Updated October 7, 2026. Quick answer: Montgomery County, Maryland government employees in Retirement Groups A and H, hired before October 1, 1994, choose a payment form that the Summary Description calls irrevocable once chosen. The normal form is a 10 year certain and continuous benefit in the optional plans or a modified cash refund annuity in the mandatory integrated plan, and a joint and survivor option can leave a survivor any percentage not less than 10%. A member who leaves can withdraw contributions plus 4% annual interest, but forfeits all rights to a pension. The pages read describe no lump sum retirement option.
What this page covers and what it does not
This page works from documents of Montgomery County Employee Retirement Plans (MCERP), which administers the Montgomery County Employees’ Retirement System (the Plan): its Summary Description “For County Employees in Retirement Groups A and H” (October 2015), a pre-retirement checklist, and the Plan’s governing law, “Montgomery County Code, Chapter 33, Article III”, read on October 7, 2026.
Group A covers non-public safety employees who are not in a bargaining unit position, and Group H covers those who are. Public safety groups E, F and G, Montgomery County Public Schools employees, and the County’s Retirement Savings Plan and Guaranteed Retirement Income Plan are not covered here. State tax: Maryland retirement taxes and does Maryland tax pensions.
The booklet is an informal guide and says “you are cautioned that this summary may not reflect all of the provisions of the Employees’ Retirement System”. If the booklet and the governing rules differ, “The provisions of the Employees’ Retirement System and the collective bargaining agreements, with the Employees’ Retirement System given priority, will govern in the event that there is an inconsistency or any ambiguity”.
Who is still in this Plan
Eligibility is tied to the hire date. “You are eligible to participate in the Plan if you were hired before October 1, 1994 and work in a permanent position for Montgomery County Government” as a full-time or part-time employee. The other side is stated too: “If you were hired on or after October 1, 1994 and work a non-public safety job you are not eligible to participate in the Plan.” This is largely a closed population, although a public safety employee hired on or after October 1, 1994 who later transfers into a non public safety position may continue as a Group A or Group H member, so the decisions below matter mainly to long-serving employees and to former employees who left a pension or contributions behind.
Within Groups A and H there are three versions. Members enrolled before July 1, 1978 are in the Optional Non-Integrated Plan (Groups A and H) or the Optional Integrated Plan (Groups AZ and HZ), and members enrolled on or after July 1, 1978 are in the Mandatory Integrated Plan (Groups AK and HK). The version decides the default payment form and several other rules below. Members pay in through payroll, and “Your member contributions earn 4% annual interest”.
When a pension can start and how to apply
Reading the booklet’s table, normal retirement for these groups is available with 5 years of credited service at age 60, or with 30 years of credited service as early as age 55. A footnote lowers the age to 50 for certain employees, such as those in the Police Telecommunicator occupational class series.
“Before you retire, you must submit a properly completed written application at least 30 days before the date you wish to retire.” The County’s checklist, written for the K-coded groups (AK, HK and others), adds that “Retirement date is always the first of the month”, and it also says: “Schedule an appointment with a Retirement Analyst if you want guidance on your payment option selection.”
For the optional non-integrated plan the pension is “2% of your average final earnings” times years of credited service (“(up to 36 years)”), plus sick leave credits. The integrated plans change the formula after Social Security Normal Retirement Age. The booklet’s own example uses average final earnings of $50,000 and 20 years of credited service plus six months of sick leave credit. Applying 2% to $50,000 and multiplying by 20.5 years gives a computed $20,500 a year, before any payment option reduces it.
Retiring early: the reduction table
“If you choose to retire early, your regular pension benefit will be reduced based on how many years you retire before your normal retirement date.” The booklet’s reductions are:
| Years before normal retirement date | Benefit reduced by | Percentage of normal retirement benefit received |
|---|---|---|
| 1 | 2% | 98% |
| 2 | 5% | 95% |
| 3 | 9% | 91% |
| 4 | 14% | 86% |
| 5 | 20% | 80% |
| 6 | 28% | 72% |
| 7 | 36% | 64% |
| 8 | 44% | 56% |
| 9 | 52% | 48% |
| 10 | 60% | 40% |
The booklet’s table sets early retirement at 15 years of credited service and age 50, or 20 years and age 45. One path avoids the cut: “Your benefit will not be reduced if your age plus credited service equals at least 85, and you have at least 35 years of credited service”. A computed example from an assumed $2,000 monthly normal retirement benefit, not a County figure: retiring 3 years early leaves 91% of $2,000, a computed $1,820 a month, before any payment option is applied.
The election: the payment options
“Unless you elect otherwise, you will automatically receive your normal benefit form according to your plan” For the Optional Non-Integrated and Optional Integrated Plans the normal form is a 10 year certain and continuous benefit, and for the Mandatory Integrated Plan it is a modified cash refund annuity. The County Code agrees on the dividing line: the modified cash refund annuity is the normal form for members enrolled on or after July 1, 1978.
A member may pick another form, and the booklet says “The forms are adjusted actuarially”. The booklet does not publish how much any other form reduces the pension.
| Option | What the member receives | What a survivor receives |
|---|---|---|
| Modified cash refund annuity (normal form, mandatory integrated plan) | A monthly benefit for life | If the member dies before receiving benefits equal to contributions plus interest, the remaining amount is paid to the beneficiary as a lump sum |
| 10 year certain and continuous (normal form, optional plans) | A monthly payment until death | If the member dies before 120 monthly payments, the beneficiary receives the remaining payments |
| Social Security adjustment (age 62 or 65), combined with either form above | A larger initial benefit until age 62 or 65, then smaller payments | Payment continues if the guarantee of the underlying form has not been used up |
| Joint and survivor annuity | A lifetime benefit, lower the larger the survivor percentage | The joint annuitant receives the chosen percentage for life, not less than 10% |
| Joint and survivor pop-up | Reduced like joint and survivor, but rises to the modified cash refund amount if the annuitant dies first or divorces | The joint annuitant receives the chosen percentage for life while both are alive |
| Joint and survivor with Social Security adjustment | A larger benefit until 62 or 65, then reduced payments | A lifetime benefit to the joint annuitant in the percentage chosen at retirement |
The Social Security adjustment options are about timing. The booklet says the option “usually gives you a larger initial monthly benefit until age 62 or age 65 (as you elect), and smaller monthly payments thereafter”. Weighing it against the retiree’s own Social Security start date is left to the member.
The joint and survivor choice, and what it does to a survivor
“At your death, your designated surviving joint annuitant will receive a percentage of the benefit for the rest of his or her life.” The trade is stated plainly: “Generally, the larger the percentage you leave to your joint annuitant, the less the amount that will be paid to you during your lifetime”. On the range: “You may choose any percentage but not less than 10%.”
The survivor must qualify: “Your joint annuitant must be your spouse, child, or eligible domestic partner at your retirement”. The guarantee differs by plan: “If you belong to one of the optional plans, the guarantee is 120 payments.” “If you belong to the mandatory plan, the guarantee is the value of your remaining contributions plus interest at retirement.” The County Code sets the same floor: “but not less than 10 percent of the amount payable to the member”.
The pop-up variation protects a retiree against losing the survivor first: “If you and your designated joint annuitant divorce or your designated joint annuitant dies before you, your monthly payment will pop up to the amount it would have been if you had selected the Modified Cash Refund option.” The Code says the pop-up is elected “with an appropriate actuarial reduction”. See also single-life versus joint-and-survivor pension and survivor benefit with a government pension.
A computed example from an assumed $1,800 monthly benefit under a joint and survivor option, not a County figure (the reduction is not published, so $1,800 is invented): a survivor percentage of 100% of $1,800 is a computed $1,800 a month, 70% is a computed $1,260, and the 10% minimum is a computed $180. The retiree’s own payment is what falls as the survivor percentage rises.
What is irrevocable, and the deadlines
“Once you have chosen your payment option, your choice is irrevocable, and can never be changed.” The County Code adds timing: “To elect a pension payment option, the member must file the appropriate form at least one month before the normal, early, or disability retirement date”.
The written retirement application is due at least 30 days before the retirement date. Beneficiary designations should be settled before then, and the checklist says to “Make sure all legal documents and beneficiary designations are up-to-date”. One restriction applies at the election itself: “You may not choose an optional form of payment if you qualify for a non-service connected disability retirement before becoming eligible for early retirement”.
The Code also says the Chief Administrative Officer “must not consider the health condition of the member” in deciding what is actuarially equivalent.
Lump sums, partial lump sums and DROP
The pages read describe no lump sum retirement option, no partial lump sum and no deferred retirement option plan (DROP). Lump sums appear only as payments to a beneficiary after death and as the refund of contributions after leaving, covered below. The choice at retirement is among monthly payment forms.
Leaving before retirement: a deferred pension or a refund
Vesting decides what is open. “You are vested in County provided pension benefits after five years of Plan membership.” The catch: “However, you give up this right if you request and receive a refund of your member contributions and interest upon termination of employment.”
A vested member who leaves early keeps a pension for later: “If you are vested and leave employment with the County before you are eligible for early or normal retirement, your pension benefit will be payable on the first of the month after you reach age 60.” The County Code says a vested member “must leave all member contributions, plus credited interest, in the fund to be eligible to receive retirement benefits”. “If you die after leaving County employment with a deferred vested pension, your designated beneficiary will receive a refund of your employee contributions plus interest.”
Taking a refund: what it ends
A refund is open even to a vested member: “You may withdraw your member contributions, plus the interest earned on that amount, at any time after leaving County employment even if you are vested.” The price is steep: “However, you will forfeit all rights to a pension from the Plan.” It is all or nothing: “You may only withdraw your total member contribution account balance.” “You may not make a partial withdrawal.”
For a member who is not vested, a refund is the only route: “If you are not vested (if you have less than five years of membership), you will receive your member contributions plus interest earned (at a 4% annual rate) when you submit a properly completed distribution form.” “If your contributions and earnings are less than $1,000, you must receive a distribution.” “You may elect to have some or all of your contributions rolled over to another retirement plan or to an Individual Retirement Account (IRA).” More on weighing the choice is on pension refund versus leaving it.
Groups A and H have a third route: “As a Group A or H participant, you are eligible to transfer to the County’s defined contribution Retirement Savings Plan (RSP).” “Please contact MCERP for more information.” The pages read do not describe how that transfer is valued.
How a refund is taxed
A refund that is not rolled over is a distribution under the IRS rules below. A computed example from an assumed $10,000 taxable refund, not a County figure: 20% of $10,000 is a computed $2,000 withheld, leaving a computed $8,000 in cash. A rollover avoids the withholding. See 20% withholding on a pension lump sum.
Buying and transferring service credit
The booklet lists purchasable credit: prior military service (up to 48 months), retirement membership from federal, state or municipal governments, prior Montgomery County service, prior State of Maryland service, and sick leave without pay. On price, “Purchases are computed based on a variety of factors including your age, salary and service at the time you request the purchase”. See the pension buyback calculator.
A limit: “Note: Purchased service credit does not count towards vesting or eligibility for retirement until you have five years of Plan membership.” On payment, “You generally may purchase the service on an after tax basis over a period of time not exceeding five years”, and “If you use a payment period, you will have to pay an additional 6.5% interest per year”.
Service can also be transferred from another Maryland public retirement system: “To do so, send your written request to MCERP within one year from your hire date with the County.”
Cost-of-living adjustments
In the optional plans, “your benefit will adjust by 100% of the change in the CPI for the Washington Metro Area for years and months of credited service before July 1, 2011”. “For years and months of credited service after June 30, 2011, any adjustment will not exceed 2.5%.” The mandatory integrated plan has a different pre-2011 formula, with a combined maximum of 7.5%.
The booklet applies the 2.5% cap to sick leave credit, transferred service and purchased service as well, so the member’s own record decides how much of a benefit is old or new service.
If a member dies before retiring
“The Plan pays benefits if you die while an active member of the Plan.” If the member was vested or eligible to retire and had designated a spouse, domestic partner or child, that person may elect the refund or “a benefit equal to the yearly amount of benefits which would have been payable if you had retired before you died”, and “The benefit will be paid in the form of a 100% joint and survivor option”. “Your beneficiary must make this election within 60 days of your death.”
“For death benefits to be paid to your spouse, your child or your eligible domestic partner, that individual must be designated as your beneficiary.” “If you do not designate a beneficiary, your surviving spouse or eligible domestic partner is your beneficiary.”
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 Montgomery County Plan’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 booklet’s own refund rule allows a rollover to another retirement plan or an IRA, as the section above quotes. 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 print the actuarial factors, so how much any non-normal payment form reduces the monthly pension is not stated.
- The pages read do not describe a lump sum retirement option, a partial lump sum or a DROP.
- The Summary Description for Groups A and H is dated October 2015, and the pages read do not show whether later changes to the Plan are reflected in every paragraph.
- The County Code copy read carries no edition date, so it was not possible to confirm that it is current.
- The pages read do not state whether a spouse must consent to a payment option that leaves a spouse with less than a full survivor benefit.
- Groups E, F, G and J, the Retirement Savings Plan and the Guaranteed Retirement Income Plan were not worked through.
- The County’s Application for Retirement Benefits form could not be retrieved and was not read, and the County’s online portal was not examined.
- Retiree health insurance and service-connected death benefits were not read.
Common mistakes
- Treating the payment option as changeable; the Summary Description says the choice is irrevocable.
- Missing the election deadline; the County Code requires the option form at least one month before the retirement date.
- Taking a refund without weighing what ends; the booklet says the member forfeits all rights to a pension.
- Stale beneficiary forms; a spouse, child or domestic partner benefit requires that person to be designated.
Related on this site: Maryland retirement taxes, does Maryland tax pensions, Maryland MSRPS retirement decisions, Baltimore ERS 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.
Find the right next step for your situation
About how much do you have invested? Pick the range that fits; your next step appears immediately below.
Compare vetted advisors for public pension decisions
If your portfolio is $250,000 or more, this connects you (free, with no obligation to hire anyone) with 2 to 3 vetted advisors.
Before you start, what actually happens. The matching service is run by WiserAdvisor, an independent advisor-matching company. It opens on their site, asks for your ZIP code and a few questions, and matches you with 2 to 3 vetted advisors. It is free to you.
WiserAdvisor states the service is built for portfolios of $250,000 and above. By submitting, you consent to emails, phone calls and text messages from WiserAdvisor and up to three advisors, so expect to be contacted. Clear Money Guide may earn a referral payment for a qualifying completed form, whether or not you ever hire anyone.
Opens on WiserAdvisor’s site in a new tab.
See how an advisor weighs a pension election
Price the destination before you decide. The matching service below introduces you to advisers who pay to meet you.
Before you start, what actually happens. The form is run by Kapitalwise, our advisor-matching partner. Kapitalwise sends your details to advisers who pay for the introduction, so expect calls and texts. Clear Money Guide may earn a referral payment through this service, whether or not you ever hire anyone. This is free to you and there is no obligation to hire anyone.
The Kapitalwise form opens here; you stay on this page.
What happens when you press the button
It asks about nine questions: age, investable assets, location; then your name, email and phone number, and verifies the phone by text. Nothing loads and nothing reaches Kapitalwise until you press the button.
Prefer flat-fee or hourly pricing instead? Compare ranges here.
Answer againSources
- Montgomery County Employee Retirement Plans, Montgomery County Employees’ Retirement System (Optional and Integrated Plans), Summary Description for County Employees in Retirement Groups A and H (October 2015): https://assets.montgomerycountymd.gov/files/Group_AH_2015-10.pdf
- Montgomery County Code, Chapter 33, Article III, Employees’ Retirement System (county-posted copy, edition date not printed): https://assets.montgomerycountymd.gov/files/mcerp/resources/files/Ch_33_Article_III-ERS.pdf
- Montgomery County Employee Retirement Plans, ERS Pre-retirement Checklist (undated as printed): https://assets.montgomerycountymd.gov/files/ERS_Retirement_Checklist.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.