Can my funds be rolled into an Individual Retirement Account (IRA)? What are the penalties/tax consequences for withdrawing my funds?
A. If you leave full-time employment with Omaha Public Schools, all tax-deferred contributions (those deducted from your wages after January 1, 1985), all service purchases paid with tax deferred rollovers and tax deferred payroll deductions, and all interest credited to your account would be eligible to be rolled into an Individual Retirement Account. Any contribution on which taxes have already been paid (those deducted from your wages before January 1, 1985 and any service purchases paid with after tax dollars) cannot be rolled into an Individual Retirement Account. If you choose not to roll the tax-deferred portion of your refund into an IRA or other eligible retirement plan, federal law requires OSERS to withhold 20% of your refund for federal income taxes. If you withdraw your money before you reach age 59 a 10% federal tax penalty may apply when you file your tax return, in addition to the ordinary income tax owed. Certain exemptions to this rule apply so as with all tax matters
