How does the Oregon PERS IAP pay out when I retire?

Your choices for the Individual Account Program: a lump sum, installments, or a rollover, plus the timing, tax and death rules that come with each.

Rules checked October 18, 2026, against oregon.gov/pers and irs.gov

What the IAP is

The Individual Account Program (IAP) is a savings account that sits alongside your PERS pension. Since 2004, the 6% of salary that members contribute (or that many employers pay for them) has gone into the IAP instead of the pension. The account rises and falls with PERS investments, and it has no guaranteed rate of return (PERS: What is the IAP?).

Tier One, Tier Two and OPSRP members all have an IAP if they worked in a qualifying job after 2003. The pension and the IAP are figured separately, but you apply for both on the same retirement application. If you're not sure which plan you're in, see Tier One, Tier Two and OPSRP compared.

The payout options

PERS offers the same IAP choices to every plan. You also pick how often installments come: monthly, quarterly or once a year. Each payment must be at least $200 (PERS: Tier One/Tier Two preretirement guide, June 2026; PERS: OPSRP preretirement guide, June 2026).

How installments are figured

Installments are not a fixed amount. Each payment is your current balance divided by the number of payments left. Because the balance keeps earning or losing money each month, the payment moves up and down. Payments stop when the balance reaches zero.

Since January 1, 2020, the money left in your account while you take installments is invested in the Retirement Installments Fund, which is based on the Oregon Short Term Fund. That is a more conservative investment than the target-date funds that hold your IAP while you're working (PERS: What is the IAP?).

The Anticipated Life Span option

This option uses your account's market value and IRS life expectancy tables, so the payment is recalculated each year. It suits people who want the money to last roughly as long as they do, but it still isn't a guaranteed lifetime income: it pays out only what's in the account.

You can always cash out later

If you start installments, you can't switch to a different installment period or frequency. You can, however, ask for the rest of the balance as a one-time lump sum at any time. That choice closes the IAP account and can't be undone.

Minimum balances for installments

Because each payment must be at least $200, you need a large enough balance for the option you pick. These are the minimums PERS lists in its June 2026 preretirement guides:

Quarterly payments fall in between (for example, $4,000 for 5 years and $16,000 for 20 years). If your balance is too small for your choice, PERS shortens the period or pays less often, down to a single payment. The Anticipated Life Span option has its own age-based minimums; at age 65, for example, monthly payments need $50,400.

Rollovers

A rollover moves IAP money into another tax-deferred account so you don't pay income tax on it yet. You can roll the IAP into a traditional IRA, another employer plan, or a 457 plan such as the Oregon Savings Growth Plan (PERS: What is the IAP?).

• Only the lump sum and 5-year options qualify. The 10-, 15- and 20-year options and the Life Span option are paid to you by check or direct deposit.
• Partial rollovers (a "split/roll") are allowed with the lump sum or 5-year option. The rolled portion must be at least $500, and PERS issues two checks.
• Rollovers to OSGP are transferred automatically. A rollover to another plan needs the Direct Transfer Rollover Acceptance form.
• After-tax money in the account may not be eligible to roll over and may be mailed to you.

When the money arrives

Since January 1, 2011, you must retire from your pension and your IAP at the same time. Members who retired from the pension before 2011 can still take the IAP whenever they choose (PERS: What is the IAP?).

The IAP is normally paid within 120 days of retirement, so it usually arrives after your first pension payments. The amount is based on the balance on the day it's distributed, not the day you filled out the application. Your account keeps gaining or losing value in its target-date fund until then, so the final number can differ from your estimate.

If you take installments, you still have to meet the federal required minimum distribution rules. PERS lists the start age as 73 for people born 1951 to 1959 and 75 for people born in 1960 or later.

Taxes and the 10% early withdrawal tax

IAP payments are taxable income, except for any after-tax money you put in. Withholding depends on the option (PERS: preretirement guide):

The 10% early withdrawal tax

PERS warns that IAP money paid before age 59½ may face a 10% additional federal tax. The IRS lists exceptions for qualified plans like the IAP (IRS: Exceptions to tax on early distributions), including:

• Leaving your job in or after the year you turn 55.
• Qualified public safety employees who leave in or after the year they turn 50.
• Payments made after the member's death.
• A series of substantially equal periodic payments.

The age 55 exception does not apply to IRAs. If you roll your IAP into an IRA and then withdraw before 59½, the 10% tax can apply. Money rolled into a 457(b) plan such as OSGP from another type of plan also keeps the 10% tax on early withdrawals, even though regular 457(b) money doesn't have it. Ask a tax professional how these rules fit your age and plans before you roll anything over.

What happens to the account when you die

After you retire: if you die before your installments are finished, PERS pays the remaining balance to your IAP beneficiary in one lump sum. You can change your IAP beneficiary at any time while money is left. If you haven't named one, or your beneficiary died first, the law sets the order: your surviving spouse, then your children in equal shares, then your estate.

Before you retire: PERS pays the IAP balance as a lump sum to the beneficiaries you named on the IAP beneficiary form (form 469). If no valid designation is on file, the same order applies: spouse, children, estate. The full balance must be paid out by December 31 of the fifth calendar year after the year of death (PERS: Member death for OPSRP; PERS: All about beneficiaries).

Your IAP beneficiary is separate from any pension beneficiary. Picking a pension option that covers your spouse doesn't change who gets the IAP. See PERS pension survivor options for that side.

What to do next

1. Check your balance and run the numbers. PERS's IAP Balance and Installment Calculator estimates payments under each option.
2. Read the retirement steps for your plan. PERS has step-by-step pages for Tier One/Tier Two and OPSRP members.
3. Update your IAP beneficiary. Forms are on the PERS IAP forms page. Send them to PERS, not your employer.
4. Talk to a tax professional before choosing a lump sum or rollover, especially if you're under 59½.

General information, not advice. We aren't part of Oregon PERS. For an official IAP estimate, call PERS Member Services at 888-320-7377 or use your Online Member Services account.