City of Austin (COAERS) Pension and a Gold IRA

Affiliate disclosure: we may earn a commission when a reader opens an account through links on this page. The commission has no effect on what you pay or on what we publish. We are not a financial or tax advisor; consult a licensed advisor for your situation. Last reviewed July 2026.

Short on time? The essentials

• Your COAERS monthly retirement benefit is a lifetime annuity and is not eligible for rollover. Only a refund of your accumulated member contributions is a lump-sum eligible rollover distribution.
• COAERS covers regular full-time City of Austin employees working 30 or more hours per week. The Mayor, City Council members, and commissioned civil service police officers and firefighters are excluded and sit under different systems.
• COAERS was established in 1941 by City ordinance. Since August 1991, it has been governed by state law under Article 6243n, Vernon's Texas Civil Statutes.
• Two groups apply. Group A is any member whose regular full-time employment date is before January 1, 2012. Group B is any member whose employment date is on or after January 1, 2012.
• The member contributes 10 percent of base pay each pay period, and the City contributes a base 10 percent as required by Texas law. A refund returns only the member portion plus interest, never the City portion.
• Under IRC Section 3405, a payment made to the former member is subject to 20 percent mandatory federal withholding. A direct rollover to the receiving custodian avoids the withholding and the 60-day redeposit clock.
• Inside the self-directed IRA, cash buys IRS-approved bullion or coins meeting IRC 408(m)(3) fineness. Gold minimum purity is 99.5 percent; silver 99.9 percent; platinum and palladium 99.95 percent. The American Gold Eagle qualifies at 91.67 percent by statute.
• Texas has no state personal income tax under Article 8, Section 24 of the Texas Constitution. The state-run Texas Bullion Depository in Leander accepts IRA storage through Lone Star Tangible Assets, which received IRS approval as a nonbank trustee in 2023.
• Home storage of IRA metal is not allowed. The 2021 Tax Court ruling in McNulty v. Commissioner treats it as a full distribution.

See the Augusta Precious Metals gold IRA company checklistAugusta is our primary affiliate partner. The free checklist gives you a clean way to vet any provider you call about a COAERS refund rollover.Print / save as PDF

On this page

• COAERS structure and who is covered
• Group A and Group B mechanics that matter for a rollover
• Contributions, vesting, and interest on the member account
• What COAERS payments are eligible to roll
• Refund the account or keep membership
• The COAERS-to-gold-IRA rollover in eight steps
• Direct vs indirect: the 20 percent withholding rule
• The age 59 and a half rule and the age 55 separation exception
• What gold the IRA can hold
• Texas advantages: zero state tax and the Texas Bullion Depository
• Direct vs indirect at a 60,000 dollar illustrative refund
• The gold IRA fee stack you will see
• Check whether your COAERS distribution is eligible to roll
• Worked example: a COAERS member refunds and rolls
• The Proportionate Retirement Program and other Texas systems
• When rolling a COAERS refund into a gold IRA is a bad idea
• COAERS to gold IRA FAQ

COAERS structure and who is covered

COAERS is the City of Austin Employees Retirement System. It is the retirement plan for regular full-time City of Austin employees working 30 or more hours per week. Membership begins automatically at hire; a member cannot opt out and cannot change the individual contribution rate.

Three groups of City workers are excluded from COAERS. The Mayor and members of the City Council do not participate. Commissioned civil service police officers sit under the Austin Police Retirement System. Uniformed firefighters sit under the Austin Firefighters Relief and Retirement Fund. Those systems are separate legal entities with their own statutes and their own rollover paperwork.

COAERS was originally established in 1941 by City of Austin ordinance. Since August 1991, the plan has been governed by state law under Article 6243n, Vernon's Texas Civil Statutes. The System is a tax-qualified defined benefit plan under Section 401(a) of the Internal Revenue Code.

Governance runs through an eleven-member Board of Trustees. The Board appoints an Executive Director who manages day-to-day operations. As of December 2025, COAERS reports approximately 4 billion dollars in Trust Fund assets, nearly 12,000 active members, and over 8,000 retirees and surviving beneficiaries receiving monthly benefits. Confirm current numbers with COAERS before relying on them.

Two mechanics drive the rollover question. The retirement benefit is paid as a monthly annuity for life, and that annuity is not eligible for rollover under IRS Publication 575. The member's accumulated contribution account is the only source of rollover-eligible cash at separation.

Group A and Group B mechanics that matter for a rollover

COAERS splits its active membership into two groups by employment date. Group A covers any member whose regular full-time employment date is before January 1, 2012. Group B covers any member whose regular full-time employment date is on or after January 1, 2012. The group is set by hire date and does not change during your career.

Group A uses a 3 percent per year benefit multiplier. A Group A member reaches a normal, unreduced monthly benefit at age 62 as an active or terminated vested member. A second path opens at age 55 with 20 years of creditable service. A third path opens at 23 years of creditable service at any age, with no age floor.

Group B uses a 2.5 percent per year benefit multiplier. A Group B member reaches normal, unreduced retirement at age 65 with at least 5 years of creditable service, or at age 62 with at least 30 years of creditable service. A reduced early retirement is available at age 55 with 10 years of creditable service.

Both groups produce a lifetime monthly annuity. That monthly payment is not an eligible rollover distribution under IRS Publication 575 and IRC Section 402(c). The rollover question is not "how much is my monthly benefit," it is "is a refund of my accumulated contributions the right move at separation."

Contributions, vesting, and interest on the member account

Every COAERS member contributes 10 percent of base pay each pay period. The rate is set by statute and is not optional. Overtime and non-base pay types are excluded from the contribution base. The contribution is deducted before federal tax and lowers current taxable income.

The City of Austin also contributes to COAERS each pay period. Texas law requires a base contribution equal to 10 percent of the member's base pay, excluding overtime and other non-base pay. City contributions fund the promised benefit for the entire membership and are pooled inside the Trust Fund. A member cannot draw the City portion at separation.

Vesting occurs after 5 years of creditable service. Before 5 years, a separating member has no lifetime benefit right under COAERS. After 5 years, a member who leaves City employment can either take a refund of accumulated contributions or leave the account on deposit and preserve the future monthly benefit. Prior service in a Proportionate Retirement Program system can count toward the 5-year vesting threshold.

The member's accumulated contribution account earns interest credited annually upon approval by the COAERS Board. That interest builds inside the member account and is included in a refund. Confirm the current interest rate with COAERS before filing any refund paperwork; the credited rate can change by Board action.

What COAERS payments are eligible to roll

The federal rule is the same across every Texas public pension system. IRC Section 402(c) defines an eligible rollover distribution as any distribution from a qualified plan, with narrow exclusions. The main exclusions are a series of substantially equal periodic payments over the life expectancy of the recipient and a required minimum distribution. A lump-sum refund of member contributions meets the eligible-rollover definition. A monthly annuity does not.

COAERS does not administer a Deferred Retirement Option Plan and does not publish a Partial Lump Sum Option at retirement. That is a difference from Dallas Police and Fire, Houston Police, or the Teacher Retirement System of Texas. The only rollable form at separation is a refund of the member's accumulated contribution account.

Refund the account or keep membership

COAERS gives a separating member two paths at termination. Option 1 is to discontinue membership and submit the Refund Application. Option 2 is to leave the accumulated contributions on deposit and retain membership, service credit, and, for pre-2012 hires, Group A status.

Under Option 1, the refund can be paid as a lump-sum check to the member or rolled over in whole or in part. COAERS states that the refund typically arrives 60 to 90 days after a complete Refund Application is filed. The Refund Application must be signed in front of a notary; COAERS provides free notary services at its office.

Under Option 2, the account stays with COAERS. Interest continues to accrue. A vested member preserves the right to a future monthly benefit at retirement age, keeps eligibility for City retiree health, dental, and vision insurance, and preserves Group A status if applicable. No action is required to keep the account.

The rollover question only surfaces under Option 1. If Option 1 is the right move, the next question is whether to take the cash as a check or as a direct rollover to another eligible plan or IRA. That choice determines whether federal withholding applies.

The COAERS-to-gold-IRA rollover in eight steps

The mechanical sequence is the same whether the member is early-career and unvested or vested with several years of service credit. The order does not change based on Group A or Group B status; the group only affects the monthly benefit calculation, not the refund mechanics.

1. Confirm the COAERS payment is eligible for rollover. A refund of accumulated member contributions plus interest is an eligible rollover distribution. A monthly annuity is not.
2. Open a self-directed IRA. A precious-metals IRA requires a qualified non-bank trustee or self-directed IRA custodian. Equity Trust Company, STRATA Trust, and GoldStar Trust are commonly used with Texas accounts, and Equity Trust is the current custodian for storage at the Texas Bullion Depository.
3. Pick a gold IRA dealer. The dealer sources the metal and coordinates with the custodian. Verify the dealer partners with your chosen custodian and quotes tight spreads on common bullion coins and bars.
4. Request the COAERS Refund Application Packet. Contact COAERS at (512) 458-2551 or through MemberDirect for the Refund Application Packet, including the Special Tax Notice Regarding Plan Payments. The application must be signed in front of a notary.
5. Complete the rollover election. Enter the receiving custodian by name, "for the benefit of" your new IRA account number, and the amount to be rolled. Have the receiving custodian sign to certify that the plan is eligible to receive the rollover.
6. Submit the paperwork and let the direct rollover fund the IRA. The check or wire is made payable to the custodian, not to you. No federal withholding applies. No 60-day clock runs. COAERS states the refund typically arrives 60 to 90 days after a complete application is filed.
7. Place the metal order. Once the cash arrives inside the new IRA, instruct the custodian to pay the dealer for IRS-approved bullion or coins meeting IRC 408(m)(3) fineness rules. The dealer ships to an IRS-approved depository, including the Texas Bullion Depository through Lone Star Tangible Assets.
8. File the right forms next April. COAERS issues Form 1099-R with distribution code G for a direct rollover. The receiving custodian issues Form 5498. Report the gross amount on Form 1040 line 5a with a taxable amount of zero on line 5b.

Direct vs indirect: the 20 percent withholding rule

Federal rollover mechanics offer two paths. A direct rollover sends the COAERS refund from the plan straight to the receiving IRA custodian. No withholding applies. No 60-day clock starts. This is the default recommendation on any COAERS refund rollover.

A payment made to the former member instead triggers IRC Section 3405. The plan must withhold 20 percent for federal income tax on any eligible rollover distribution paid to the recipient. The COAERS Special Tax Notice explains the same rule.

The former member then has 60 days to redeposit the full pre-withholding amount into the new IRA. The missing 20 percent has to come from personal savings during that window. On a 60,000 dollar illustrative COAERS refund, that means 12,000 dollars is withheld and 48,000 dollars arrives, so the former member must add 12,000 dollars from personal savings within 60 days to keep the rollover whole.

The 20 percent withholding is later credited against the federal tax bill at filing. If the former member redeposited the full pre-withholding amount on time, the credit returns as part of the refund. If the former member redeposits only the 80 percent that arrived, the missing 20 percent is treated as a taxable distribution. A 10 percent federal early-withdrawal penalty stacks on top for former members under age 59 and a half unless an exception fits.

Failing the 60-day window has narrow relief. IRS Revenue Procedure 2016-47 and later guidance allow a self-certification waiver in a defined list of hardships, such as a plan administrator error or a serious illness. Do not plan on that safety net.

The age 59 and a half rule and the age 55 separation exception

Under IRC Section 72(t), a distribution taken before age 59 and a half is generally subject to a 10 percent federal early-withdrawal penalty. Ordinary federal income tax also applies on any portion not rolled over. A direct rollover is not a taxable distribution and does not trigger the penalty.

IRC Section 72(t)(2)(A)(v) allows a penalty-free distribution from a qualified employer plan on a member who separates from service in or after the calendar year they turn 55. COAERS is a governmental Section 401(a) plan and qualifies as an employer plan under this rule. A COAERS refund taken directly from the plan at or after age 55 is not subject to the 10 percent penalty, though ordinary federal income tax still applies on any amount not rolled over.

The exception does not survive a rollover. Once the COAERS cash moves into an IRA, the IRA distribution rules apply. The 10 percent penalty reappears on any IRA withdrawal before age 59 and a half. It is waived only if a different IRA-side exception fits: first-home ($10,000 lifetime), qualified higher education, unreimbursed medical above the threshold, disability, or substantially equal periodic payments under Section 72(t)(2)(A)(iv).

Practical implication for a COAERS member separating between 55 and 59 and a half. If some of the cash is needed for living expenses within the next few years, taking that portion as a direct payment from COAERS preserves the age 55 separation exception. Rolling the remainder to the IRA keeps the tax-deferred growth intact.

What gold the IRA can hold

IRC Section 408(m) generally bans collectibles inside an IRA and then carves out an exception for bullion and certain coins that meet a fineness threshold. The gold floor is 99.5 percent purity. Silver is 99.9 percent. Platinum and palladium are 99.95 percent.

Two coins are named statutory exceptions inside the rule. The American Gold Eagle is IRA-eligible at 91.67 percent purity, which is 22-karat. The American Silver Eagle is IRA-eligible at 99.9 percent. Proof Eagles qualify when held in original mint packaging with the certificate.

Bars must come from a refiner or assayer approved by NYMEX, COMEX, LBMA, or produced by a national government mint. Common eligible names include PAMP Suisse, Credit Suisse, Valcambi, the Royal Canadian Mint, and the Perth Mint.

Common eligible coins include the American Gold Eagle by statute, the American Gold Buffalo at 99.99 percent, the Canadian Gold Maple Leaf at 99.99 percent, the Austrian Gold Philharmonic at 99.99 percent, and the Australian Kangaroo at 99.99 percent. The South African Krugerrand sits at 91.67 percent gold with no statutory exception, and it is not IRA-eligible.

Texas advantages: zero state tax and the Texas Bullion Depository

Two Texas features change the wrapper around a federal rollover.

Article 8, Section 24 of the Texas Constitution prohibits a state personal income tax. Any taxable IRA distribution, including a botched indirect rollover, a future required minimum distribution, or a partial cash retention from a COAERS refund, is taxed at the federal level only. A Texas resident does not pay a state layer on top.

Texas also runs its own bullion depository. The Texas Bullion Depository is an agency of the State of Texas, authorized by House Bill 483 signed by Governor Greg Abbott on June 12, 2015. It has operated since 2017 on a purpose-built 10-acre campus in Leander, Texas, roughly 30 miles north of downtown Austin, with Lone Star Tangible Assets LP as the depository contractor.

IRA storage is available at the depository. The Texas Bullion Depository is open for IRA storage through its operator LSTA. LSTA received IRS approval as a nonbank trustee in 2023. Equity Trust Company is the first self-directed IRA custodian working with the depository. An Austin member can ask a gold dealer to coordinate delivery with Equity Trust. The Leander site keeps IRA metal inside the same metropolitan area.

Storage features published on the depository's site include a purpose-built high-security facility with 24/7 monitoring, insurance through Lloyd's of London, and segregated storage without commingling of client metal. IRA storage fees are negotiated between the custodian, the gold dealer, and the depository contractor. They can differ from the standard retail schedule.

Direct vs indirect at a 60,000 dollar illustrative refund

The chart below compares the two rollover paths on an illustrative 60,000 dollar COAERS refund of accumulated member contributions. The direct-rollover bar shows the trustee-to-trustee outcome under IRC Section 401(a)(31), where the full amount reaches the custodian. The indirect-rollover bar shows the 60-day path under IRC Section 3405, where 20 percent is withheld and the former member must add personal savings to keep the rollover whole.

Two clarifications on the chart. The 60,000 dollar figure is illustrative and not a COAERS-specific number; substitute the actual balance from your COAERS member statement. The withheld 12,000 dollars is credited against the federal tax bill at filing. The former member still needs that cash on hand within 60 days to complete the rollover, or the 12,000 dollars is taxable and can trigger the 10 percent early-withdrawal penalty.

The gold IRA fee stack you will see

COAERS does not charge a visible administration fee on a refund of member contributions. The System absorbs those costs. A self-directed gold IRA carries its own fee stack, with several stacked line items the former member pays directly.

The dealer markup is the line item with the widest range. Common bullion coins and bars carry tight spreads. Premium or proof coins marketed as exclusive or limited carry markups that can be several times higher. A clean COAERS refund rollover is undone quickly if the metal is bought at a 25 or 35 percent markup over spot.

Check whether your COAERS distribution is eligible to roll

Before calling a provider, confirm the COAERS payment is actually eligible to roll under federal rules. The screening tool below walks through the eligibility questions and timing rules. It is a triage step, not legal or tax advice.

Can you roll your account into a gold IRA? Eligibility checker

Most retirement money can move into a gold IRA once it is an eligible rollover distribution. Pick your account and situation for a general answer. Always confirm the specifics with your plan administrator or custodian.

Account typeTraditional IRARoth IRASEP IRASIMPLE IRA401(k) or 403(b) from a former employer401(k) or 403(b) at your current employerGovernmental 457(b)Thrift Savings Plan (TSP)Pension lump sum or refund (after you separate) Your situationSeparated from that employerStill employed there, under 59 and a halfStill employed there, age 59 and a half or older

Check eligibility

General guidance only, not tax or financial advice. Eligibility depends on your specific plan document and IRS rules; confirm with your plan administrator and a tax advisor. A direct trustee-to-trustee transfer avoids the 60-day rule and 20% withholding.

Picking a company that explains every fee up front is the first step. Get the free gold IRA company checklist.

Worked example: a COAERS member refunds and rolls

The Proportionate Retirement Program and other Texas systems

Texas runs a Proportionate Retirement Program that lets members combine service credit across participating systems. Prior service in a PRP system can count toward the 5-year COAERS vesting threshold. It does not merge account balances; the money stays with each system.

A COAERS member with prior service in a Texas PRP system may use combined credit to reach the 5-year COAERS vesting milestone. Qualifying systems include TMRS, TCDRS, ERS of Texas, TRS of Texas, and the Judicial Retirement System of Texas. Notify COAERS in writing of any PRP participation and keep it current.

The PRP does not change the rollover mechanics. Each system pays its own refund of member contributions on separation, and each system pays its own monthly annuity at retirement age. A member who wants to consolidate cash inside a single IRA can request a direct rollover from each system separately.

When rolling a COAERS refund into a gold IRA is a bad idea

COAERS to gold IRA FAQ

Sources

1. City of Austin Employees Retirement System. About COAERS. coaers.org/about. Checked July 2026.
2. City of Austin Employees Retirement System. Understanding Your Benefits. coaers.org/understanding-your-benefits. Checked July 2026.
3. City of Austin Employees Retirement System. Retirement Eligibility (Group A and Group B). coaers.org. Checked July 2026.
4. City of Austin Employees Retirement System. Leaving City Employment. coaers.org. Checked July 2026.
5. City of Austin Employees Retirement System. FAQs for Members. coaers.org/faqs-for-members. Checked July 2026.
6. Vernon's Texas Civil Statutes, Article 6243n. Governing statute of the City of Austin Employees Retirement System since August 1991. statutes.capitol.texas.gov. Checked July 2026.
7. Internal Revenue Service. Publication 575: Pension and Annuity Income. irs.gov/publications/p575. Checked July 2026.
8. Internal Revenue Service. Publication 590-A: Contributions to Individual Retirement Arrangements (IRAs). irs.gov/publications/p590a. Checked July 2026.
9. Internal Revenue Service. Publication 590-B: Distributions from Individual Retirement Arrangements (IRAs). irs.gov/publications/p590b. Checked July 2026.
10. Internal Revenue Service. Rollovers of Retirement Plan and IRA Distributions. irs.gov/retirement-plans. Checked July 2026.
11. Internal Revenue Service. Topic No. 413, Rollovers from Retirement Plans. irs.gov/taxtopics/tc413. Checked July 2026.
12. Internal Revenue Service. Topic No. 558, Additional Tax on Early Distributions from Retirement Plans. irs.gov/taxtopics/tc558. Checked July 2026.
13. Internal Revenue Code Section 402(c). Rollovers from qualified plans. uscode.house.gov. Checked July 2026.
14. Internal Revenue Code Section 401(a)(31). Direct rollover option. uscode.house.gov. Checked July 2026.
15. Internal Revenue Code Section 3405. Special rules for pensions, annuities, and certain other deferred income; 20 percent mandatory withholding. uscode.house.gov. Checked July 2026.
16. Internal Revenue Code Section 408(m). Collectibles rule and bullion exception. uscode.house.gov. Checked July 2026.
17. Internal Revenue Code Section 72(t)(2)(A)(v). Separation-from-service exception at age 55. uscode.house.gov. Checked July 2026.
18. United States Tax Court. McNulty v. Commissioner, 157 T.C. No. 10 (November 18, 2021). Home-storage IRA confirmed as a full distribution.
19. Texas Bullion Depository. IRA Storage Services. texasbulliondepository.gov. Checked July 2026.
20. Office of the Texas Comptroller of Public Accounts. Texas Bullion Depository overview. comptroller.texas.gov. Checked July 2026.
21. Texas Constitution, Article 8, Section 24. Prohibition on a state personal income tax. statutes.capitol.texas.gov. Checked July 2026.

By the Harry’s Coins Editorial team. Last reviewed July 2026.