Refunds Before Retirement

Types of Refunds

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

Separation Refund — when you leave your IMRF employer before you retire.
Voluntary Additional Contribution refund — if you have been making Voluntary Additional Contributions (VAC) you can take a refund of these contributions at any time. You can read more about these refunds on the Voluntary Additional Contributions page.
Retirement Refund — refunds you may be eligible for at retirement if you retire with an IMRF pension. You can read more about these refunds on the Retirement Options and Refunds at Retirement page.

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:

You have at least eight years of any type of service credit. You are now eligible to receive a future lifelong IMRF pension under the Regular plan. If you take a refund, you give up your future pension.
You have 20 or more years of SLEP service credit. You are now eligible for a future SLEP pension. If you take a refund, you give up your future SLEP pension.
You think you may return to work for an IMRF employer or Illinois reciprocal system and earn additional service credit toward a future pension.

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 are: Under age 50. Between age 50 and 55 but do not have 20 or more years of SLEP service credit. Age 55 or older but do not have eight or more years of any type of service credit. Age 55 or older and have eight or more years of any type 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 50 or older and you have at least 20 years of SLEP service credit. You are age 55 or older, have eight or more years of any type 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.)

You can take a refund if:

You cannot take a refund if:

You stop working for your IMRF employer and you are:

Under age 50.
Between age 50 and 55 but do not have 20 or more years of SLEP service credit.
Age 55 or older but do not have eight or more years of any type of service credit.
Age 55 or older and have eight or more years of any type 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 50 or older and you have at least 20 years of SLEP service credit.
You are age 55 or older, have eight or more years of any type 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?

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 and whether you were a public safety employee when you stopped working, 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.

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 and whether you were a public safety employee when you stopped working, 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

To apply for a refund online, sign in to your Member Access account and follow the prompts.

Paying Back a Refund

To be eligible to repay your refund, you must be currently participating in IMRF as a SLEP member. You could repay the refund after working enough hours to meet your employer’s IMRF hourly standard (either 600 or 1,000 hours).

To find out how much it would cost to repay refund and reinstate your service credit, you would complete an "Application to Reinstate Service Credit - Repaying a Refund " form (Available in Member Access) and IMRF will calculate your current cost.

Understanding Plans and Tiers

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