Common VRS Retirement Mistakes to Avoid

VRS retirement is full of deadlines, irrevocable elections, and enrollment windows that close permanently. Most of the costly mistakes are not complicated — they are procedural errors that happen because people did not know the rule existed until it was too late.

Here are the ones that cause the most damage.

Missing the Service Credit Purchase Deadline

Once you separate from employment or retire, any eligible prior service credit you have not purchased is permanently forfeited. There is no buying it back after your retirement date.

This catches members who plan to "get around to it" during their last year of work. If you have refunded VRS service, military time, or eligible out-of-state public employment, initiate the purchase process now. Payroll deduction payments must be completed — not just started — before your effective retirement date. If your last installment processes after separation, you lose the unpurchased portion.

Choosing a Payout Option Without Running the Numbers

Your payout option election — Basic Benefit, Survivor Option, APO, or PLOP — becomes permanent and irrevocable once VRS disburses your first payment. Members who pick an option based on a general sense of what sounds right, without comparing the actual dollar amounts across all five options, lock themselves into a decision they cannot undo.

Log into the myVRS Benefit Estimator and generate estimates for every option available to you, including PLOP if eligible. Compare the monthly amounts side by side. The difference between a Basic Benefit and a 100% Survivor Option is the exact monthly cost of protecting your spouse — that number, not a gut feeling, is what your decision should be based on.

Failing the Break-in-Service Requirement

Virginia law requires a bona fide break in service of at least one full calendar month over a period you would normally work. This means completely separating from employment with any VRS-participating employer during the qualifying month. Non-covered part-time work, volunteer work, or independent contracting with the same participating employer during this period invalidates the break.

If you return to VRS-covered employment before completing this full calendar month, your retirement application is voided. Teachers retiring at the end of the school year need to be especially careful: summer break does not count as a break in service for 10-month employees because it is not a period you would normally work.

Missing the 31-Day Health Insurance Enrollment Window

State employees have exactly 31 days from their retirement date to enroll in the State Retiree Health Benefits Program. If you miss this window or waive coverage, you permanently lose eligibility — there is no open enrollment period for retirees, and you cannot get back in unless you maintained continuous coverage under a spouse's active state plan.

Submit your enrollment form (A10741 for state employees) within the first week of retirement to give yourself a buffer for processing delays.

Not Filing Form VRS-45 for the Health Insurance Credit

Even if you enroll in retiree health coverage, VRS does not automatically apply your Health Insurance Credit. If your health insurance premiums are not deducted directly from your pension payment, you need to submit Form VRS-45 (Request for Health Insurance Credit) with proof of qualifying coverage. Without it, you forfeit a tax-free monthly reimbursement that can add up to hundreds of dollars per month for long-tenured members.

Ignoring the Tax Withholding Setup

Your retirement application includes federal withholding elections (IRS Form W-4P or the myVRS digital equivalent) and Virginia state income-tax withholding elections. Set them intentionally for your circumstances; ask a tax professional if you need help estimating the right amount.

You can update your withholdings at any time through myVRS.

Assuming PLOP Eligibility

PLOP requires active service past your earliest unreduced retirement date — 12 months for a 1-year PLOP, 24 for 2, 36 for 3. Purchased prior service credit does not count toward this active-service requirement. Members who buy enough service credit to reach unreduced eligibility and then immediately retire are not eligible for PLOP, even if their total service credit is well above the threshold.

The VRS Retirement Guide walks through each of these pitfalls with checklists and timelines to keep your retirement on track.

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