Updated October 8, 2026. Quick answer: The Pennsylvania Municipal Retirement System (PMRS) administers pension plans for participating local employers, and each employer’s plan decides the real terms. PMRS lists a single life annuity, guaranteed present value, 10-year and 20-year period certain, and 50% and 100% joint survivor options. The choice is one-time and irrevocable. A plan may also allow a lump sum at retirement, with 20% withheld if paid to you. Withdrawing contributions after leaving forfeits employer-funded benefits, and interest stops at termination.
What this page covers and what it does not
This page works from documents published by the Pennsylvania Municipal Retirement System (PMRS): its retiree page on benefit payment options, its members’ FAQ, its defined benefit and cash balance pages, its DROP page, and three forms: the Application for Return of Contributions (PMRB-4, March 2026), the Application for Lump Sum Distribution (PMRB-6, July 2026) and the Application for Retirement Benefits (PMRB-8, May 2018). The web pages were read on October 8, 2026. PMRS is a multi-employer system, so this page covers what PMRS says in general and no single municipality’s plan. PMRS is plain about it: “Benefits are based on the agreement between your employer and PMRS”.
State tax questions are on Pennsylvania retirement taxes and does Pennsylvania tax pensions. The state employees’ system is separate and covered at Pennsylvania SERS retirement decisions.
Why the terms differ from one municipality to the next
PMRS says “each participating employer may have multiple plans”, and that “each plan member is provided with a benefit summary that details the benefits that are provided by your plan”. On survivor choices: “Your employer benefit plan will determine the survivor options that are available to you”, and “Most plans provide at least four options for survivor benefits”. Even its list of options carries a caution: “The list below is only a general overview of plan benefits.” “Please check with your employer’s benefit plan to see what is available in your payment options.”
How the monthly benefit is figured
For a defined benefit plan, PMRS says “Employee retirement payments are based on a pre-set formula”, using the years of credited service, the final average salary, and “The plan benefit accrual rate (multiplier) determined by your employer”. Its worked example reads: “10 (years of credited service) x $30,000 (final average salary) x .05 (accrual rate/multiplier) = $15,000 (annual pension benefit)”
A computed example from assumed figures, not a PMRS figure and not any employer’s multiplier: with an assumed 20 years of service, an assumed final average salary of $50,000 and an assumed multiplier of 0.02, 20 x $50,000 x 0.02 gives a computed $20,000 a year, or a computed $1,666.67 a month before any option reduction.
A cash balance plan works differently. PMRS says “the account does not make or lose money with the market”, and “the account only makes money at the regular interest rate as set by the PA Retirement Board of Trustees”. The benefit comes from a conversion: “Amount in Account divided by a Unisex Factor equals Annual Benefit for Life”. The pages read give no factor, so no cash balance amount can be estimated here.
The election: PMRS’s payment options
“When you retire, you will make a one-time, irrevocable choice of how you would like to receive your benefits.” “Generally, providing the least guaranteed survivor benefit will provide you with the most monthly benefit.” PMRS also says that “PMRS does not recommend which survivor option should be selected”. It lists these things to consider: “Your health and your survivor’s health”, “Life expectancy and family history”, and “Other pensions that may provide for your survivor(s)”.
| Option | What the member receives | What happens after the member’s death |
|---|---|---|
| Single Life Annuity | Income throughout the lifetime of the member | No benefit for a survivor; unpaid member contributions and credited interest go to the designated beneficiary |
| Single Life Annuity with Guaranteed Present Value | A reduced lifetime benefit | The remainder of the present value goes to the named beneficiary or estate; over $5,000, the beneficiary may choose a lump sum, a monthly benefit, or both |
| Single Life with 10-Year Period Certain | Income for life or a minimum of 10 years, whichever is longer | Payments continue to beneficiaries for the rest of the 10 years if death comes first |
| Single Life with 20-Year Period Certain | Income for life or a minimum of 20 years, whichever is longer | Payments continue to beneficiaries for the rest of the 20 years if death comes first |
| 50% Joint Survivor | A reduced monthly benefit for the member | The survivor annuitant receives one half of the original benefit; it ends when the survivor annuitant is no longer living |
| 100% Joint Survivor | A reduced monthly benefit for the member | The benefit continues at the same dollar level while either the member or the survivor annuitant is living |
PMRS calls the last five “actuarially reduced alternatives to the Single Life Annuity benefit” but publishes no reduction percentage. Two administrative points: “This option will not appear on benefit estimates if a joint survivor is not identified.” “If you have named your spouse as a beneficiary, that person will be listed as the joint annuitant by default.” The comparison is worked through on single life vs joint and survivor pension.
A computed survivor example
A computed example from an assumed $1,000 monthly benefit, not a PMRS figure, and ignoring the reduction PMRS applies: under the 50% Joint Survivor option the survivor annuitant receives one half of the original benefit, so 50% of $1,000 is a computed $500 a month. Under the 100% option the same dollar level continues, a computed $1,000 a month. The member’s own reduced starting benefit, not $1,000, is what the survivor share applies to, and the PMRS estimate shows it.
What is irrevocable and the deadlines
The PMRB-8 form states “Option selection is irrevocable”, matching the retiree page’s “one-time, irrevocable choice”. The pages read describe no exception. On timing, “Your retirement date will be the day after your last day of employment.” “if you file this form more than 90 days after your last day of employment, your retirement date will be the day that the form is received by PMRS” A late filing can therefore move the start date. The form also advises: “To ensure that you understand the payment options available to you, you should request a benefit estimate from PMRS before you complete this form.” It further says “Federal tax will be withheld based on the tax tables using a status of Married with 3 Exemptions, if you do not file a W-4P form”, so confirm the current withholding instructions with PMRS, since that edition is dated May 2018.
A lump sum at retirement
Some plans pair a monthly benefit with a lump sum of the member’s own money. PMRS says “In combination with any of the payment options above, you can receive a single lump sum payment of the contributions you made to the plan plus interest earned on those contributions”. The cost: “If the lump sum option is elected, the monthly payment option you also elect will be proportionally reduced by the ratio of the lump sum amount compared to the value of your total benefits (including the lump sum amount).” The PMRB-8 form calls this Option IV and says “Not available in all plans”. Not every plan has it, and PMRB-6 says so as well: “Not every PMRS-participating pension plan allows members to withdraw lump sums at the time of retirement.”
A computed example from assumed figures, not a PMRS figure: take an assumed total value of $200,000 including an assumed $50,000 lump sum, and an assumed $1,000 monthly benefit. One reading of PMRS’s sentence is that the monthly benefit falls by the ratio of the lump sum to the total: $50,000 divided by $200,000 is a computed 25%, so $1,000 becomes a computed $750 a month. The real calculation uses the plan’s own present value, so rely on the PMRS estimate.
On tax, PMRS says “If you made after-tax contributions, a portion of your lump sum distribution will be non-taxable in accordance with IRS regulations”. The lump sum application adds: “According to the IRS, some post-tax contributions are not considered to be tax free if included in a lump sum distribution.”
How a lump sum can be paid, and what is withheld
The deadline for a lump sum taken at retirement: “Complete and return this form and the appropriate retirement application form to PMRS no later than 90 days after your last day of employment.” PMRB-6 lists four ways to take the money. “The distribution could be paid directly to you.” “PMRS will withhold 20% for payment to the IRS.” “The taxable distribution could be rolled over directly to a traditional IRA or other IRS-qualified plan, if such a plan will accept the distribution and hold it for your future retirement benefit.” “PMRS will not withhold or pay anything to the IRS.” Next, “The non-taxable distribution could be rolled over directly to a Roth IRA”. The last choice: “The distribution could be divided, with some paid directly to you and some paid to either a traditional IRA/IRS-qualified plan or to a Roth IRA.” The form adds: “I understand that by receiving this lump sum distribution, I will forfeit any future benefits with respect to the lump sum amount paid.”
A computed example from an assumed $10,000 taxable lump sum paid to the member, not a PMRS figure: 20% of $10,000 is a computed $2,000 withheld, leaving a computed $8,000 in cash. PMRS says “PMRS does not provide tax advice” and “If selecting a lump sum distribution, you are strongly encouraged to seek guidance from a tax professional”.
The Deferred Retirement Option Plan (DROP)
The DROP page begins with a condition: “If your employer offers a DROP option”. It then says the option “allows you to enter retirement status using one of the Retirement Payment Options above and continue to work for a period not to exceed 36 months”. “During the DROP period, the member’s monthly benefit payments will be deposited to an interest-bearing DROP account and will be paid in a lump-sum upon termination from employment.” The pages read do not show which employers offer a DROP, what interest the DROP account earns, or how a survivor option interacts with it.
Leaving before retirement: keep the benefit or withdraw contributions
A vested member who leaves before eligibility to retire faces a time limit: “Within 90 days of termination of employment, you must complete an Application for Retirement Benefits (PMRB-8) or an Application for Retirement Benefits for Plans with Automatic Spouse’s Death Benefits form (PMRB-50)”. “When you reach normal retirement age, PMRS will begin paying you a monthly benefit.” A member who is not eligible for a monthly benefit gets a refund: “If you are not eligible for a benefit, you will receive a refund of your personal contributions (if any) and credited interest.” The general trade-off is on pension refund vs leaving it.
The cost is stated twice. The FAQ: “By withdrawing your contributions and interest, you forfeit the right to any benefit funded by your employer’s contributions.” On PMRB-4 the member signs a certification about “making a final and binding decision to forfeit my rights to employer contributions and to any other benefit to which I may be entitled from the Pennsylvania Municipal Retirement System”, and the instructions say “the member is making a binding and irrevocable decision to forfeit employer contributions and a lifetime annuity benefit in order to withdraw his or her own contributions, plus interest, from PMRS”.
Interest stops with the job. The FAQ says “Interest will not be credited on your account after the date of termination”, and the form says “Interest ceases to accrue upon date of separation for members who are ineligible for retirement benefits”. On timing and routing: “Processing usually takes 90 days from the time we receive the form until the check is mailed from our office.” “Both the employer and member must complete this form.” “PMRS cannot process payment until the member has also completed and submitted an Application for Lump-Sum Distribution (PMRB-6).”
The FAQ describes the refund as for someone who is “not eligible for a benefit”, while PMRB-4 says “This form may be submitted at any time after a vested member has terminated employment and has received his or her final paycheck”. A vested member should confirm with PMRS which category applies before signing.
Interest, portability and military time
On interest, the FAQ says “The interest rate may change from year to year, currently the rate is 5.50%”. “If excess interest is allocated by your employer to your member’s account as an active employee, it will increase your monthly retirement benefit.” On moving between employers: “Some PMRS member municipalities have agreements that allow members to move their credited service from one employer to another.” “The portability election must be made within one year of separation from your previous employer.” Because a refund forfeits employer-funded benefits, confirm with PMRS whether portability applies before withdrawing anything. For military time, “PMRS staff will determine if the time spent in the military is purchasable service and will provide you with a statement detailing the different payment amounts over various time periods.” The pages read give no price schedule.
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 PMRS’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”. PMRS’s lump sum application describes the same withholding and direct rollover choices. 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 PMRS documents differ or are dated
The web page names the options Single Life Annuity, Guaranteed Present Value, Period Certain, 50% Joint Survivor and 100% Joint Survivor, while the retirement form uses “Life with Guaranteed Present Value (Option I)”, “100% Survivor Annuity (Option II)”, and “50% Survivor Annuity (Option III)”. They look like the same choices, but the pages read do not say so, so the labels on a member’s own estimate control. The retirement form is dated May 2018 and the refund and lump sum forms 2026, so the older form may not reflect later changes.
What this page could not settle
- The pages read do not give any employer plan: multiplier, vesting schedule, retirement ages, early retirement reduction, or whether a lump sum or DROP exists.
- The pages read do not state how much any reduced payment option lowers the monthly benefit.
- The pages read give no unisex factor that converts a cash balance account into a lifetime benefit.
- The pages read do not state whether a spouse must consent to a refund, a lump sum or a non-spousal option.
- The pages read do not state the interest a DROP account earns.
- The statute (Act 15 of 1974), the DROP policy statement, the benefit summaries and the Special Tax Notice attached to the lump sum form were not read.
- The pages read do not state the rules for disability retirement, a death while employed, or cost-of-living increases.
Common mistakes
- Treating a PMRS page as a statement of the member’s own plan; the benefit summary for the employer’s plan controls the actual terms.
- Choosing a payment option without the PMRS estimate; PMRS says the choice is one-time and irrevocable.
- Naming the wrong person, or none, as survivor annuitant; the joint survivor options do not appear on an estimate unless one is identified.
- Filing a retirement application more than 90 days after the last day of work; the retirement date then moves to the day PMRS receives the form.
- Taking the lump sum paid to oneself and expecting the full amount; PMRS withholds 20% of the taxable portion unless it is rolled over.
- Withdrawing contributions without weighing the forfeiture of benefits funded by the employer’s contributions.
- Waiting to submit a refund request after leaving; interest stops on the date of separation.
Related on this site: Pennsylvania retirement taxes, does Pennsylvania tax pensions, Pennsylvania SERS retirement decisions, pension refund vs leaving it, single life vs joint and survivor pension and public pension retirement decisions by system.
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Answer againSources
- Pennsylvania Municipal Retirement System, Benefit Payment Options (retiree web page, read October 8, 2026): https://pmrs.pa.gov/retirees/benefit-payment-options/
- Pennsylvania Municipal Retirement System, Members Frequently Asked Questions (web page, read October 8, 2026): https://pmrs.pa.gov/members/members-faqs/
- Pennsylvania Municipal Retirement System, Defined Benefit (member plan benefits web page, read October 8, 2026): https://pmrs.pa.gov/members/plan-benefits/defined-benefit/
- Pennsylvania Municipal Retirement System, Cash Balance (member plan benefits web page, read October 8, 2026): https://pmrs.pa.gov/members/plan-benefits/cash-benefit/
- Pennsylvania Municipal Retirement System, Application for Return of Contributions, form PMRB 4 (MAR 2026): https://pmrs.pa.gov/wp-content/uploads/2026/07/Final-Form-PMRB-4.pdf
- Pennsylvania Municipal Retirement System, Application for Lump Sum Distribution, form PMRB 6 (JULY 2026): https://pmrs.pa.gov/wp-content/uploads/2026/09/pmrb-6-Updated-date_7.21_website.pdf
- Pennsylvania Municipal Retirement System, Application for Retirement Benefits, form PMRB 8 (05/2018): https://www.pmrs.pa.gov/wp-content/uploads/2023/08/pmrb-8.pdf
- Pennsylvania Municipal Retirement System, Deferred Retirement Option Plan (DROP) (retiree web page, read October 8, 2026): https://pmrs.pa.gov/retirees/deferred-retirement-option-plan-drop/
- 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 8, 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.