Refunds Before Retirement

for Tier 1 Regular Plan Members
Beach

Types of Refunds

You may be eligible for up to three types of refunds:

Taking a Separation Refund

Think carefully before taking a separation refund. You are not required to take a refund when you leave your IMRF employer. Leaving your money with IMRF can give you time to decide what to do with it. However, you will not receive interest when you apply for a separation refund, no matter how long you keep your contributions on deposit with IMRF.

If you take a refund, you give up your right to any retirement or disability benefit, and your beneficiary(ies) will not be entitled to any death benefit. Review your options carefully—it may make more financial sense for you to leave your contributions on deposit with IMRF, especially if:

When Can You Take a Separation Refund?

You can take a refund if: You cannot take a refund if:
You stop working for your IMRF employer and you meet one of the following requirements:
  • You are under age 55
  • You are over age 55 but you have less than eight years of service credit
  • You are age 55 or older and have eight or more years of service credit, but your monthly pension would be less than $100.
  • You stop participating in IMRF but continue working for the same employer.
  • You are age 55 or older, have eight or more years of service credit, and your monthly pension would be $100 or more. (In some cases you may take a refund if you are rolling it over to another defined benefit plan to purchase qualifying service credit.)

What are Your Refund Options?

Rollover your refund Receive a direct payment
If you decide to take a refund, you have two options on what to do with your money. Each option has different tax consequences:
Rollover your refund Receive a direct payment
  • When you rollover your refund into an IRA (other than a Roth IRA) or other eligible retirement savings account, your contributions remain sheltered from taxes until you withdraw them.

  • If you roll over your refund into a Roth IRA, you will have to pay taxes up front; however, as long as you follow the withdrawal rules you can withdraw your money tax free – even the increase on your original amount that was earned as investment income.
  • IMRF is required by federal law to withhold 20% of the taxable portion of your refund unless you elect to have the taxable portion directly rolled over into a traditional IRA (not a Roth IRA) or other qualified retirement plan.

  • Depending on your age, you may also be liable for an additional 10% tax on the taxable portion of your refund. You may defer the additional 10% tax by directly rolling your refund into a traditional IRA or other qualified pension plan.

How to Apply for Your Refund

You can apply for a refund online:

You can also complete a paper "Application for Separation Refund" form and mail or fax it to IMRF at (630) 706-4289.

Paying Back a Refund

If you took a refund of your contributions and have returned to work for an IMRF employer, you may be able to buy back your service credit. You can buy back all, or a portion, of your service credit. Interest accumulates every year, so the longer you wait to pay back a refund, the more it will cost you.

To be eligible to apply to repay your refund, you must:

To find out how much it would cost to repay refund and reinstate your service credit, you would complete an "Application for Reinstatement of Service Credit," and IMRF will calculate your current cost.

You can also apply to reinstate your service credit online: