Kansas City Employees Retirement System: Options and Refund

Updated October 7, 2026. Quick answer: A City of Kansas City, Missouri employee (other than police and firefighters) belongs to Tier 1 if hired before April 20, 2014 and Tier 2 if hired on or after that date. Normal retirement is age 65 with at least five years of service for Tier 1 and age 67 with at least 10 years for Tier 2. At retirement a member may withdraw all or part of the contributions for a reduced lifetime pension, and a married member may choose an actuarially equivalent survivor annuity. Leaving early means withdrawing contributions or, with enough service, a deferred pension.

Kansas City Public Schools employees belong to a separate retirement system with its own rules: Kansas City school retirement decisions.

What this page covers and what it does not

This page works from two documents published by the Employees’ Retirement System of the City of Kansas City, Missouri (the System): its 2023 annual report, which contains a Summary of Plan Provisions dated April 30, 2023, and its financial statements for the years ended April 30, 2021 and 2020, read on October 7, 2026. Both are reports, not the governing ordinance, so the Retirement Division decides any individual case. Dollar figures here are the System’s or are labeled computed examples from assumed inputs.

Who is covered: “Membership is required for all full-time, permanent employees of the City (except firefighters and police) on date of employment.” The summary sorts members into two tiers by hire date: “Employees hired prior to April 20, 2014, are Tier 1 members”, and “Employees hired on or after April 20, 2014, are Tier 2 members”. This page covers both tiers. It does not cover the City’s police or firefighter plans, which the documents read do not describe. The summary states that it reflects the plan “as amended by City Ordinance through December 2020”, so ordinance changes after that date may not appear in it.

The documents disagree on Tier 2 vesting. The plan summary requires 10 years of service for a Tier 2 deferred pension and the 2021 statements say Tier 2 “Employees become vested for retirement benefits after ten years of service”, while the annual report’s highlights say “The vesting period for Tier 2 members decreased from 10 years to 5 years, effective August 1, 2023”. Confirm the current threshold with the Retirement Division. State tax questions are on Missouri retirement taxes and does Missouri tax pensions.

When a pension can start, by tier

The summary sets three routes to a pension: normal, optional and early retirement. The table restates them from the summary; each row is a separate test.

A computed example from an assumed Tier 1 member who retires early 36 months before age 60, not a System figure: 0.5% a month for 36 months is a computed 18 percent reduction, so an assumed unreduced $2,000 monthly pension becomes a computed $1,640 a month.

How the monthly pension is figured

Tier 1 has two base formulas that depend on marital status at retirement. “The base benefit formula for married members of the System is 2.0% of final average compensation multiplied by creditable service.” “The base benefit formula for single members of the System is 2.22% of final average compensation multiplied by creditable service.” Tier 2 is a single formula: “The base benefit formula for all members of the System is 1.75% of final average compensation multiplied by creditable service.” The summary also states that “The maximum benefit payable is 70% of final average compensation” (it states this separately for each tier).

A computed example from assumed inputs, not a System figure: take an assumed final average compensation of $60,000 a year and an assumed 20 years of creditable service. A married Tier 1 member’s pension is 2.0% times 20 years, a computed 40% of final average compensation, or a computed $24,000 a year ($2,000 a month). A single Tier 1 member at 2.22% would receive a computed $26,640 a year, and a Tier 2 member at 1.75% a computed $21,000 a year.

A floor exists for longer-service members: “The minimum benefit is $400 for members, calculated prior to any reductions for either withdrawal of contributions or election of an actuarially equivalent surviving spouse annuity, and $200 for surviving spouses.” (The summary applies it to members with at least ten years of creditable service.) Members also pay in: “all members contribute 5.0% of base salary”, with the City paying “the remaining cost of the System”. A computed example: 5.0% of an assumed $60,000 base salary is a computed $3,000 a year. The summary adds that “Contributions are excluded from Missouri and Federal income tax under Employer Pick-up Provisions of the IRS Code Section 414(h)(2)”.

The retirement election: contributions, survivor options and what they change

At retirement a member decides whether to take contributions out and whether to protect a spouse. The table restates the summary’s four choices.

On the survivor side, the summary says for a member who dies after retirement that the surviving spouse “receives an annuity equal to 50% of the member’s accrued annuity”, “providing the marriage occurred on or before the date of retirement”. It continues: “If the member elected the actuarial equivalent annuity, the same base annuity is continued for the surviving spouse.” The pages read do not say whether the 50% is figured before or after any withdrawal reduction.

A computed example from an assumed accrued annuity of $2,000 a month, not a System figure: 50% of $2,000 is a computed $1,000 a month for a surviving spouse. Whether to give up part of the pension for a larger survivor check is the same trade-off covered on single-life versus joint-and-survivor pension.

The 2.22% option and spousal consent

Tier 1 has a choice for married members that is built around consent. The summary says: “If married, the member may choose the 2.22% option, forfeiting the surviving spouse’s annuity. The spouse must consent to this in writing.” The Tier 2 paragraph in the summary does not list a 2.22% option, and the pages read do not state a spousal consent rule for any other election, so confirm that point with the System. General consent rules are on spousal consent to waive a joint and survivor annuity.

Withdrawing contributions at retirement: a partial lump sum

The closest thing to a partial lump sum in the documents is the withdrawal election at retirement. “Members may withdraw all or a portion of their accumulated contributions and interest and receive an actuarially reduced lifetime pension.” “The member’s annual cost-of-living adjustment and the surviving spouse’s annuity are not reduced by election of this option.” The summary repeats the choice for early retirement and again for the point at which a deferred pension is scheduled to begin.

The cost is a smaller pension. The pages read do not give the reduction factor, the interest rate on contributions, or any limit on the amount withdrawn, so the trade-off cannot be computed here; ask for a quote showing the pension with and without the withdrawal. If the cash is paid to the member rather than rolled over, the withholding rules below apply; see 20% withholding on a pension lump sum.

What is irrevocable and what the documents do not say about deadlines

The pages read give no election deadline and do not say whether an election is irrevocable. Two timing rules are stated. First: “Any death of a retired member occurring before the date of first payment of the retirement annuity is deemed a death before retirement.” Second, for a deferred pension: “Members may withdraw their contributions and interest and forfeit the deferred annuity at any time before benefit payments commence.” Ask the Retirement Division whether any election can be changed once payments start.

Leaving before retirement: refund or deferred pension

The summary says: “Tier 1 members with less than five years of service or Tier 2 members with less than 10 years of service must withdraw their accumulated contributions and interest from the System.” Tier 1 members with five or more years of service or Tier 2 members with 10 or more years of service “may elect a deferred pension and waive the option to withdraw their contributions and interest at the time of separation”. The 2021 statements put the Tier 1 choice this way: members with five or more years “may elect to receive a refund of their member contributions with interest as a lump-sum distribution, or they may elect to receive a deferred pension”.

A refund has consequences. For a member who leaves with less service than the vesting threshold, the financial statements say “they forfeit the right to receive the portion of their accumulated Plan benefits attributable to City contributions and are refunded their member contributions with interest”. “Such refunds result in the forfeiture of all other benefits under the Plan.” The pages read do not give the interest rate currently credited on contributions. The 2021 statements record only that, in an April 2014 change, “interest credited to employee account balances decreased to 5.00 percent”; that is a historical entry, not a statement of the present rate.

On the deferred-pension wording quoted above, deferring does not by itself close the refund door before payments begin. The general question is covered on pension refund versus leaving it. The pages read do not say how long a refund takes or whether a spouse must consent.

Buying, restoring and converting service credit

For members who left and came back, the summary says: “Members who terminate service and later return to service may receive credit for such prior service after they have been reemployed for at least two, but not more than three, consecutive years, and have repaid withdrawn contributions plus interest at the rate then assumed for actuarial calculations.”

For service with another Missouri public employer: “Tier 1 members with at least five years creditable service and Tier 2 members with at least 10 years creditable service may transfer or purchase creditable service from a previous Missouri public employer.” The summary adds: “The member must accept the valuation of service as determined by the System’s actuary.” The pages read give no price. For judging whether a purchase pays back, see the pension buyback calculator.

Unused leave can also count: “At retirement, a member may elect to convert accrued sick leave or vacation leave to creditable service.” “Hours converted to creditable service are not payable in cash to the member upon retirement.”

Cost of living adjustments, minimums and retiree health money

Tier 1 and Tier 2 differ here. “A 3% non-compounded cost-of-living adjustment is paid to all System beneficiaries.” For Tier 2, the adjustment “will be paid to all System beneficiaries following the Tier 2 member’s 62nd birthday if the funding ratio of the pension fund, as shown by the System’s most recent actuarial report, is equal to or greater than 80%”. The Tier 2 increase is capped: “but shall not exceed 2.5%”. The summary says the Tier 2 adjustment is “applied to the annuity as calculated upon retirement date prior to any reduction for withdrawal and/or election of an actuarial equivalent annuity”.

A computed example from an assumed $2,000 monthly annuity before any reduction, not a System figure: the Tier 1 rate of 3% is a computed $60 a month, and the Tier 2 cap of 2.5% is a computed $50 a month at most in a given year.

Beyond the pension, the summary lists a health benefit: “a $200 monthly health insurance subsidy is payable to all retired members”.

If a member dies before retirement

The survivor rules before retirement turn on tier and service. Where a Tier 1 member had under five years or a Tier 2 member under 10, “the member’s surviving spouse receives a refund of the member’s accumulated contributions and interest”, and with no surviving spouse the payment goes to the designated beneficiary or the estate. For a Tier 1 member with at least five but less than 20 years, or a Tier 2 member with at least 10 but less than 20, the spouse may elect an annuity instead: “Such annuity is 50% of the member’s accrued annuity at date of death.” For 20 or more years the spouse may elect “the larger of the annuity computed above or an annuity determined on a joint and survivor’s basis from the actuarial value of the member’s accrued annuity at date of death”. See survivor benefit with a government pension.

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 Kansas City System’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 documents read do not say whether a payment from this System can be rolled over directly, so ask the Retirement Division before choosing. 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.

A withholding example

A computed example from an assumed $10,000 taxable refund paid directly to the member, not a System figure: 20 percent of $10,000 is a computed $2,000 withheld for federal tax, leaving a computed $8,000 in cash before any other tax. The final tax can be more or less than the withholding. For a retiree who lives across the state line, see Kansas retirement taxes. For comparison with another Missouri plan, see Missouri LAGERS retirement decisions.

What this page could not settle

• The documents read do not state how much the actuarially equivalent survivor annuity or the contribution withdrawal reduces the monthly pension; the reductions are described only as actuarial.
• The pages read do not state whether an election at retirement is irrevocable or give a deadline for making it.
• The pages read do not state the interest rate currently credited on member contributions, how long a refund takes, whether a spouse must consent to a refund, or whether a refund can be rolled over directly.
• The current Tier 2 vesting threshold is not settled by the documents read: the plan summary lists 10 years, while the 2023 report says it decreased from 10 to 5 years effective August 1, 2023.
• The pages read do not give a price or formula for purchasing service from a previous Missouri public employer.
• The City ordinance text itself, the disability coverage (outsourced to an insurance carrier), retiree health plan rules and the police and firefighter systems were not read for this page.
• The City’s retirement pages on kcmo.gov returned an access-denied response to automated requests and were not read, so no member handbook, election form or benefit estimate was read.

Common mistakes

• Assuming the summary and the financial statements agree on Tier 2 vesting; they do not, so confirm the current threshold before deciding to leave.
• Withdrawing contributions at retirement without asking the Retirement Division for a quote showing the pension with and without the withdrawal.
• Taking a refund of contributions without weighing that the financial statements say a refund forfeits the other benefits under the plan.
• Choosing the Tier 1 2.22% option without noticing that the summary says it forfeits the surviving spouse’s annuity and needs the spouse’s written consent.
• Expecting a Tier 2 cost of living adjustment every year; the summary ties it to age 62, the funding ratio and a cap.

Related on this site: Missouri retirement taxes, does Missouri tax pensions, Kansas retirement taxes, Missouri LAGERS 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 Kansas City, Missouri Employees’ Retirement System, 2023 Annual Report including Summary of Plan Provisions (fiscal year ended April 30, 2023): https://publicplansdata.org/wp-content/uploads/reports/MO_KANSASCITY-ERS_FinStmt_2023_175.pdf
• City of Kansas City, Missouri Employees’ Retirement System, Financial Statements with Supplementary Information for the years ended April 30, 2021 and 2020: https://publicplansdata.org/wp-content/uploads/reports/MO_KANSASCITY-ERS_CAFR_2021_175.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.