If it is anything like the city's retirement, a transfer of funds to a traditional IRA is a non-taxable event, so there should be no ramifications. Taxes would be taken out if you transfer to a Roth. However, if you take a check written to you, you will receive a 10% early withdrawal penalty.
source: i work for the city's retirement office
LA. Deferred Compensation Plan. Is the best thing for her to roll that moolah into a traditional roth?
I had to wait 90 days with TRSL, not sure if that is still the rule.