Refunds Before Retirement

for Tier 2 SLEP Plan Members
Seaside rocks

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 are:
  • Under age 50
  • Between ages 50 and 55 and do not have 10 or more years of SLEP service credit
  • Age 55 or older and do not have either:
    • 10 or more years of SLEP service credit
    • 8 or more years of Regular Tier 1 or a combination of SLEP and Regular Tier 1 service credit
  • Age 62 or older and do not have either:
    • 10 or more years of SLEP, Regular Tier 2,  or a combination of SLEP and Regular Tier 2 service credit
    • 8 or more years of Regular Tier 1 or a combination of SLEP and Regular Tier 1 service credit
  • You stop participating in IMRF but continue working for the same employer.
  • You are age 50 or older and you have at least 10 years of SLEP service*
  • You are age 55 or older and you have either:
    • 10 or more years of SLEP service credit*
    • 8 or more years of Regular Tier 1 service credit or a combination of SLEP and Regular Tier 1*
      service credit
  • Age 62 or older and have either:
    • 10 or more years of SLEP, Regular Tier 2,  or a combination of SLEP and Regular Tier 2 service credit*
    • 8 or more years of Regular Tier 1 or a combination of SLEP and Regular Tier 1 service credit*
* If you meet the age and vesting requirements for an IMRF pension but your monthly pension amount would be less than $100, you can take a refund. In some cases, even if you meet retirement age and vesting requirements, 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.

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.