Leaving SURS/Terminating Employment – Self-Managed Plan

Leaving SURS/Terminating Employment – Self-Managed Plan

  • Review Options

  • Select Option

  • Apply for Distribution (if desired)

  • Paperwork Processed and Forwarded to Provider(s)

  • 2 working days

Although you may intend to stay with a SURS-covered employer until retirement, the time may come when your personal situation prevents you from doing so.  The following are your options should you leave the system entirely:

  • Leave funds on file:  You may elect to leave your funds on file.  You can manage your investments just as if you were an active participant; however, no additional contributions may be made so long as you remain in terminated status.  You may elect to take a distribution at a later date; however, a distribution must be made to you by the April 1st following the year you reach age 70 ½ if you are not employed with SURS or a State of Illinois reciprocal system at that time. 
  • Apply for a retirement benefit:  If you meet the age and service requirements for a retirement benefit, you may apply for retirement benefits upon termination of employment.  If you have not met the age requirement, you may leave your funds on file until you become eligible for retirement benefits.  You must begin the annuity by the April 1st following the year you reach 70½ if you are not employed with SURS or a State of Illinois reciprocal system at that time. 

For more information click on the SMP Retirement tab on the Life Events bar.

  • Receive a separation refund:   You may receive a one-time lump sum distribution.  No partial distributions are allowed.  By accepting a distribution, your claim to future benefits will be forfeited.
  • You may elect to receive your refund as a lump sum paid directly to you.
  1. The IRS requires a minimum of 20% be withheld for federal income tax.  You may elect to have additional withholdings.
  2. Your refund is subject to an IRS 10% early withdrawal penalty unless:
  • You are over age 59 ½;
  • You terminated employment after age 55;
  • You have medical expenses large enough to be deducted on Form  1040, Schedule A; or
  • You are a public safety employee who terminated employment after age 50.                                                                            

Note:  The 10% penalty is not withheld by SURS.  It is calculated on IRS Form 5329 to be filed with your federal tax return for the tax year in which your refund is paid. 

You may defer taxation by rolling the taxable portion of your refund directly from the SMP provider(s) to an IRA, a qualified 401(a) retirement plan, a 403(b) plan, or a 457 plan.  If you arrange a trustee-to-trustee transfer, there will be no federal income tax withheld.  Most rollovers are not subject to federal income tax.  However, they are subject to taxation, according to IRS regulation, at the time of withdrawal.  Rollovers to Roth IRAs are taxable at the time of the rollover. 

You should consult a tax advisor with questions regarding a rollover or taxation of your distribution.

You will receive a 1099-R to file with your federal tax return the January following the tax year in which your refund is paid.  Your refund is not subject to State of Illinois income tax.

If you elect to leave your funds on file, no further action is required on your part.  You will receive quarterly Unified Statements showing the value of your account.  Please keep SURS updated with any address changes.

Click here to link to the member website/Change of Address form

If you wish to apply for a retirement benefit, please refer to the Retirement Life Event for further information. 

For more information click on the SMP Retirement tab on the Life Events bar.

If you wish to receive a separation refund, continue to Step 3.

To receive a distribution, you must have terminated your employment from all SURS-covered employers.  If you wish to withdraw your funds from SURS, you must complete a withdrawal form.  Depending upon your citizenship status, you may also be required to submit an IRS Form W-9 or W-8BEN. 

To begin the Separation Refund process:

  • Dial Toll Free:  800-275-7877
  • Dial Direct:  217-378-8800

Before any paperwork can be sent to you, your employer must submit the certification of your employment, the date of termination of employment, and all final payroll information if not already on file.  In addition, SURS must also receive all applicable state matching funds.  Upon receipt of all required information, SURS will send paperwork to you to apply for a distribution.      

You should contact your employer to determine their resignation process and complete any required paperwork.       

Once SURS receives the completed withdrawal form, SURS will fax the forms to your provider(s) within two working days.   Contact your provider(s) for their processing times. 

Click here to view Fidelity contact information

Click here to view TIAA contact information

Delays in Finalizing Refund Claims:  There are several reasons why a claim may not be finalized within the average processing time.  The following are the most common:

  • Receipt of employer information:   The response time of your former employer affects the processing time required to process your claim.  If the information reported by your employer is inconsistent with the information SURS has on file, SURS will contact the employer for clarification.
  • Response from member:  If SURS requests additional information or paperwork from you, it must be submitted before your separation refund can be processed.
  • Receipt of state matching funds:  All applicable state matching funds must be received and posted to your account.  If you have less than five years of service credit, you will not receive the state matching funds as part of the distribution.