Single-Sum Retirement Benefit
A TRS member with less than five years of service credit and who taught after July 1, 1947, is eligible to receive a single-sum retirement benefit at age 65. This benefit is a standard annuity calculated at 1.67 percent of the final average salary for each year of creditable service. To be eligible for this benefit, you must terminate TRS-covered employment and complete a Single-Sum Retirement Benefit Application.
Upon receipt of a single-sum benefit, you may be employed in any job without restriction. You may return to work in a TRS-covered position, however you will not be required to contribute to TRS regardless of the number of days or hours worked. You will no longer accrue any TRS service credit as a single-sum recipient.
Members who receive a single-sum retirement benefit are not considered TRS annuitants and may not participate in the Teachers’ Retirement Insurance Program (TRIP).
Single-Sum Benefit Estimate
If you have less than five years of service credit and would like an estimate of your single-sum retirement benefit, please contact a TRS Member Service Representative at 877-927-5877 (877-9-ASK-TRS).
Social Security Benefits
Acceptance of a single-sum retirement benefit or a refund of your contributions may reduce your Social Security benefits. Please contact the Social Security Administration regarding what impact taking a TRS single-sum benefit or refund might have on your Social Security benefits.
Refund of Accumulated Contributions
Instead of taking a single-sum retirement benefit, you may choose to take a refund of your retirement contributions.
To be eligible for a refund, you must terminate your TRS-covered employment and complete a TRS Refund Application form. After your last day of work in a TRS-covered position, you must wait four months before you may take a refund.
Refunds include the amount you contributed toward retirement and annual increases without interest. Currently, the annual contribution amount is 7.5 percent for retirement and 0.5 percent for annual increases.
The 1 percent survivor benefit contribution and Teachers’ Health Insurance Security (THIS) Fund contributions paid after July 1,1995, are not refundable.
A refund of contributions should be carefully considered because it terminates your benefits and will be costly to repay if you return to teaching.
If you subsequently return to a TRS-covered position following the receipt of a refund, you will become a contributing TRS member and TRS contributions will be required on future earnings.
Tax
The difference between your single-sum retirement benefit and your previously taxed member contributions is reportable as taxable income at the time of payment.
Refunds are reportable as taxable income at the time of payment with the exception of any contributions made with previously taxed monies.
If it is greater than $200, the taxable portion of a single-sum benefit or refund can be rolled over to a qualified retirement plan or annuity.
By law, any taxable portion of a single-sum benefit or refund that is not rolled over to a qualified retirement plan is subject to 20 percent withholding for federal income tax purposes.
You should consult a professional tax consultant for more information about of the taxability of single-sum benefits and refunds.
Inactive Member Benefit Payments
Under federal law, TRS is required to pay a benefit to any inactive member who is at least 70½ years of age (or age 72 if born on or after July 1, 1949). If a benefit is not paid, the Internal Revenue Service may require the member to pay a 50 percent excise tax on the amount of the benefit that should have been paid to the member.
Reciprocal Service
Under the Illinois Retirement Systems Reciprocal Act, TRS service may be combined with service from other Illinois public retirement systems. At least one full year of TRS service is required in order to receive benefits under this act. Before taking a single-sum benefit or refund of your TRS contributions, consult the other systems with which you have service to determine eligibility for reciprocal retirement.
No Increase in Benefits
Members who are eligible for either a single-sum benefit or a refund will not have their benefits increase unless they return to a TRS-covered position. Inactive members will not accrue interest or other benefits by waiting to take a single-sum benefit or refund past their first eligibility date.