Updated October 30, 2026. Quick answer: For South Dakota Retirement System (SDRS) Class A Generational members, who joined on or after July 1, 2017, the SDRS handbook sets normal retirement at age 67 with unreduced benefits, vesting after 3 years of contributory service, and early retirement as early as age 57 with a permanent 5% cut for each year before 67. Foundation members, who joined before July 1, 2017, have normal retirement at age 65 with 3 years, and a Rule of 85 that does not apply to Generational members.
Foundation or Generational
“Generational members include all Class A and Class B members that joined SDRS on and after July 1, 2017.” “Foundation members include all Class A and Class B members that joined SDRS prior to July 1, 2017.”
Generational Class A: normal retirement
“To be entitled to retirement benefits, you must have a minimum of three years of contributory service. Unreduced retirement benefits are available once you reach your normal retirement age.” “Class A Normal Retirement (unreduced benefit): Age 67”. “Class A Early Retirement (reduced benefit): As early as age 57”.
Generational Class A: early retirement
“If you choose to retire prior to your normal retirement age, your retirement benefit will be permanently reduced by five percent for each year (and prorated for each partial year) that payments are made before age 67.”
Vesting
“You become vested and entitled to SDRS retirement benefits after three years of contributory service, provided you have not withdrawn (refunded) your accumulated contributions.”
Foundation Class A, in brief
The SDRS actuarial valuation summarizes the older rules. “The Normal Retirement Age is age 65 with three years of Contributory Service for Class A and Class B Judicial members”. On the Rule of 85, the valuation lists for Class A members: “85 for Class A members, but not prior to age 55”. It adds that for Generational members: “Generational Members No Special Early Retirement Benefits are available.” Early retirement for Foundation members: “Any member with at least three years of Contributory Service can retire in the ten years preceding Normal Retirement Age.” “Benefits will be reduced by ¼ of 1% for each full month by which the commencement of payments precedes the earlier of the Normal Retirement Age or the Special Early Retirement Date.”
What the pension is based on
“The Class A benefit is: 1.8% times Final Average Compensation times Class A Credited Service”. “Your FAC is determined by averaging your annual compensation during the highest 20 consecutive calendar quarters in the last 40 quarters of SDRS membership”.
A worked example with invented numbers
Take an invented Generational Class A member with 25 years of Class A service who retires at 62, five years before age 67. That is 25 years at 1.8%, or 45% (computed) of a final average salary of $60,000 (invented, for the computation), which comes to $27,000 a year (computed). The reduction is 5 years before age 67 at 5% each, which is 25% (computed). The pension after the reduction is $20,250 a year (computed).
What the documents do not say
The Foundation member handbooks were not archived, so the Foundation Class A rules come from the SDRS June 30, 2025 actuarial valuation’s summary of plan provisions, not from a member handbook. The Generational handbook prints its worked examples as an image or table, so the 1.8% multiplier is quoted from the valuation. Class B Public Safety and Judicial rules are not covered. The SDRS web eligibility page and the South Dakota statute page load through scripts and returned no text, so no statute text is used. The handbook states 5 percent a year and the valuation states 5/12 of 1% a month; these are the same rate.
Common mistakes
- Applying the Rule of 85 to a Generational member. The valuation says no special early retirement benefits are available to them.
- Using age 65 for a member who joined on or after July 1, 2017. Their normal retirement age is 67.
- Assuming early retirement is free of cost. A Generational member who retires early takes a permanent reduction.
Related: South Dakota SDRS retirement decisions, the South Dakota SDRS COLA for 2027, how public pension decisions work, and whether South Dakota taxes pensions.
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Answer againSources
- South Dakota Retirement System, Class A Handbook for Generational Members Joining SDRS on or after July 1, 2017: www.sd.gov
- South Dakota Retirement System, SDRS Actuarial Valuation as of June 30, 2025 (summary of plan provisions): www.sd.gov
- Related official page (not quoted): IRS Tax Topic 410, Pensions and annuities: www.irs.gov
- Related official page (not quoted): IRS Tax Topic 411, Pensions: the General Rule and the Simplified Method: www.irs.gov
Read from the primary documents linked above on October 30, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer or the IRS itself is the right place to confirm anything consequential.