Your pension depends on your role — certificated employees (teachers, counsellors) build benefits in CalSTRS, classified staff (office, facilities, food service, aides) in CalPERS — and neither is rollover money. Supplemental 403(b) and 457(b) accounts are where the four options apply, with two cautions: annuity products inside 403(b)s can carry surrender charges, and rolling a governmental 457(b) to an IRA forfeits its early-access feature.
Certificated and classified: the structural split
The nation’s second-largest school district employs two distinct workforces under one roof. Certificated employees participate in the California State Teachers’ Retirement System (CalSTRS), while classified employees participate in CalPERS — a structural split common to California districts. On top of either pension, LAUSD Benefits Administration states that LAUSD offers traditional and Roth 403(b) and 457(b) accounts; TSACG is plan administrator for the 403(b) and posts the district's investment provider list, and Voya is plan administrator for the 457(b).
One more Social Security note belongs here: educators researching old articles will find warnings about WEP and GPO reductions — those provisions were repealed by the Social Security Fairness Act in January 2025, so anything written earlier needs re-checking against current law.
The four options for your 403(b) and 457(b) accounts
Pension money never enters this table. Each supplemental account gets its own pass through it.
| Option | Good when | Watch out for |
|---|---|---|
| Leave it | The plan’s institutional pricing is genuinely low and you like the menu | Small balances can be forced out; orphaned accounts get forgotten |
| Roll to new employer | You want everything in one place and the new plan is decent | The new menu and fees may be worse than what you are leaving |
| Roll to an IRA | You want wider choice, control, or ongoing advice | An IRA balance can complicate a future backdoor Roth (pro-rata rule) |
| Cash out | A genuine emergency with no other source of cash | Income tax now, a 10% penalty under 59½, and the compounding is gone |
Before you roll a governmental 457(b) to an IRA. A governmental 457(b) allows penalty-free withdrawals at any age once you have separated from the district. That is a feature, not a loophole — and it evaporates if the balance is rolled into an IRA, where pre-59½ withdrawals generally face the 10% penalty. Decide with eyes open, per our 457(b) guide.
Things to check before leaving the district
- Which pension system is yours. Certificated means CalSTRS, classified means CalPERS — and each has separate vesting, refund and reciprocity rules to confirm directly with the system.
- Every 403(b) and 457(b) you opened. Use your statements and the district's investment provider list posted by TSACG to identify your accounts.
- Surrender charges on annuity 403(b)s. Check your statement, SPD or HR for your contract type and any surrender terms.
- Refund consequences at the pension. Cashing out CalSTRS or CalPERS contributions generally cancels the associated service credit — an irreversible trade to model, never to default into.
- Recordkeeper and transfer paperwork. Per LAUSD Benefits Administration, TSACG administers the 403(b), and Voya administers the 457(b).
Changing districts is not leaving the system
A move from LAUSD to another California public school employer usually continues your membership in the same state system — the pension follows the system, not the district. In that case the urgent decisions shrink to the supplemental accounts: whether the old 403(b) vendors still earn their fees, and whether consolidation would serve you. Leaving public education entirely is the scenario where every account, pension included, needs a deliberate election.
Always transfer directly. Move any balance you roll via direct transfer between institutions. A cheque issued in your name arrives 20% lighter under IRC § 3405(c), and completing a tax-free rollover inside 60 days then depends on your ability to supply the withheld share from elsewhere.
Common questions
I am a teacher with an old 403(b) annuity. Should I roll it into an IRA?
Ask two questions first: what surrender charge applies today, and what are the contract’s ongoing costs against its guarantees? High-cost annuities often justify a move even after a modest surrender hit; older contracts with strong guaranteed rates sometimes justify staying. It is arithmetic, and we are happy to run it with you.
Do CalSTRS and CalPERS transfer to my new district?
If the new employer participates in the same system, your membership generally just continues — no transfer needed. Crossing between systems, or into private employment, raises reciprocity and refund questions best answered by the systems before you sign anything.
Who actually pays you in all this?
Clients only. We sell no annuities, accept no vendor compensation, and quote one transparent asset-based fee — which is exactly why we can tell you to keep an old contract when keeping it wins.
Grade the accounts before they grade you
Bring the pension estimate and every vendor statement — we will sort keepers from movers and sequence the exit properly.