Contribution Refund Facts
The TRS Early Retirement Option (ERO) automatically expired on July 1, 2016 because the law authorizing the program was not extended by the General Assembly.
Since July 1, 2005, active members have contributed 0.4 percent of their creditable earnings to help fund the ERO. Because the program was not extended, state law requires TRS to offer members a refund of their ERO contributions. You have the option to:
- Apply for a cash refund that will be mailed directly to you.
- Apply for a withdrawal so you can “roll over” the taxable portion to a qualified non–TRS retirement plan, such as a 401(k), 403(b) or an IRA.
- Do nothing and leave your ERO contributions with TRS. You can apply for the refund at a later date, but no interest will accrue if the ERO contributions are left with TRS.
Consider several issues in making this decision:
Federal Income Taxes, Early Withdrawal Penalties and Unpaid State Debts
- If you take a cash refund, mandatory federal income taxes will be withheld from this refund at a rate of 20 percent. You also may be subject to early withdrawal penalties. After a refund is issued, an Internal Revenue Service 1099–R form will be sent to you in the January following the receipt of your refund.
- Also, refunds that are not directly rolled over are subject to involuntary withholding as defined in the Illinois State Collection Act of 1986 (30 ILCS 210). The act covers unpaid debts that include delinquent child support, overpaid state unemployment benefits, delinquent state taxes, federal tax levies and delinquent student loans.
Money Owed to TRS
TRS cannot accept a direct rollover of ERO contributions to pay off any account balance you have with TRS, such as a 2.2 Upgrade or the purchase of optional service credit.
Administration of Your Refund or Withdrawal
The decision you make regarding your ERO contributions is irrevocable. Once a refund or withdrawal application is submitted to TRS, it will be processed.
- Refund and withdrawal checks will be issued and mailed by the Illinois Comptroller’s Office. An electronic transfer of funds is not available for this transaction.
- No application deadline exists for an ERO Sunset Refund. TRS will not regularly remind members about the refund.
- TRS does not provide financial advice concerning which decision is best for you. Contact a licensed financial advisor for advice.
You may email TRS at ERO-Refund@trsil.org about any other ERO Sunset Refund questions.