Updated October 30, 2026. Quick answer: A Montana FURS firefighter does not choose a payment option at retirement. The handbook says the retirement benefit is paid to the surviving spouse, then to dependent children, by law. Service retirement opens at 20 years of membership service at any age, or at five years and age 50, at 2.5% of highest average compensation per year of service. The choices that remain are leaving contributions or taking a refund (which ends membership, with 20% withheld from a direct payment over $200 unless rolled over), buying service, and whether GABA applies. The documents read describe no lump sum at retirement and no DROP.
More on public pension COLAs for 2027: the Montana FURS COLA for 2027 and the fixed 3% GABA.
What this page covers and what it does not
This page works from two Montana Public Employee Retirement Administration (MPERA) documents on the Firefighters’ Unified Retirement System (FURS): the FURS Member Handbook, printed Rev. 03/2026, and the FURS member page on the MPERA website, whose footer carries a 2023 copyright and no revision date. Both were read on October 30, 2026. The handbook is a summary, not a statute compilation: it says “This handbook is not an official source of the law or rules and should not be taken as final legal authority”, and “If the context of this handbook conflicts with state law or administrative rules, the law or rules will apply”. It names the governing law as Title 19, Chapters 2 and 13 of the Montana Code Annotated. No count of active members is given because the system’s annual financial report is too large to archive for this page. Other Montana systems are on Montana PERS retirement decisions and Montana TRS retirement decisions.
Is there an option to elect at retirement?
Many public pensions ask the retiree to pick between a single-life benefit and a reduced benefit that continues to a survivor. The FURS documents read describe no such election, although the handbook’s introduction to its eligibility section mentions “payment options” and the section itself lists none. They describe what is paid to a survivor instead: “Your retirement benefit will be paid to your surviving spouse upon your death”, and “If you do not have a surviving spouse, or your surviving spouse dies while receiving the benefit, the benefit will be paid to your surviving dependent children”. The handbook’s sample calculation shows the effect: “If he dies, a monthly benefit equal to the amount of Kenny’s benefit will continue to his surviving spouse for life”. With the survivor receiving the same amount and no reduction described, there is no reduction percentage to price, unlike the elected options discussed at single-life versus joint-and-survivor pension. The pages read do not describe a way to waive the spouse’s benefit.
| Situation | What is paid | Who receives it |
|---|---|---|
| Retired member | The retirement benefit continues | Surviving spouse; if none, or if the spouse dies while receiving it, dependent children |
| Retired member with no spouse or dependent child | The remaining account balance: contributions plus interest at retirement, minus benefit payments already received | Designated beneficiary; if none, the estate |
| Active member with fewer than 20 years of membership service | Handbook: an annual survivorship benefit equal to half of highest average compensation (the website says monthly) | Surviving spouse, or dependent child if no spouse |
| Active member with over 20 years of membership service | The monthly benefit the member was entitled to as a service retirement on the date of death | Surviving spouse, or dependent child if no spouse |
| Inactive member with more than 20 years of membership service | The benefit amount the member was entitled to on the date of death | The survivor |
| Active member with no spouse or dependent child | A lump-sum payment | The member’s beneficiary |
A beneficiary form matters when no spouse or dependent child survives. The handbook says “A non-statutory beneficiary is eligible to receive any balance in your account but does not receive a monthly benefit”, and “Any beneficiary change is not effective until the form is received in our office”. More on survivors in other systems is at survivor benefit with a government pension.
When a pension can start and how to apply
The handbook says “You are eligible for service retirement benefits when you complete 20 years of membership service at any age, or you have five years of membership service and are 50 years of age”. Membership service counts “one month of membership service for any month you contribute to FURS, regardless of the number of hours you worked or the pay you received during that month”, while service credit, which sets the amount, is “granted when you are paid, not when it is earned”.
The handbook sets the sequence: “At least three months before you plan to retire, contact us for an official Defined Benefit Estimate Request”, and “At least 30 days before you plan to retire, you must complete the retirement application forms that accompanied your benefit estimate and return them to MPERA”. Then “you will be considered retired on the first day of the month following your termination”.
A retiree who goes back to covered work faces a limit. The handbook says “If you retire on or after July 1, 2017, you may work in a FURS-covered position for less than 480 hours during a calendar year”, and “If your yearly income from the FURS-covered position exceeds $5,000, your retirement benefit will be reduced $1 for each $3 you earn over the limit”. A computed example from an assumed $8,000 of yearly earnings from the covered position, not a FURS figure: the amount over the $5,000 limit is $3,000, and $1 for each $3 of it comes to a computed reduction of $1,000 in the benefit.
How the benefit is figured
The handbook gives the formula: “The basic formula for a FURS monthly service retirement is: 2.5% x Years of Service Credit x HAC*”, where highest average compensation (HAC) is “the average of your highest consecutive 36 months of compensation”. For members hired on or after July 1, 2013, “HAC will be capped at 110% on compensation earned during the highest average compensation period”.
A computed example from assumed inputs, not a FURS figure: 2.5% of an assumed $4,000 HAC for each of 24 years of service credit is 2.5 divided by 100, times 24, times $4,000, or a computed $2,400 a month before any GABA increase. The handbook’s own sample is “0.025 x 20 x $3,000 = $1,500”, for a member with 20 years of service credit and a $3,000 monthly HAC.
Some older members have a second formula. For a member “hired before July 1, 1981, and did not elect to be covered under GABA”, the handbook says the benefit is the greater of the formula above or a second calculation. With fewer than 20 years of membership service that is “2% of your Highest Monthly Compensation (HMC) for each year of service credit”; with 20 or more it is “50% of your HMC plus 2% of your HMC for each year of service credit over 20 years”. Its example: “if your highest monthly compensation was $3,000 and you retired with 24 years of service credit, the calculation would be: (0.5 x $3,000) + (0.02 x $3,000 x 4)”. A computed example using the handbook’s own inputs ($3,000 treated as both HMC and HAC, 24 years): the second formula gives a computed $1,740, while 2.5% x 24 x $3,000 gives a computed $1,800, so the greater figure in that illustration is the 2.5% one.
What is irrevocable and the deadlines
No FURS option election is described, so no survivor choice becomes irrevocable at retirement. The step with the clearest cost is a refund: “Once you withdraw the money from your account, your membership ends, and you lose your right to any benefit from FURS”. A service purchase has its own trap: “If you fail to make a regular monthly payment, you give up the right to make any more payments”. Timing figures in the handbook: “At least three months” before retirement for the estimate, “at least 30 days” before for the application, 90 days for the small-balance rollover application, and 30 days for a service purchase cost statement.
On court orders in a divorce, the handbook says “a FLO cannot require any payments from your FURS defined benefit account before you retire and begin drawing benefits or take a refund”.
Lump sums, partial lump sums and DROP
The documents read describe a lump sum paid by FURS to a member or survivor at two points only: a refund of contributions after leaving covered work (including the mandatory small-balance refunds) and the death payment. The handbook’s glossary defines a lump-sum payment as “An amount, which may include interest, that is payable instead of monthly benefits”, but its benefit pages describe a monthly benefit for life. The pages read do not describe a lump sum in place of a retirement benefit, a partial lump sum, a deferred retirement option plan (DROP) or a payment option election. For comparing a lump sum with a monthly benefit in another plan, see pension lump sum versus monthly annuity break-even.
Leaving before retirement: leave the money or take a refund
For a vested member who leaves covered work, the handbook says “you can leave your money on account to continue to earn interest and later receive a retirement benefit”; or “you can receive a refund of your accumulated contributions (your contributions plus interest)”. A member is vested “after you accumulate five years of membership service”. A refund ends membership: “Once you withdraw the money from your account, your membership ends, and you lose your right to any benefit from FURS”. “Employer contributions are not refundable”. The handbook says “Your FURS account earns interest each month”, and “The interest credited to your account will not affect the amount of your monthly retirement benefit”. The pages read do not state the interest rate. See pension refund versus leaving it.
| Accumulated contributions (not vested) | What the handbook describes | Tax and deadline |
|---|---|---|
| Less than $200 | A lump-sum refund is sent to the address on file | No taxes are withheld |
| $200 to $1,000 | A refund application offers a lump sum sent directly, or a rollover to another eligible plan | The application must be returned within 90 days of termination; otherwise the contributions are refunded directly with required federal income tax withheld |
| More than $1,000 | The handbook lists an optional refund: contributions may be left on account to keep earning interest | The pages read state no deadline |
A refund takes time: “This process may take over four weeks from the date you get your last paycheck”. A member who returns later to a mandatory FURS-covered position is treated as new: “We will consider you a new member without credit for the refunded service”, though “You may reinstate the refunded service through a service purchase”.
How a refund is taxed
The handbook says “The pretax portion of your accumulated contributions is subject to state and federal taxes when refunded directly to you in a lump sum”. On a direct payment, “If you receive a refund greater than $200 directly, the IRS requires us to withhold 20% for federal income tax purposes”. “You may also be subject to an additional 10% penalty if you withdraw your account before you reach age 59 ½”. The alternative: “You may avoid paying the 20% withholding tax and the 10% early withdrawal penalty by “rolling-over” the taxable part of your refund into an IRA or other eligible retirement plan immediately, as a direct rollover, or within 60 days”. See 20% withholding on a pension lump sum.
A computed example from an assumed $10,000 taxable refund paid to the member, not a FURS figure: 20% of $10,000 is a computed $2,000 withheld for federal tax, leaving a computed $8,000 in cash before any further tax or penalty.
Buying service
The handbook says “As a FURS member, you can purchase service at any time before retirement”. A refund taken earlier can be reversed only by a member who later returns to a FURS-covered position (an inactive member must be vested): “To purchase the refund, you must repay the accumulated contributions you received and pay the interest that would have been credited to your account had the refund not taken place”. The one-for-five purchase works as follows: “For each five-year period of membership service, you can buy one year of service credit. You may buy up to five years of “One-for-Five” years”, but ““One-for-Five” Service is not membership service and cannot be used to make you eligible to retire or to purchase other types of service”. Military service is capped by the rule that “Current law limits the purchase of active military, reserve military, additional, and other public service to a combined total of five years”.
A purchase starts with a cost statement from MPERA, and the handbook says “Cost statements are only valid for 30 days”. “You can pay for a service purchase in one lump sum within 30 days of the date of your cost statement or make monthly payments”. “Service purchases are subject to interest if not paid as a lump sum”. The pages read give no price per year of credit, which comes from MPERA’s cost statement. To test whether a purchase pays back, use the pension buyback calculator.
The yearly increase (GABA)
The handbook says “If you elected GABA, or you became an active member on or after July 1, 1997, you will be eligible for a 3% GABA”. There is a wait: “Before you receive an increase under GABA, you need to have received your benefit for at least 12 months”, and “Once eligible, you will receive your first increase in your retirement benefit payment that following January”. The website’s example: “If you retire on July 1, 2021, you will meet the 12-month requirement on July 1, 2022. You will then receive your first GABA increase beginning with your January 1, 2023, benefit”. “Other events which increase your benefit will reduce the amount you will get from GABA”.
A computed example from an assumed $2,400 monthly benefit, not a FURS figure: 3% of $2,400 is a computed $72 a month, if the full 3% applies and no other increase offsets it.
For a member who did not choose GABA, the handbook describes a floor instead: “If you have at least 10 years of service, and did not choose to be covered under GABA, you will receive a minimum retirement benefit adjustment”.
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 FURS’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 do roll it over and want to defer tax on the entire taxable portion, you’ll have to add funds from other sources equal to the amount withheld”. The FURS handbook describes the same 20% withholding on a direct payment and the rollover alternative. 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 (within in the meaning of section 414(d)) provided that the qualified public safety employee has separated from service during or after the year in which 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 sources disagree
First, the survivor benefit for an active member with fewer than 20 years. The handbook says “If you have not completed 20 years of membership service, the annual survivorship benefit will be equal to half of your highest average compensation”, while the website says “Less than 20 years of membership service: The monthly survivorship benefit will be equal to one-half of your Highest Average Compensation”. The two differ on annual versus monthly, so MPERA is the place to confirm which applies.
Second, the interest on repaid refunded service. The handbook says “pay the interest that would have been credited to your account had the refund not taken place”, while the website says “pay the interest at the actuarial assumed rate of return in effect at the time of the redeposit”. A cost statement settles the amount.
Third, part-time service. The handbook says “If you work part-time, we will adjust your service credit at retirement to prevent a double reduction of your benefit”, while the website says “If you work part-time, we will adjust either your service credit or your HAC at retirement”.
What this page could not settle
- The documents read describe no member payment option election and no way to waive the statutory survivor benefit; the statute itself was not read.
- The pages read do not describe a lump sum at retirement, a partial lump sum or a DROP.
- The pages read do not state the interest rate credited to accounts or the cost per year of purchased service.
- No membership count is given: the system’s June 30, 2025 annual report is over 25 MB and was not archived.
- Montana Code Annotated Title 19, Chapters 2 and 13 was not read; the handbook says it is based on the 2023 code and that the law controls where they conflict.
- The website page carries no revision date, so it may be older than the 03/2026 handbook where the two differ.
- The pages read do not state whether a non-vested member with more than $1,000 may take a refund, beyond the handbook’s heading calling it an optional refund.
- Disability retirement, contribution rates and retiree health insurance were not examined.
Common mistakes
- Looking for a single-life versus survivor option; the handbook describes none, and the spouse is the statutory beneficiary of the retirement benefit.
- Taking a refund without weighing that membership ends and the right to any FURS benefit is lost.
- Expecting the full refund check; 20% of a direct payment over $200 is withheld unless rolled over.
- Assuming the beneficiary form can redirect the monthly benefit; the form matters when no spouse or dependent child survives.
- Letting a service purchase payment lapse; the handbook says a missed regular monthly payment ends the right to make more.
Related on this site: Montana PERS retirement decisions, Montana TRS retirement decisions, pension refund versus leaving it, survivor benefit with a government pension, pension buyback calculator and public pension retirement decisions by system.
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Answer againSources
- Montana Public Employee Retirement Administration (MPERA), Firefighters’ Unified Retirement System (FURS) Member Handbook (Rev. 03/2026): https://mpera.mt.gov/_docs/Handbooks/FURS.pdf
- Montana Public Employee Retirement Administration (MPERA), Firefighters’ Unified Retirement System (FURS) member web page (footer copyright 2023, no revision date): https://mpera.mt.gov/members/furs
- 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 30, 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.