Refunds and IMRF

Under specific circumstances, IMRF members can take refunds from their Voluntary Additional Contribution (VAC) account or from their IMRF contributions.

Below is some important information to know if you are thinking about requesting a refund.

Voluntary Additional Contributions

At any time, IMRF members can take a refund from their VAC account, even if you are still participating in IMRF and making contributions.

If you are employed and an active IMRF member, your refund will include all the contributions you made, however, the interest you earned will stay in your account. When you leave your IMRF employer you can apply for a refund of the interest. If the retirement stays in your account until you retire, then you will decide how to receive the interest at that time.

If you have left your IMRF employer, you will receive a payment for all the contributions you made AND the interest you earned. To avoid a tax penalty, the interest should be rolled over into an IRA or other qualified retirement plan. If the interest is NOT put into a retirement account, IMRF is required by federal law to withhold 20% of the interest.

Use this guide to learn how to request a refund from your VAC account.

If you have left your IMRF employer, IMRF will follow up with you after submitting your refund request with further instructions in an “Option Election Form.” The "After Requesting a Refund" section below has more information.

Pension Contributions

IMRF members are only allowed to request a refund of the contributions they have made if they are no longer employed by a qualified IMRF employer and will not receive a monthly pension of more than $100.

If you have left IMRF employment and are requesting a refund, the total will be your pension contributions, plus anything in your VAC account.

It is important to remember that if you take a refund of your IMRF contributions and it is NOT rolled over into an IRA or other qualified retirement plan, you will have 20% withheld, in accordance with federal law, and this may have greater tax implications when it is time to file your annual taxes. Depending on your age, you may also be liable for an additional 10% tax.

Finally, when you take a full refund, you lose all your service credit that you earned toward an IMRF pension. If you ever start working for an IMRF employer again, you will either have to start working toward your pension with zero service credit or work for at least 2 years and pay back your refund plus interest in order to reinstate your service credit.

You can request a refund directly in Member Access.

After Requesting a Refund

Once you request a refund, IMRF will follow up with an “Option Election Form,” which will contain information about how you can take your refund and which additional forms need to be completed.

It will also include information about additional documentation that is needed, the amount of money you will receive, and the amount of money that will be withheld for taxes.

Learn more about the “Option Election Form” and how to follow up in this guide.

As always when making financial decisions about your retirement, it is a good idea to speak with a financial advisor.

Below are a couple of important pieces of information to remember:

• It will take approximately eight weeks to process your refund application. The eight-week processing time begins once all the documents necessary for the refund are returned to IMRF – including the documents IMRF sends after the initial review of your refund request.
• If you are employed by an IMRF employer, requested a VAC refund, and submitted a direct deposit form, you may not receive an “Option Election Form,” since you submitted all the necessary information at once.
• Once documents are available in Member Access, there will be additional handouts that explain your benefits and detail tax implications in the “Preliminary Statement – Separation Refund” and “Rollover Options” downloads. These can be found by clicking the “Documents” widget on the Member Access Homepage and then clicking the “Other Documents” tab. Follow this guide to learn more.
• When you choose to roll over your pension to a retirement account (401(k), 403(b), 457(b), and IRA plans), your plan administrator MUST sign the “Direct Rollover-Account Information” Form to confirm that all the information is correct. The plan administrator could be someone from the financial institution who will be the custodian of the account.