You Generally Have Two Options
If you leave a CalSTRS-covered position before you are eligible to retire, your accumulated contributions do not simply disappear, but what happens next depends on what you choose to do.
Option 1: Leave Your Contributions on Deposit
If you have at least five years of service credit, you are vested, meaning you are entitled to a future pension benefit even if you never teach again. Leaving your contributions on deposit with CalSTRS preserves that service credit, and you become eligible to begin collecting a monthly pension once you reach minimum retirement age, just like any other CalSTRS member.
The tradeoff is that your final compensation used in the calculation is generally locked in based on your salary at the time you left, since you are no longer earning CalSTRS-covered income to increase it.
Option 2: Take a Refund
You can also request a refund of your accumulated contributions plus interest. Doing this forfeits your service credit and your future pension eligibility entirely. It converts your pension into a lump sum, and depending on your age and tax situation, that lump sum may be subject to income tax and an early withdrawal penalty if not rolled over properly.
A refund is one of the more permanent decisions a former CalSTRS member can make. Once you take it, that service credit is gone unless you later redeposit the funds, with interest, if you return to CalSTRS-covered employment.
What If You Move to a CalPERS Job, or Another California Public System?
California has reciprocity agreements between CalSTRS, CalPERS, and many other public retirement systems. If you leave a CalSTRS-covered position and start a new position covered by a reciprocal system within a specific window, generally five years, you may be able to preserve certain advantages, including using your highest final compensation across systems when each system eventually calculates your benefit.
Reciprocity has to be elected and has specific timing rules. If this applies to you, it is worth confirming the details with both systems before assuming it applies automatically.
Which Option Makes Sense?
For most vested members, leaving contributions on deposit preserves more long-term value than taking a refund, especially if there is any chance of returning to public education or a reciprocal system later. But every situation is different, and the decision is hard to fully undo once made.