UCRP Retirement Options: Payment Options, Cashout and Buyback

Updated October 2, 2026. Quick answer: A University of California Retirement Plan member can take monthly income, with or without a contingent annuitant under Options A to D, or elect a Lump Sum Cashout. A 25% survivor continuance is built into the benefit and is not optional. The option and the cashout become irrevocable on the retirement date on the election form, or 15 days after the confirmation letter if later. The cashout forfeits all future UC retirement benefits, and a service credit purchase is priced by a different method if it is elected within three years of returning from a leave.

More on public pension systems, topic by topic: UCRP service credit purchase and UCRP disability income.

The choice in one view

A University of California employee who leaves with enough service has three routes in the plan documents: monthly retirement income, a Lump Sum Cashout, or a refund of accumulations. This page follows the 1976 Tier summary plan description and UCRP’s own guides to the cashout and to service credit purchases. For monthly income, the plan sets the age and service bar this way: “when you reach age 50 and leave University employment with at least five years of service credit.” The cashout has its own eligibility line: “You must also be eligible to retire (that is, age 50 or older with five years of UCRP service credit) or be an inactive or disabled member who is eligible to retire.”

That is the 1976 Tier summary’s wording, and the Plan Text carries more than one age and more than one tier. For the 1976 Tier Benefit and the Modified 2013 Tier Benefit, Section 5.05 says: “An Active Member, Disabled Member, or Inactive Member who has attained age 50 and earned at least five years of Service Credit, including service credit under PERS as a University employee, or who entered the Plan on or before July 1, 1989 and has attained age 62, regardless of the Member’s years of Service Credit, may elect to retire at any time by complying with Plan requirements as stated in Section 12.03 with respect to the Member’s 1976 Tier Benefit and/or the Member’s Modified 2013 Tier Benefit.” For the 2013 Tier Benefit and the 2016 Tier Benefit the age is 55 and not 50: “An Active Member, Disabled Member, or Inactive Member who has attained age 55 and earned at least five years of Service Credit, including service credit under PERS as a University employee, or became a Member on or before July 1, 1989 and has attained age 62, regardless of the Member’s years of Service Credit, may elect to retire at any time by complying with Plan requirements as stated in Section 12.03 with respect to the Member’s 2013 Tier Benefit and/or the Member’s 2016 Tier Benefit.”

The cashout line has its own tier limit. Section 4.08(c) says: “(c) may elect a Lump Sum Cashout with respect to the Member’s 1976 Tier Benefit, the Member’s Modified 2013 Tier Benefit, and the Member’s benefit accrued under Articles 7 or 8, provided the Member has earned five years of Service Credit and attained age 50 (effective January 1, 1990), or has attained age 62 regardless of Service Credit and became a Member of the Plan on or before July 1, 1989; or”

Payment options A to D and the built-in survivor continuance

Two different survivor benefits sit inside a UCRP retirement, and the plan keeps them apart. The first is the postretirement survivor continuance, which the plan describes as a benefit that “Is not optional” and that “Is built into the retirement benefit (basic retirement income is not reduced to pay for it)”. Its size is stated this way: “25% of your basic retirement income = postretirement survivor continuance”. On who qualifies: “the marriage or domestic partnership must have existed for at least one year before your retirement and continuously until your death”.

That continuance belongs to one tier only. Section 5.17 says: “This Section 5.17 applies only to a Member’s 1976 Tier Benefit.” Section 5.12 says: “The Postretirement Survivor Continuance is not available for a Member’s 2013 Tier Benefit, a Member’s Modified 2013 Tier Benefit and/or a Member’s 2016 Tier Benefit.” And Article 5 begins: “The provisions of this Article shall apply to a Member who earns Service Credit as a Member with Coordinated Benefits under the Plan.”

The 25 percent is not always of basic retirement income alone. Section 5.17 says: “The amount of the Postretirement Survivor Continuance payable with respect to a Retired Member who was a Member with Coordinated Benefits and whose death occurs before attainment of age 65 is equal to 25% of the sum of the amount of Basic Retirement Income for the Member’s 1976 Tier Benefit, plus, if applicable pursuant to Section 5.07 for a surviving spouse or surviving Domestic Partner, 25% of the amount of the Social Security Supplement payable to the Retired Member as of the date of death.”

It is also not owed to every survivor in turn. Section 5.17 says: “Upon the death of a Retired Member who accrued a 1976 Tier Benefit, a monthly benefit shall be paid to the person or persons (on a share and share alike basis) in the first of the following categories in which there is a survivor:” It then names the categories, and it adds: “A Postretirement Survivor Continuance shall not be paid to a former spouse or former Domestic Partner.”

The second is the contingent annuitant benefit a member chooses, and only one annuitant may be named. The cost is stated in the plan’s words: “To provide a contingent annuitant benefit, you receive a reduced retirement benefit for life. The amount of the reduction varies according to the option you choose as well as the average life expectancy of you and the contingent annuitant.” The two pieces are calculated in a set order: “Before the reduction in your benefit is calculated, the 25 percent postretirement survivor continuance is set aside. The remaining 75 percent of your basic retirement income is adjusted for the payment option selected.” “If no one is eligible for the postretirement survivor continuance at the time of retirement, the entire basic retirement income is adjusted for the payment option.”

The table repeats the plan’s worked examples. Its footnote says: “The example assumes that both you and your contingent annuitant are age 60. If your ages are different, the dollar amounts will vary somewhat because different reduction factors will be used.” The table shows how the options rank for one pair of ages, so a member’s own estimate from UCRP will differ.

The options are not open on the same terms to every tier. Section 5.12 says: “A Member may not elect Option D for a 2013 Tier Benefit, a Modified 2013 Tier Benefit or a 2016 Tier Benefit.” And Plan Regulation 2.34 says: “A Member’s 2013 Tier Benefit and/or 2016 Tier Benefit cannot be paid as a LSC and must be payable as a monthly payment option described in Section 5.06 or 5.12 of the Plan.”

A computed example of the survivor continuance

A computed example from the plan’s own Option A inputs, not a new UCRP figure. The basic retirement income is $2,000 a month. The 25% continuance is $2,000 times 25 divided by 100, which is $500. That leaves $1,500 as the option portion before reduction. The plan’s reduction factor for the example is 0.910825, so the option portion becomes 0.910825 times $1,500, which is $1,366.24. Adding the $500 continuance back gives $1,866.24 a month. The plan’s own statement of the result is: “Your monthly retirement benefit is $1,866.24, to be paid every month for life.” With no eligible survivor the arithmetic changes, because the whole $2,000 is reduced instead. Which factor applies depends on the option and on the ages of the member and the contingent annuitant.

For the general trade between a single-life and a joint benefit, see single life versus joint and survivor.

What is irrevocable, and when

The election has a firm point. The plan says: “The selection of the option and contingent annuitant becomes irrevocable on the retirement date on the election form (or 15 days after the date of the letter confirming that your election has been received, if later).” If the annuitant dies first: “If the person you name as contingent annuitant dies before you, you cannot name another contingent annuitant and your benefit will not be adjusted.”

Two rules limit who can be named. For a non-spouse annuitant who is much younger, the plan says: “Please note that an Internal Revenue Code regulation places a limitation on the extent your monthly benefits can be reduced to provide for a non-spouse contingent annuitant who is more than ten years younger than you.” “As a result, some or all of the alternate payment options may not be available for you to elect if the contingent annuitant is more than ten years younger than you.” For a married member who names someone else: “If you are married or have a registered domestic partner and designate someone other than your legal spouse or partner as a beneficiary or contingent annuitant, you need to consider the spouse’s/partner’s community property rights.” Where a designation is unusual, confirm it with UCRP and, if it matters, a lawyer.

The Plan Regulations go further than a consideration. Regulation 5.12 says: “Election of a payment option as described in Sections 5.12, 6.11, 7.11, and 8.10 of the Plan by a married Member or a Member who has designated a Domestic Partner as described in Section 2.19 of the Plan will require the written acknowledgement of the spouse or Domestic Partner, as applicable, of the payment option election and its effect on the spouse or Domestic Partner, as applicable.” And Regulation 2.34 says: “A Lump Sum Cashout election by a married Member or a Member who has a Domestic Partner will require the spouse’s or Domestic Partner’s written acknowledgement of such election and its effect on the spouse or Domestic Partner, as applicable.”

The July 1, 2024 factor change

UCRP’s payment options depend on actuarial factors, and the university published a change. The notice says: “for retirements on or after July 1, 2024, updated mortality assumptions will be used in the calculations of the UCRP lump sum cashout and UCRP monthly retirement income for members and contingent annuitants under Payment Options A-D.” “The current factors will continue to be used for retirement dates prior to July 1, 2024.” Who is unaffected: “These changes will not impact the retirement benefits of current retirees .” The monthly options and the cashout move in opposite directions:

In the notice’s words: “There will be decreases at many common retirement ages for the member and contingent annuitant (ages 50 to 65). This will lead to lower benefits payable under these options for retirements on or after July 1, 2024.” “there will be increases (0.36% to 0.56% for ages 50 to 65) in the factors used to calculate the lump sum cashout for retirement ages through age 80.” “For retirement ages over age 80, the factors used to calculate lump sum cashouts will decrease.” Its advice at the time was to “estimate your benefits using retirement dates both prior to and on or after July 1, 2024 (for example, June 29 and July 1, 2024)”. Because the date has passed, a member retiring now falls under the updated factors, and UCRP’s current estimate is the figure to rely on.

The Lump Sum Cashout

The cashout is the plan’s one-time alternative to monthly income. UCRP says “The lump sum cashout is a present value projection of your lifetime basic retirement income as of the cashout date and includes assumed cost-of-living increases.” It cannot be paid during employment: “You can’t receive the cashout itself while you’re still employed.” On the calculation, the plan says: “The calculation assumes future investment earnings of 6.75 percent per year up to an average life expectancy”, with a 2 percent annual cost-of-living assumption added.

The plan’s worked example: “Winston is retiring at age 60 and chose the lump sum cashout. His basic retirement income would have been $2,000 per month, and would have been assumed to increase by 2 percent each year.” “His cashout amount at age 60 is a one-time payment of $367,320.” The plan calls 183.66 the Lump Sum Cashout factor at age 60 and says it varies by age. A computed example from the plan’s own inputs, not a new UCRP figure: $2,000 times 183.66 is $367,320, which matches the amount the plan states. The factor belongs to age 60 and the plan’s assumptions, so another age uses a different factor.

The risk is spelled out: “You could exhaust the cashout if you live longer than expected or your invested cashout funds do not consistently earn at least 6.75 percent per year.” For the general comparison, see pension lump sum versus monthly annuity.

What the cashout forfeits

The plan’s statement is plain: “By electing the cashout, you forfeit all future UC retirement benefits”. The forfeited benefits include “continued UC medical insurance (if eligible)”, “post-retirement survivor continuance (if eligible)” and “contingent annuitant benefit”. One piece is paid on top: “Your CAP balance, if any, is paid separately from (and in addition to) the lump sum cashout.”

The waiver is narrower than the guide’s sentence suggests. Plan Regulation 2.34 says: “A Member who elects to receive an LSC will waive all rights to benefits, other than a 2013 Tier Benefit and/or 2016 Tier Benefit, provided under Articles 5, 6, 7, and 8 of the Plan, including but not limited to:” It adds: “A Multi-tier Member who has Service Credit in the 2013 Tier and/or 2016 Tier does not waive his or her rights to the basic death payment as provided under Sections 5.18 and 6.17 of the Plan or the conversion of unused sick leave as provided under 5.04 and 6.04 of the Plan and described under Regulation 5.04.N.2. when the Member elects an LSC in any other Member Tier.” And Section 4.08 says: “A Member who elects a Lump Sum Cashout or a Refund of Accumulations shall waive all rights to additional benefits provided by the Plan to the extent they are attributable to Service Credit completed prior to the Member’s Break in Service.”

Cashout timing, cancelling, death and returning to work

The window is bounded: “UC Human Resources must receive your election form no more than 90 days before or 90 days after the cashout date you are requesting.” The guide says the decision is “irrevocable from the date specified on your election form”, or, if that date is later, “15 days after the date of the confirmation statement that the UC Retirement Administration Service Center will send you.” Before that there is room, according to the plan description: “You may cancel or change your election at any time up to your cashout date (or 15 days after your confirmation letter is sent, if later).”

The Plan Regulations state two separate time rules. Regulation 2.34 says: “The Plan Administrator will not accept a request to elect a Lump Sum Cashout (LSC) more than 120 days before the cashout date, as defined in Section 2.34 of the Plan.” It also says: “If no election form for either Lump Sum Cashout or Retirement Income is received by the Plan Administrator within 90 days following the cashout date or Retirement Date specified on the Member’s request to retire or the date the initial election form is sent to the Member, whichever is later, the request to retire is cancelled, and the Member must reapply.”

Death changes the answer by timing. “If you were to die after you elected the lump sum cashout but before you received payment, the cashout would be paid to your designated beneficiary.” “If you were to die before submitting the election form, the cashout election would not be available to your survivors.”

Returning to work is restricted: “In general, if you elect the lump sum cashout, you may not return to work in a career or long-term appointment at UC.”

Taxes and rollover on a cashout

UCRP’s cashout guide is direct on withholding: “Unless you arrange for a direct rollover of your money (see below), the law requires that 20 percent federal income tax be withheld from your distribution.” “On any part of the cashout that you directly roll over, taxes won’t be withheld.” On the early distribution tax: “an early distribution penalty tax (10 percent federal and 2½ percent California) may apply unless you qualify for an exception”. One exception it lists: “You’re at least age 55 at the end of the calendar year in which you leave UC employment”.

Where the money can go: “A traditional IRA or another employer’s 401(a), 401(k), 403(b), or governmental 457(b) plan”. The Plan Text’s own list of eligible retirement plans also includes a Roth IRA. Section 2.24 says: “(g) effective January 1, 2008, a Roth IRA subject to the requirements established in Section 408A(b) of the Internal Revenue Code, that accepts an Eligible Rollover Distribution.” If the money is paid to the member first, the plan says the rollover must occur “within 60 days of receipt of the distribution”. See the 20 percent withholding rule for the general mechanics.

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 UCRP’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”. UCRP’s own cashout guide says a direct rollover avoids the withholding and the early distribution tax on the part rolled over. 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.

One condition the quoted list leaves out. The IRS topic page words the public safety exception this way: “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.”

Leaving: refund of accumulations and vesting

A member who leaves has a second route to cash. “Upon leaving University employment, you may receive a distribution of your Plan accumulations (your contributions plus interest) or leave them in the Plan (University contributions must remain in the Plan).” The cost: “a refund of accumulations cancels your right to any future Plan benefits based on that period of service unless you return to University employment and reestablish the service credit” For the general comparison of a refund and leaving the money, see pension refund versus leaving it in.

Leaving the money in is a status with conditions. Section 3.08 says: “In order to retain Inactive Membership an Inactive Member is required to leave any Accumulations on deposit with the Plan.” A member who does not qualify for a retirement route is paid out. Section 4.08 says: “(d) in the case of a Member who is not eligible for, or has not elected one of the above, shall receive a Refund of Accumulations, provided, however, that effective April 15, 2010, a Member who is not vested in his or her basic pension benefit upon a Break in Service will not be required to take a Refund of Accumulations, subject to the requirements of the Minimum Distribution Rule.” And Section 10.08 says: “(b) if a Member receives a Refund of Accumulations or a Lump Sum Cashout in accordance with Section 4.08, such Member shall automatically receive the Capital Accumulation Payment which consists of the total value of Capital Accumulation Credits in accordance with Section 10.09 at the same time;”

Vesting decides what is left to take later. “You must earn five or more years of service credit to be vested.” “Once vested, you generally have a non-forfeitable right to receive UCRP retirement benefits upon leaving the University and reaching retirement age.” “Employees who became UCRP members on or before July 1, 1989, are vested regardless of service credit if they leave University employment in an eligible position after reaching age 62.”

Cost-of-living adjustments

The plan describes the adjustment this way: “After receiving benefits for one year, UCRP members are eligible to receive an annual cost-of-living adjustment (COLA), starting on the following July 1.” “100 percent of the CPI increase up to 2 percent”. “The maximum COLA is 6 percent. If the CPI decreases, UCRP benefits are not reduced.” The rate depends on inflation, so a projection should be checked with UCRP.

The Plan Text states the adjustment as two parts. Section 9.03 says: “The amount of the initial adjustment on the adjustment date shall be determined in accordance with the Consumer Price Index Movement but shall be limited so that the total of adjustments under this subsection granted to any payee shall not, as of any adjustment date, exceed the lesser of: (i) 2% per year compounded annually beginning with July 1, 1969, or beginning with the first adjustment date, whichever is later; or (ii) the Cumulative Consumer Price Index movement.” It continues: “In addition to the amount determined under (b) above, effective July 1, 1992 an additional adjustment shall be made on each July 1, equal to 75% of the amount by which the percentage increase in the Consumer Price Index during the preceding year exceeds the greater of 4% or the adjustment determined in (b) above.” It caps that additional part: “Beginning with July 1, 1992, such additional adjustment shall not exceed the greater of 4% or the difference between (i) and (ii) above.” The 2% part plus a 4% additional part is 6 percent; the Plan Text states the limit as these two parts, not as one 6 percent figure.

Buying service credit

A member can pay the plan for credit. UCRP’s guide defines the purchase: “A service credit purchase is a payment that you can make to the UC Retirement Plan to obtain service credit for periods during which you were temporarily laid off or on an approved leave of absence, including a sabbatical.” Who can buy: “You must be an active UCRP member, on pay status at UC, to elect a service credit purchase.” On timing: “There’s no official deadline. But the sooner you begin, generally the less a service credit purchase may cost you.” “You must be on active UC pay status until you’ve completed your payments.”

The Plan Text adds conditions to who can buy. Section 5.04(d) says: “An Active Member’s election shall not be effective unless the Member has not less than five years of participation in the Plan, excluding any Service Credit purchased under this subsection.” It also says: “An Active Member may not purchase more than five years of nonqualified service credit.” Those two rules apply to credit that is nonqualified service credit under Section 415(n) of the Internal Revenue Code.

Cost depends on timing. “if you elect the service credit purchase within three years of returning from your leave, your cost will be calculated using what’s called the Plan Normal Cost Rate method.” “If you elect a service credit purchase after three years, your cost will be based on the Individual Actuarial Cost.” For 1976 Tier members the plan states a normal cost rate: “1976 Tier Members (with or without Social Security): 20.95%”.

The three-year line is not the only pricing rule. Section 5.04(d) says: “The cost of the purchase of any Service Credit that exceeds 24 months shall reflect the actuarially determined cost to the Plan for such Service Credit based on the Member’s individual life expectancy as calculated under mortality tables that reflect the experience of the general population that purchases annuities.” It also says: “If the request to establish Service Credit is received by the Plan Administrator on or after May 1, 2009 and more than three years after the Member returns to University service from the Leave as an Active Member in pay status, amounts determined under subparagraphs (A) and (B) will be adjusted to reflect the actuarially determined cost to the Plan based on the Member’s individual life expectancy as calculated under mortality tables that reflect the experience of the general population that purchases annuities.” Plan Regulation 5.04 words the line differently: “Effective May 1, 2009, if a Member elects to establish Service Credit after 3 or more years of returning from furlough, temporary layoff, approved leave of absence, extended sick leave, or sabbatical, regardless of when the leave commenced, the total cost shall be determined under the individual actuarial cost methodology described in the Plan.”

The guide says the ways of paying, which include “An after-tax lump sum payment”, are subject to the Internal Revenue Code Section 415(c) “annual limit of $72,000 for 2026”.

It is a commitment: “Once you make the commitment to start a service credit purchase, you can’t cancel it unless you leave UC, and you can’t change the amount of the payments.” “It’s not possible to get a refund of any of your service credit purchase payments as an active employee.”

On whether it pays: “divide the total cost of the service credit purchase by the amount your monthly benefit will increase as a result of the service credit purchase.” To test the arithmetic, see the pension buyback calculator.

What this page could not settle

• The pages read do not give a member’s own reduction factor or cashout factor; those come from a UCRP estimate for a specific age, tier and date.
• The July 1, 2024 notice gives ranges of change, not the new factors themselves.
• The pages read do not set out the 2013 and 2016 Tier rules in full; they appear only where they touch the 1976 Tier election.
• The pages read do not state how the cashout compares in value with monthly income for any one member.
• The pages read do not state the price of an individual medical policy after the cashout.
• The Special Tax Notice that UCRP tells members to read before a distribution election was not among the documents read.

Common mistakes

• Treating the survivor continuance as something that can be waived; the plan says it is built in and not optional.
• Electing an option or the cashout without noticing that it becomes irrevocable on the retirement date on the form, or 15 days after the confirmation letter if later.
• Choosing a non-spouse contingent annuitant without checking the age-gap limit and the spouse’s community property rights.
• Taking the Lump Sum Cashout without counting what it forfeits, including survivor benefits and continued UC medical insurance.
• Requesting a distribution without a direct rollover and then facing 20 percent federal withholding.
• Taking a refund of accumulations and forgetting that it waives future plan benefits.
• Waiting past three years from returning from a leave to buy service credit, when the cost basis moves from the plan normal cost rate to the individual actuarial cost.

Related on this site: California retirement taxes, does California tax pensions, CalPERS retirement decisions, a different system, pension buyback calculator, pension lump sum versus monthly annuity and public pension retirement decisions by system.

Sources

• University of California Retirement Plan, 1976 Tier Summary Plan Description: https://ucnet.universityofcalifornia.edu/wp-content/uploads/forms/pdf/ucrp-1976-tier-summary-plan-description.pdf
• University of California Retirement Plan, Lump Sum Cashout: https://ucnet.universityofcalifornia.edu/wp-content/uploads/forms/pdf/lump-sum-cashout.pdf
• UCnet, Factors used to calculate UCRP payment options will change on July 1, 2024: https://ucnet.universityofcalifornia.edu/employee-news/factors-used-to-calculate-ucrp-payment-options-will-change-on-july-1-2024/
• University of California Retirement Plan, Service Credit Purchase Guide: https://ucnet.universityofcalifornia.edu/wp-content/uploads/forms/pdf/ucrp-service-credit-purchase-guide.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 2, 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.