000 a year, the City’s allocation at the 5% rate is a computed $2,500, and the 6% Defined Contribution contribution is a computed $3,000. The salary is invented to show the arithmetic.

On the Cash Balance side, the account value on retirement, or on leaving without a benefit, “will not be less than the sum of your accumulated participant Cash Balance Plan contributions”. The Defined Contribution account is member-directed, and “a target date investment fund” is the default for members who give no direction.

When a general employee can retire

For general employees hired on or after July 1, 2012, the summary gives two routes. Retirement benefits begin at age 65 with 5 years of service, or after “twenty-five (25) years of service” with a written election made at least thirty days before the retirement date. The 25-year route carries a cost: the benefit is “reduced by 5.0% per year for each year that his or her early retirement date precedes the date the Participant will attain age 62”.

The election is filed with the Pension Board, so the thirty-day notice is a deadline. Confirm dates with the Total Rewards Service Center at (901) 636-6800.

A computed example from assumed figures, not Memphis figures: a member with 25 years of service retires at an assumed age of 57 with an assumed accrued monthly benefit of $2,000. The date precedes age 62 by 5 years, so the reduction is 5.0% times 5, or 25%, a computed $500 a month, leaving a computed $1,500. The actual accrued benefit comes from the plan’s own calculation.

How the monthly benefit is paid

The Hybrid Plan does not use a years-times-percentage-times-final-pay formula. The summary says the monthly benefit is “equal to the actuarial equivalent of the sum of (i) your Cash Balance Plan account, (ii) your Defined Contribution Plan account”, plus any rollover account elected. It defines the key term: “Amounts that are “actuarially equivalent” are mathematically equivalent in value based upon calculations using plan interest rates and mortality tables”. The pages read do not print those rates or tables.

On payment form, the summary says: “Your retirement benefits will be paid to you for life, provided you do not return to employment with the City.” On marital status it says the annuity “payable to you as a single person based on your accrued benefit will be actuarially equivalent to the monthly benefit payable to you if you are married, with your spouse entitled to a survivor benefit, although the actual monthly amount you would receive in each case would be different”. That sentence lists no named annuity options, percentages or choice deadline. For how reductions usually work elsewhere, see single-life versus joint-and-survivor pension, and confirm with the Total Rewards Service Center what applies in Memphis.

Lump sum at retirement

The Summary Plan Description describes monthly payments and no lump sum at retirement. A 2018 benefits guide says “employees have the option of 457 Cash Out or rolling the fund over into an annuity”. That guide is a plan-change presentation, not the plan summary. Ask the Total Rewards Service Center whether a cash payout exists for Hybrid Plan members today.

The summary is clear on tax: “none of the monthly retirement benefit distributions can be rolled over and are not subject to 20% mandatory withholding”. The withholding discussed below therefore applies to refunds, not monthly checks. For the general rule see 20% withholding on a pension lump sum. The pages read do not describe a deferred retirement option plan (DROP) for the Hybrid Plan.

Rolling an outside 457(b) account into the plan

The summary says a member who leaves City service “can transfer your 457(b) account by direct rollover to the Hybrid Plan provided you make the rollover before you begin to receive your retirement benefits”. “Only funds contributed to the 457(b) account while you were employed by the City may be rolled into the Hybrid Plan.” The trade-off is that the member “can’t withdraw the account, or receive a distribution of the account except at times you would otherwise be able to receive distributions under the Hybrid Plan”. The balance is added to the Cash Balance and Defined Contribution accounts to raise the monthly benefit. This is a one-way decision, and the pages read give no rate or conversion factor to price it.

Leaving before retirement: deferred benefit or refund

The summary says: “If you terminate service with the City after ten or more years of service, you will receive a retirement benefit, payable in monthly benefit form, when you reach age sixty.” It adds: “In lieu of this monthly benefit commencing at age sixty you may elect to receive a refund of your Cash Balance Plan employee contributions and interest credits allocable to your employee contributions and your Defined Contribution Plan account balance attributable to your employee contributions.” The benefit is conditioned on the member not having committed an act the Board finds harmful, as the summary defines it.

With less than 10 years there is no such choice. For a member who is “not entitled to a retirement benefit (normal or deferred)”, the summary provides “an amount equal to your total employee contributions to the Cash Balance Plan plus credited interest on your employee contributions” and the Defined Contribution balance from employee contributions. “This amount will be paid to you within two months of your date of termination.” Taking a refund counts as leaving: the summary lists “Receive a distribution of your employee contributions” among the ways a member terminates service. The general framework is on pension refund versus leaving it.

Taking a refund: paperwork, timing and release

The City’s refund packet says: “Complete sections A & C for the refund check to be paid directly to you.” “Complete sections B & C for the refund check to be directly rolled to an IRA account or another qualified plan.” The packet sets the timing: “Allow up to sixty (60) days after you receive your final pay for your refund or rollover to be distributed.” The summary measures from termination instead (see above), so the two statements are close but not identical. “The Application for Refund MUST be notarized if signed outside the Total Rewards Service Center-Benefits office.”

The application also contains a release. The member signs a statement to “waive for myself and for anyone who may have or claim to have any interest in the said retirement fund all claims on the said retirement fund”, and the form adds that “payment of said refund shall operate as a release of any claims which I may have against the said retirement fund as a result of City service and contributions”. Confirm the numbers before signing.

The form offers a rollover route, letting the member ask that the refund be “rolled over to my existing City of Memphis Mass Mutual 457 (b) Deferred Compensation account”, or rolled to another named fund or company. For a refund paid to the member, the form states “the City is required by the IRS to withhold 20% taxes and also I may be required to pay an additional 10% tax”.

A computed example from an assumed $10,000 taxable refund paid to the member, not a Memphis figure: 20% of $10,000 is a computed $2,000 withheld, leaving a computed $8,000 in cash. A direct rollover avoids the withholding. The summary says a refund paid to the member is taxed in the year distributed unless rolled over within 60 days, and “if you receive the payment before age 59 ½, you also may have to pay an additional 10% tax”. The taxable amount depends on the member’s own situation, so a tax preparer should confirm it.

What a survivor gets

If the member dies, a surviving spouse (or children, if the member is not married) receives “75% of the retirement benefit you were receiving if you died while receiving a benefit”, or “75% of the normal, involuntary, or disability retirement benefit you would be entitled to at the time of your death” after at least five years of service or an ordinary disability. “Your surviving spouse will receive death benefits until his/her death or remarriage (if he/she remarries before age 65).” Children’s benefits begin after the spouse’s death or remarriage, or at once if there is no spouse.

A computed example from an assumed $1,800 monthly benefit, not a Memphis figure: 75% of $1,800 is a computed $1,350 a month. The line-of-duty rule is higher: “The Line-of-Duty death benefit for your spouse or Children is equal to the greater of 60% of your Average Monthly Compensation (as defined in the Plan) as of the date of your death or your Accrued Benefit as of the date of your death”. Compare other systems on survivor benefit with a government pension. The summary describes no election that changes this 75%, though its payment-form sentence says amounts differ for a married member, so ask what the retirement paperwork offers.

Cost-of-living adjustments

The FAQ says “cost of living adjustments for retirees are recommended by the Mayor and approved by the City Council each year”. The pages read state no formula, so a member should not assume a fixed increase. The FAQ also says “City employees who pay into pension do not pay into Social Security”.

Tax on the monthly benefit

The summary says that because the City picks up the contributions, “your entire retirement benefit payment will be subject to Federal income tax when you receive it”, unless a portion can be rolled over. Whether Tennessee taxes it is on does Tennessee 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 the Memphis plan’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 City’s refund packet says the same thing in its own terms: the member is told in advance that withholding applies when the refund is paid to the member. 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” if the employee separated from service during or after the year they attained age 50 or 25 years of service under the plan, whichever is earlier. 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.

Where the documents differ

Three differences appear. First, on a cash payout, the Summary Plan Description describes a monthly benefit while the August 2018 guide says “employees have the option of 457 Cash Out or rolling the fund over into an annuity”. Second, on how much the City contributes, the plan summary puts the City’s Cash Balance allocation at 3% to 13% for general employees and 1.5% to the Defined Contribution account, while the FAQ says “the City contributes 3-16% of their salary (based on years of pension creditable service and position) to the employee’s individual account”. Third, on refund timing, the packet allows up to sixty days after final pay and the summary says two months from termination. The Total Rewards Service Center should confirm any difference that affects a decision.

What this page could not settle

• The pages read do not describe a menu of annuity options (such as single-life versus joint-and-survivor) for Hybrid Plan retirees, or the reduction percentages for one.
• The pages read do not state whether a lump-sum retirement payment is available to Hybrid Plan members today; a 2018 guide mentions a 457 cash out, but the plan summary does not.
• The pages read do not print the interest rates and mortality tables used to convert the accounts into a monthly benefit.
• The pages read do not describe a way for a Hybrid Plan member to purchase service credit. The FAQ discusses a buyback only for members who left the older 1978 plan, and this page does not apply it to the Hybrid Plan.
• The Summary Plan Description carries no printed edition date in the copy read, and the refund packet is a 2018 packet.

Common mistakes

• Assuming the 1978 plan rules apply; a general employee hired on or after July 1, 2016 cannot participate in the 1948 or 1978 plans or change plans.
• Retiring at 25 years without counting the reduction; the benefit is cut 5.0% for each year before age 62.
• Taking a refund without weighing the release; the packet has the member give up claims on the fund for that service.
• Having a refund paid to oneself and expecting the full amount; 20% federal withholding applies unless the refund is rolled over directly.
• Rolling a 457(b) account into the Hybrid Plan without noting that it cannot be withdrawn except when plan distributions are allowed.

Related on this site: Tennessee retirement taxes, does Tennessee tax pensions, Tennessee TCRS retirement decisions, pension refund versus leaving it, single-life versus joint-and-survivor pension, pension buyback calculator, 20% withholding on a pension lump sum, survivor benefit with a government pension and public pension retirement decisions by system.

Sources

• City of Memphis Retirement System, 2016 Cash Balance Plan and 2016 Defined Contribution Plan Summary Plan Description, General Employees (edition date not printed): https://totalrewards.memphistn.gov/wp-content/uploads/2025/12/Hybrid_General_Employees_Summary-1.pdf
• City of Memphis Division of Human Resources, Pension Refund Forms: Application for Refund of Member’s Contributions and Special Tax Notice Regarding Plan Payments (2018 packet): https://totalrewards.memphistn.gov/wp-content/uploads/2025/12/Pension-Refund-Form-2019.pdf
• City of Memphis Division of Human Resources, 2016 Hybrid Plan Frequently Asked Questions (6.2022): https://totalrewards.memphistn.gov/wp-content/uploads/2025/12/Hybrid-Plan-FAQs_Letterhead-6.2022-1.pdf
• City of Memphis, City of Memphis Pension Plans benefits guide pages (August 2018): https://totalrewards.memphistn.gov/wp-content/uploads/2025/12/CoM_Benefits2018_Pension-1.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 7, 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.