Federal Income Tax
Annual Tax Statement - Form 1099-R
IMRF will send you a 1099-R tax statement every January. This statement shows:
- The gross amount of benefits you received the previous year.
- The taxable portion of your pension.
- Any federal income tax that was withheld from your payments.
This information should be used for filing your federal and state income tax returns. IMRF will report the taxable amount of your pension on your 1099-R using the method indicated on your Certificate of Benefits.
Your 1099-R statement will be available in your Member Access account before it is mailed to you. You can also view 1099-R statements from earlier years in Member Access.
Filing Federal Taxes
You must use Internal Revenue Service Form 1040 or Form 1040A, "U.S. Individual Income Tax Return," when you file your annual federal tax return. You cannot use Form 1040EZ.
Are you under age 59-1/2 and continuing to work for your IMRF employer?
If you are under age 59-1/2 and plan to continue working for the last IMRF employer you worked for before you retired, you should:
- Call IMRF immediately to make sure you aren't in violation of return to work rules
- Be aware that you may be required to pay an additional 10% early withdrawal tax on your monthly payments.
Your IMRF pension qualifies for an exception to a 10% early withdrawal tax if you are at least age 55 when you retire (age 50 for public safety employees) as long as you have totally separated from service with your last IMRF employer.
If you continue to work for this employer in a non-participating position while receiving your pension payments at the same time, you are not eligible for this exception. You must pay the additional 10% early withdrawal tax on your monthly IMRF pension payments. You will be required to pay this additional tax until you reach age 59-1/2 or until you leave employment with your IMRF employer.
State Income Tax
Illinois State Tax
Your IMRF pension is not subject to Illinois state income tax.
If your state of residence is other than Illinois, you should check with that state’s department of revenue to find out:
- If your pension is subject to state tax
- How your pension income must be reported on your state income tax return
IMRF will not withhold state income tax for any state outside of Illinois.
Filing Illinois State Income Tax Returns
You should enter the federally taxed portion of your pension (from your Form 1099-R) as a subtraction on Form IL-1040, "Illinois Individual Income Tax Return." This line is designated as retirement and Social Security income.
To prove you can subtract your IMRF pension in Form IL-1040, you must include a copy of page one of your US 1040 or 1040A form with your Illinois state income tax return. If you fail to attach a copy of the US 1040 or 1040A, your entry will not be allowed.
If you have no other taxable income, the Illinois Department of Revenue requires that you file a return if you are an Illinois resident.
Form W-4P: Withholding Certificate for Pension Payments
You are required by the Internal Revenue Service to complete Form W-4P and return it to IMRF. The easiest and fastest way to do this is through your Member Access account.
Amount of Withholding
IMRF cannot offer tax advice. If you are not sure how much money should be withheld from your pension payments, you should talk with your tax consultant or visit the IRS website at www.irs.gov and enter the search term "withholding calculator".
Withholding Without Form W-4P
If you do not return Form W-4P to IMRF and your pension during 2014 exceeds $1,691.60 a month, IMRF is required by law to withhold an amount based upon the IRS tax tables. The amount withheld will be based on a married individual claiming three withholding allowances. If your monthly pension payments during 2014 are $1,691.60 or less and you have no withholding request on file, no federal tax will be withheld. The dollar amount ($1,691.60) will be adjusted each year by the IRS.