Overview

You may receive a refund of your survivor benefit contributions if you are retired and do not have a dependent beneficiary. Taking a refund, however, forfeits all rights your beneficiaries have to the survivor benefits TRS provides.

Am I eligible to receive a refund?

If you are receiving a regular age retirement annuity, you are eligible for a refund of your survivor benefits contribution. If you are receiving any type of disability benefit, you are not eligible for a refund of your survivor benefit contributions.

When you apply for an age retirement annuity or while you are receiving an age retirement annuity, you may take a refund of your survivor benefit contributions if you have creditable service after July 24, 1959, and you do not have a dependent beneficiary.

A dependent beneficiary is

• a spouse to whom you have been married for at least one year, except where a child is born of the marriage in which case the one-year qualifying period is not applicable;
• an unmarried natural or adopted child under age 18, or between ages 18 and 22 if he or she is a full-time student in an accredited educational institution, or an unmarried child of any age who is dependent by reason of a physical or mental disability and who is not receiving benefits under the Illinois Public Aid Code, Article III; or
• a dependent parent who received at least half of his or her support from you for the 12-month period immediately prior to your death. A dependent parent is eligible only if there are no other dependents.

What benefits will I lose by receiving a refund?

When you receive a refund of your survivor benefit contributions, you waive all rights to your beneficiaries receiving survivor benefits. However, your remaining accumulated retirement contributions, if any, still remain payable to your beneficiaries upon your death.

How much will my refund be?

The refundable amount is 1 percent of total gross creditable earnings for each year of teaching service after July 24, 1959.

You may redirect the refund of survivor benefit contributions to pay your 2.2 upgrade cost at retirement.

How do I obtain the refund?

When you are applying for retirement or at anytime thereafter, you may request a Refund of Survivor Benefit Contributions Application form from us. Return your completed form to our Springfield office.

When will I receive the refund?

Within six weeks after we receive your completed application, we will process your refund and will forward it to the Office of the Comptroller for payment.

Is the refund taxable?

Refunds are not subject to the Illinois Individual Income Tax. However, any portion of the refund attributable to contributions made by either you or your employer that were excluded from taxable income in the years the contributions were made is subject to federal income tax.

To help you in tax planning, correct and complete applications received by the close of business on December 5 will be processed in the current tax year. Refund applications received after December 5 will be processed in the next tax year.

We will notify you of the taxable portion of your refund. We also will report the refund payment to the Internal Revenue Service on IRS Form 1099-R and will send you a copy of this form in January or February in the year after the refund is taken.

Special tax consequences and penalties may apply to refund payments. You should consult a professional tax consultant for details of the taxability of refunds. Additional information is also contained in Internal Revenue Service Publication 575, Pension and Annuity Income. To obtain this publication, go to www.irs.gov online or call (800) 829-3676.

Is the refund eligible for rollover?

Payments of refunds for survivor benefit contributions may either be made directly to you or directly rolled over to an eligible retirement plan that you specify.

In a direct rollover, the eligible rollover distribution (the taxable portion) is paid directly from us to an individual retirement account (IRA) or another qualified retirement plan that accepts rollovers. By using a direct rollover, you avoid a 20 percent withholding requirement if the payment is made directly to you. Also, if you choose a direct rollover, the distribution is not taxed until it is withdrawn from the IRA or other qualified retirement plan.

Can I repay the refund?

You may reinstate the survivor benefit only if you return to teaching, earn one year of creditable service, and repay the survivor benefit refund with interest from the date of the refund to the date of the repayment.

Questions?

If you have questions, please contact us.

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