Wisconsin Retirement System members often ask if they can borrow money from their accounts or take out a loan. No, it is not possible to borrow from your account; the only way to receive your funds before reaching minimum retirement age is to take a separation benefit.
A separation benefit is a one-time, lump-sum payment of employee-required contributions, voluntary additional contributions (if applicable), and accumulated earned interest. Separation benefits do not include your employer contributions – by taking a separation benefit, you are closing your account and forfeiting employer contributions and interest. In addition:
- you lose any creditable service earned and all future rights related to that service; and;
- you may also be responsible for significant state tax liabilities if you do not roll your payment into another qualified retirement plan or Individual Retirement Account.
If you leave your funds in the WRS until applying for a retirement benefit (if vested), then your benefit will be based on the employee and employer contributions (plus future years of accumulated interest).
For More Information
Webpage: Leaving WRS Employment
Brochure: Separation Benefits (ET-3101)
Brochure: Tax Liability on WRS Benefits (ET-4125)