Updated October 7, 2026. Quick answer: An Alameda County (ACERA) member retiring picks one of five options: the unmodified option with a 60% continuance, or Options 1 to 4. The choice is permanent after retirement, and the only chance to name a continuance beneficiary is at retirement. Leaving employment gives four paths: retire, defer, establish reciprocity, or withdraw contributions. A lump sum refund carries at least 20% federal withholding, and a deferred member with less than 5 years of service must wait until age 70 to draw a pension.
What this page covers and what it does not
This page works from the Alameda County Employees’ Retirement Association (ACERA) member pages on its own website, listed under Sources and read on October 7, 2026. They are web pages with their own posting dates, not a dated handbook, so a rule on a page not read here could differ.
ACERA sorts members into tiers and several rules differ by tier, so a member’s own ACERA statement decides which figures apply. State tax treatment is covered on California retirement taxes and does California tax pensions.
Your four paths when you leave ACERA-covered employment
ACERA says:“one of your 4 options regarding retirement is to withdraw the employee retirement contributions you’ve paid into ACERA with each paycheck during your career as an ACERA member” The other paths are to retire if already eligible, to defer membership, or to establish reciprocity with another California public retirement system. Deadlines differ by path.
For deferral, ACERA says “Make sure to submit your form to ACERA within 90 days of your termination date.” For reciprocity, “Make sure to submit your form to ACERA within 30 days of your termination date.” “you need to start your new job with a reciprocal agency within 6 months of leaving your ACERA-covered job to establish reciprocity.” On overlapping service, ACERA cautions that “More than 12 weeks of overlapping service in two agencies may disqualify you for reciprocity.”
When a pension can start, and how it is calculated
A pension is only one of the paths, and it depends on age and service. ACERA’s page on deferring describes eligibility for a member who leaves with at least five years of service: “Tiers 1, 2, and 3 become eligible at age 50.” “Tier 4 members are eligible at age 52 (General) or age 50 (Safety).” For a member with less than five years, “You must wait until age 70 to begin receiving your retirement allowance.”
The size of the pension is set by a formula. “In retirement, you will receive a percentage of the highest salary you earned while you were working.” ACERA writes it as an age factor percentage times years of service credit times a highest average monthly salary. The salary figure is averaged over the highest consecutive 12 monthly pay periods for Tiers 1 and 3 and 36 for Tiers 2 and 4, according to ACERA’s table.
A computed example from assumed figures, not an ACERA figure for any member: at an assumed 2% age factor for 20 years of service credit, the percentage is 2 times 20, a computed 40%. Applied to an assumed highest average monthly salary of $5,000, that is 40% of $5,000, a computed $2,000 a month. The real age factor depends on the tier and the age at retirement, so the 2% is illustrative only.
The election: five options, one permanent choice
A retiring member chooses an option on the retirement application. “On your retirement application, you will choose one of the five retirement options below.” The choice has no second chance: “Your selection is permanent and cannot be changed after you are retired”. The beneficiary side is just as fixed: “Members’ only opportunity to name a continuance beneficiary is at the time of retirement.”
| Option | What the retiree receives | What the survivor receives |
|---|---|---|
| Unmodified | The maximum allowance for the retiree’s lifetime | 60% of the allowance at death (100% if the retiree was on a service-connected disability retirement), as a lifetime monthly continuance to an eligible spouse or domestic partner, or to minor children; otherwise a lump sum of contributions and interest less payments already made |
| Option 1 | A slightly lower allowance than the unmodified option | No monthly continuance; a one-time lump sum of contributions plus interest less the annuity portion already paid, to anyone |
| Option 2 | A lower allowance, reduced by the beneficiary’s age at retirement | 100% of the allowance at death, for life, to one person |
| Option 3 | A lower allowance than the unmodified option, but higher than Option 2 | 50% of the allowance at death, for life, to one person |
| Option 4 | A lower allowance, reduced by the youngest named beneficiary’s age at retirement | Any chosen percentage or dollar amount up to 100% to one or more beneficiaries, for life |
The pages read publish no reduction percentages for Options 1 to 4, so the actual reductions are one to get from ACERA before filing. The general trade is covered on single-life versus joint-and-survivor pension.
What each option leaves a survivor
The unmodified option pays the highest allowance, and its survivor benefit has conditions. “A spouse, state-registered domestic partner, or Alameda County domestic partner who entered marriage or domestic partnership at least 1 year before retirement will receive a lifetime monthly continuance of 60% of retiree’s allowance at time of death.” For minor children, ACERA says “Continuance stops at age 18”, with a later stop for a full-time student.
When there is no eligible spouse, partner or child, the unmodified option leaves only money, and the balance can be spent down: “If the retiree dies after the first 3-5 years of retirement, the lump sum amount will already be exhausted.”
Option 1 pays no monthly continuance. “If all contributions and interest have been paid as of retiree’s death, there will be no balance remaining for the beneficiary.” ACERA adds that “the beneficiary may elect to receive the payment in monthly installments over a period of up to ten years”.
Options 2 and 3 pay a survivor for life, and both reduce the retiree’s payment based on the beneficiary’s age. “Retiree’s allowance may be sharply reduced if beneficiary is considerably younger than retiree.” Option 4 is the flexible choice: “Retiree can specify one or more beneficiaries for a lifetime continuance of any percentage or dollar amount equivalent to or less than 100% of the retiree’s pension benefit.” “May not be provided if retirement allowance is based on disability retirement.”
A computed example from assumed figures, not ACERA figures: suppose the unmodified allowance were $2,000 a month. A 60% continuance would then be 60% of $2,000, a computed $1,200 a month for the survivor. Under Option 2, with an assumed reduced allowance of $1,700, the survivor would receive 100% of $1,700, a computed $1,700 a month. Under Option 3, with an assumed reduced allowance of $1,800, the survivor would receive 50% of $1,800, a computed $900 a month. The reduced allowances are invented to show the pattern, since ACERA’s pages read give no reduction table.
Spouse rights, a beneficiary who dies first, and the IRS cap
Survivor options sit inside California family rules. “Under California law, retiree’s spouse/state-registered domestic partner may have certain rights over any other designated beneficiary.” If a continuance beneficiary dies first, ACERA says “Retiree can name a new beneficiary, but only for a lump-sum payment, not for a continuance.” Under Options 2 and 3, “If named beneficiary dies before retiree, retiree’s benefit will not be increased.”
A second limit comes from federal rules. For Options 2 and 4, when a beneficiary who is not a spouse is more than 10 years younger than the retiree, ACERA says “the beneficiary’s benefit may be less than 100% and will be limited based on the IRS Limit for Non-Spouse Beneficiaries”. ACERA adds that “Domestic partners are not treated as spouses under federal rules.” The test compares both ages in the retirement year and uses the member’s applicable required minimum distribution age, which ACERA lists by birth year, including “Age 75 if born 1960 or later”. The adjusted age difference is the member’s age minus the beneficiary’s age, minus the gap between that applicable age and the member’s age.
A computed example from assumed ages, not an ACERA member: a member aged 65 in the retirement year, born in 1960 or later so that the applicable age is 75, with a beneficiary aged 40, has an adjusted difference of (65 minus 40) minus (75 minus 65), a computed 15 years. ACERA’s table shows 84% at that difference, so on an assumed $1,700 reduced allowance the largest continuance would be 84% of $1,700, a computed $1,428 a month, not the full amount. ACERA confirms whether a given beneficiary is covered.
Deferring: leaving the money with ACERA
Deferral keeps membership open. “When you defer membership, your payment of employee contributions ends and you elect to leave your accumulated employee contributions and interest on deposit with ACERA.” “Your contributions on deposit with ACERA continue to earn interest, and you can request a refund of your contributions at any time, unless you have established reciprocity with another public agency.” On return from deferral, ACERA says “you will return at your original entry age and tier”.
ACERA does not treat deferral as always better. For a member who is already eligible and is only waiting for a higher age factor, ACERA says “it’s probably to your advantage to go ahead and retire”, and “We recommend running estimates of both retirement scenarios using the benefit estimator in your online ACERA account”.
Deferral has costs to know before filing. If a member dies while deferred, ACERA says “your beneficiary(ies) will receive a return of your retirement contributions plus interest as of the date of death.” “No additional death benefits, including a continuance or lifetime continuance, are offered to your beneficiaries.” Sick leave is also lost: “if you become a deferred member by terminating your employment prior to retiring, you lose all of your accrued sick leave.”
For the general decision, see pension refund versus leaving it.
Taking a refund or a rollover
A member who ends membership takes the contributions and interest out. “Select whether you want A.) a refund, B.) to rollover your funds to another pre-tax retirement account, or C.) a combination of the two.” The refund has paperwork and timing: “ACERA cannot pay your refund sooner than 30 days from the date of termination.” “Expect 30 to 60 days for funds to be disbursed.”
A direct rollover moves the money without a tax bill now. “Pre-tax contributions and interest may be rolled over into an eligible retirement account, such as an IRA or another employer’s eligible retirement plan.”
A refund paid straight to the member is taxed at the source. “ACERA is required to withhold federal income tax at the rate of at least 20% from the taxable portion of all lump sum distribution.” “ACERA is also required to withhold California state income tax at the rate of 2% from the taxable portion of your distribution unless you elect otherwise.” For a member under 59 1/2, ACERA says “both the Federal and State governments may assess penalties”, and “The taxes and penalties may add up to as much as 33%.” The federal rule is explained further on 20 percent withholding on a pension lump sum.
A computed example from an assumed $10,000 taxable refund paid straight to the member, not an ACERA figure: withholding at 20% would be a computed $2,000 and at 2% a computed $200, which together is the 22% of the amount, leaving a computed $7,800 in cash before any penalty. If ACERA’s outer figure of 33% for taxes and penalties applied to the whole amount, that would be a computed $3,300. The actual tax depends on the member’s own return.
The paperwork is strict. ACERA says that in most cases “your spouse or domestic partner must acknowledge your election”. “If your Total Balance is $10,000 or more, you MUST get the form notarized.”
A refund and what comes back with a later return
A refund ends membership, so returning to covered work later raises the redeposit question. “ALL previous service credit must be purchased; partial purchases of service credit are not allowed.” “A decision to forego redeposit means your prior service credit does not count towards establishing your eligibility for retirement.” Restoring the credit has a cost: ACERA says the member may redeposit the withdrawn funds plus the interest that would have accrued up to the redeposit payment date. A member who may come back to ACERA covered work should weigh that cost before taking a refund.
Buying service credit
More service credit raises the pension, and ACERA’s page says that “by purchasing service credit, you can increase your retirement benefit and, in some cases, become eligible to retire at an earlier date”. For county and participating employer service, “this service credit will count towards eligibility to retire and towards becoming vested (five years of service needed) in the retirement plan” Credit for service with another agency works differently: “Purchasing previous public employer service credit would increase your retirement benefit allowance but would NOT count toward determining your retirement eligibility date or becoming vested in the retirement plan.”
The price has two parts. “When you purchase service credit, you must pay 2 amounts:” First, “The amount of employee retirement contributions you would have contributed if you had been able to during the time you’re trying to buy.” Second, “The interest that money would have earned had it been invested in the fund between the time you’re trying to buy and now, when you’re trying to buy it.” One category costs more: “For purchases of other prior public service from other California agencies, you will also have to pay the employer contribution portion and interest.”
The process starts with a request, not a payment. “ACERA staff will do research and calculations, and send you a letter telling you whether your time is purchasable and how much it’s going to cost.” Two limits follow: “Redeposits are all or none.” “To have any service credit purchases or redeposits included in your retirement calculation, you must complete payment before your retirement date.”
The purchase is final. ACERA says “the payment is permanent and cannot be refunded back to you”, except in narrow cases the page lists. “Nevertheless, as stated above, your purchase is irrevocable.” ACERA also puts the decision on the member: “it is your responsibility to determine if the purchase of service credit is a wise financial decision.”
Cost-of-living adjustments
ACERA’s page defines the adjustment: “The Cost of Living Adjustments is an increase made to your retirement allowance every April 1.” “The maximum statutory annual COLA increase is 3% for Tier 1 and 3 members and 2% for Tier 2 and 4 members.” Anything above the cap is banked: “the difference between your maximum and the rounded CPI increase is automatically banked for future years.”
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 ACERA’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”. ACERA’s own pages describe a refund that is paid out or rolled over, and the mandatory federal withholding it applies to a lump sum. 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.
What this page could not settle
- The pages read do not state the size of the reduction for Options 1 to 4; they say the reduction depends on beneficiary age and point to retirement estimates.
- The pages read do not state the interest rate credited on contributions on deposit, beyond saying they continue to earn interest, so no refund amount is computed.
- The pages read do not describe a partial lump sum at retirement, a deferred retirement option program or any lump sum at retirement other than a refund of contributions.
- The pages read do not state whether a married member needs spousal consent to choose an option other than the unmodified one; the Termination Election Form for a refund does call for a spouse or domestic partner to acknowledge the election.
- The pages read are web pages, several posted in 2013, 2019 or 2022, and not a dated member handbook, so a newer rule could differ from what was read on October 7, 2026.
Common mistakes
- Treating the retirement option as changeable later; ACERA says the selection is permanent after retirement, and the only chance to name a continuance beneficiary is at retirement.
- Choosing the unmodified option and assuming a lump sum is left to a beneficiary; ACERA says the lump sum will already be exhausted if the retiree lives past the first few years of retirement.
- Deferring only to wait for a higher age factor without running estimates; ACERA recommends running both scenarios in the benefit estimator.
Related on this site: pension refund versus leaving it, single-life versus joint-and-survivor pension, pension buyback calculator, 20 percent withholding on a pension lump sum, California retirement taxes, does California tax pensions and public pension retirement decisions by system.
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Answer againSources
- Alameda County Employees’ Retirement Association (ACERA), Applying to Retire: Step 3 Decide on 1 of 5 Retirement Options (acera.org web page, overview dated June 10, 2020, retrieved 2026-10-07): https://www.acera.org/retire
- ACERA, Withdrawing Your Retirement Contributions and Ending ACERA Membership (acera.org web page, posted October 7, 2022): https://www.acera.org/withdraw
- ACERA, Deferring Your Retirement (acera.org web page, posted October 7, 2022): https://www.acera.org/defer
- ACERA, Purchasing Service Credit (acera.org web page, posted February 13, 2019): https://www.acera.org/post/purchasing-and-redepositing-service-credit
- ACERA, Earning and Purchasing Service Credit (acera.org web page): https://www.acera.org/earning-and-purchasing-service-credit
- ACERA, Cost of Living Adjustments (COLA) (acera.org web page, 2026 figures): https://www.acera.org/cola
- ACERA, How Your Retirement is Calculated (acera.org web page, November 13, 2013 overview): https://www.acera.org/how-your-retirement-calculated
- 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.