Can You Transfer NY State Retirement to Another State?

You cannot transfer your New York state retirement to another state’s pension system. New York’s public retirement systems, including NYSLRS and NYSTRS, only allow transfers between each other, and New York has no interstate pension reciprocity agreements. If you’re leaving New York public employment for a job or retirement in another state, your real choices are to leave your pension in place and collect it later, withdraw your contributions and roll them into an IRA or other qualified plan, or some combination of the two.

What “Transfer” Means Under New York Law

In New York retirement law, “transfer” has a narrow meaning: moving your membership from one New York public retirement system to another. A state employee joining a New York City agency can transfer. A teacher moving to a district covered by a different New York system can transfer. Someone taking a public job in New Jersey, California, or anywhere else cannot.¹

That leaves the question of what to do with the pension you’ve built up. The answer starts with whether you’re vested.

Vesting Controls What You Can Do

All NYSLRS members in Tiers 1 through 6 need five years of credited service to become vested.² Once you’re vested, you’ve earned the right to a monthly pension even if you never work another day in New York public service. That single fact makes leaving your pension in place a real option.

If you leave before hitting five years, your only choice is to withdraw your accumulated contributions plus interest. Contributions earn 5% interest compounded annually, but interest stops accruing after seven years off the payroll, at which point membership automatically terminates.¹

Members with at least five but fewer than ten years of credited service can decide: withdraw or leave the money in the system and collect a pension later. Members with ten or more years of service cannot withdraw at all. Their benefits stay in the system until they’re eligible to collect.¹

Option 1: Leave the Pension in Place

For most vested members moving out of state, doing nothing is the simplest and often smartest choice. Your benefit will be calculated on the service credit and salary you earned as an active member. It won’t grow after you leave, but it also won’t disappear.²

The age at which you can start collecting depends on your tier:

Tiers 1 and 2: the first of the month following your 55th birthday.
Tiers 3, 4, 5, and ERS Tier 6: your 55th birthday.
PFRS Tier 6: your 63rd birthday.

Those are the earliest possible dates.² Collecting at the earliest age comes with permanent benefit reductions that get steeper the further you are from full retirement age. At age 55, the reduction is 27% for Tiers 3 and 4, 38.33% for Tier 5, and 52% for Tier 6.³ For NYSTRS Tier 6 members who become vested-deferred before age 55, the earliest collection age is 63.⁴

You still have to file a retirement application to start receiving payments. Applications need to be submitted between 15 and 90 days before your intended retirement date. File late and your effective date becomes the date the application is received, not the date you first became eligible.² Before you decide, run the numbers using the pension estimator in Retirement Online to see what your future monthly benefit would actually look like.⁵

Option 2: Withdraw and Roll Over

Eligible members can withdraw their accumulated contributions plus interest starting no earlier than 15 days after leaving public employment. You can begin the process through Retirement Online under “Withdraw My Membership,” or by mailing form RS5014.¹

Withdrawal is permanent. It terminates your membership and ends any right to a future pension from the system. A vested member who withdraws is trading a guaranteed monthly income for a lump sum that may be far smaller than the total pension payments they would have collected over a 20- or 30-year retirement. That is where people make expensive mistakes.

If you do withdraw, you can direct all or part of the payment as a direct rollover to an IRA or another eligible retirement plan that accepts rollovers.¹ Choose the direct rollover. If the distribution is paid to you instead, NYSLRS must withhold 20% for federal taxes, and you then have 60 days to deposit the full distribution amount, including the 20% that was withheld, into a qualifying account to avoid income tax on the whole thing. Miss the 60 days and the entire distribution becomes taxable income for the year.⁶

The 10% Early Withdrawal Penalty

Beyond ordinary income tax, the IRS imposes an additional 10% penalty on most retirement plan distributions taken before age 59½.⁷ Several exceptions can spare you:

If you leave public employment during or after the year you turn 55, distributions from a governmental plan are exempt from the 10% penalty.
Police officers, firefighters, and other public safety employees of a state or local government can use the separation-from-service exception starting at age 50.
Withdrawals from a governmental 457(b) deferred compensation plan are not subject to the 10% additional tax at any age, unless the funds were rolled in from another plan type.

These exceptions apply to the penalty only. You still owe regular income tax on the distribution unless you complete a qualifying rollover.⁷

How Your New State (and New York) Will Tax the Pension

Here is a point that trips people up. If you move out of New York and later collect your NYSLRS or NYSTRS pension, New York will not tax it. NYSLRS pensions are exempt from New York State and local income tax, and once you’re no longer a New York resident, the state has no claim on that income at all.⁸ Federal law reinforces this. Under 4 U.S.C. § 114, no state may impose an income tax on the retirement income of someone who isn’t a resident of that state.⁹

Your new state may tax it, though. Treatment of government pension income varies widely. Some states exempt all government pensions. Others tax them as ordinary income. States with no income tax, such as Florida and Texas, don’t tax pension income regardless of source. Federal income tax applies no matter where you live.

If you stay in New York and collect, public pension income from New York State or local government plans is fully exempt from state income tax, and so is federal government pension income.¹⁰ That exemption is one reason some retirees leave their pension in place and collect it from wherever they end up rather than withdrawing a taxable lump sum while still in New York.

The SUNY ORP Is the One Portable Plan

The SUNY Optional Retirement Program is the one New York public retirement arrangement built for portability. Unlike the defined benefit pensions offered by NYSLRS and NYSTRS, the ORP is a defined contribution plan. Your benefit is determined by contributions and investment performance, not a formula tied to salary and service.¹¹

ORP annuity contracts are fully vested with the individual immediately and are transferable to other educational and research organizations throughout the country. A SUNY employee taking a job at a university in another state can often continue their contracts without interruption.¹¹ If you’re in the ORP, your benefits travel with you in a way that NYSLRS or NYSTRS benefits do not.

Buying Service Credit in Your New State

Some state pension systems allow incoming employees to buy service credit for time spent in public employment elsewhere. This isn’t a transfer of your New York pension. It’s a separate purchase, paid from your own funds, that credits the new system as if you’d worked there during those years. Cost is calculated using actuarial factors tied to your age, salary, and existing credit in the new system.

These purchases tend to be expensive, and the older you are when you buy, the higher the price, because the plan has fewer years to earn returns before it starts paying you. Whether it makes sense depends on how close you are to retirement in the new system, the benefit formula there, and whether you also have a deferred New York pension waiting. Run the numbers on both the purchase cost and the incremental benefit before committing.

Don’t Forget Supplemental Savings

If you also participated in a New York 457(b) deferred compensation plan or a 403(b) alongside your pension, those accounts follow different rules. They’re yours to roll over into an IRA, a new employer’s 401(k), or another eligible plan regardless of where you move. Distributions from a governmental 457(b) plan avoid the 10% early withdrawal penalty, which makes them particularly flexible if you retire or change careers before 59½.⁷

For a vested member planning to collect the pension later, supplemental savings can bridge the gap between leaving public employment and reaching the age when pension payments start. That gap can run a decade or more, especially for Tier 6 members who leave in their 40s and face a 52% reduction if they try to collect at 55.³

How to Start

Most NYSLRS actions can be handled through Retirement Online. Signing in and going to My Account Summary gives you access to withdraw your membership or estimate your future benefit.¹ You can also apply by mail using form RS5014 for withdrawals.

Gather your employment records, contribution summaries, and payroll statements before you begin. If you’re withdrawing and rolling funds over, request the direct rollover option to avoid the mandatory 20% federal tax withholding.⁶ And if you’re vested but torn between leaving the pension in place and cashing out, use the Retirement Online estimator to see the monthly benefit at stake before you give it up.⁵

1
Office of the New York State Comptroller. Transferring or Terminating Your Membership
2
Office of the New York State Comptroller. Are You Vested? And What It Means
3
Office of the New York State Comptroller. Comparison of ERS Benefits
4
New York State Teachers’ Retirement System. Service Retirement
5
Office of the New York State Comptroller. Estimate Your Pension
6
Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions
7
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
8
Office of the New York State Comptroller. Taxes and Your Pension
9
Office of the Law Revision Counsel. 4 USC 114 – Limitation on State Income Taxation of Certain Pension Income
10
Department of Taxation and Finance. Information for Retired Persons
11
SUNY. Optional Retirement Program (ORP) Summary Plan Description