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Bruce Rauner, Governor

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   Survivor/Death Benefits Information for Tier 1  


Survivor/Death Benefits


Benefits are based on the laws in effect on your last day of employment. In order to receive any benefit, you must apply for it. All benefit claims should be made to the Claims Division. After you begin receiving benefits, you should notify SERS if you change your name or address. All SERS records are maintained according to your Social Security number.


First Survivor, Widow, Occupational Death Annuity Payment

SERS will process your first annuity payment after we receive your application and other required information from the deceased member’s agency. The normal processing time is 30 days.

The Comptroller’s office will mail the first annuity payment directly to your home. You will also receive a Notice of Benefit Approval, which contains information about your annuity; a tax brochure, which provides an overview of your annuity taxes; and a payment stub with information about your payment.

Future Survivor, Widow, Occupational Death Annuity Payments

Future annuity payments are mailed on the 19th of each month, unless the 19th is on a weekend or holiday, when they are mailed on the last working day before the 19th. If your payment is mailed directly to your home, allow six working days for delivery. If you have not received your payment after six working days, call SERS. Failure to advise SERS of an address change may result in a delayed payment.


Direct Deposit (Electronic Funds Transfer)

When you apply for a SERS benefit, you will receive a Depository Agreement form along with an explanation of this program. We encourage you to have your monthly retirement annuity directly deposited in your bank account. Complete and return this form with your application for benefits.

When you choose direct deposit, your first payment is mailed to your home. All future payments will be deposited into your bank account on the 19th of each month.You will not receive a payment stub for each direct deposit payment. Instead, the Comptroller’s office will periodically issue an earnings statement with information about your annuity payment.


Social Security Offset

If an employee contributed to both SERS and Social Security, an offset of 50% of the survivor's Social Security benefit is usually applied to the SERS widow’s or survivor’s benefit when the survivor reaches age 60. If the survivor is over age 60 when the benefit begins, the offset starts with the first payment. These offsets do not reduce the SERS widows or survivor's benefit by more than 50%.

Marriage

If a child under age 18, or age 22 if full-time student, marries, their survivor, widow, or occupational death benefit will be terminated.

Taxation of the Survivor, Widow, Occupational Death Annuity Payments

All SERS benefits are exempt from state income tax under Illinois law. The occupational death benefit annuity is not subject to federal tax, but the survivor and widow annuities are. When you apply for benefits, SERS sends you an IRS Form W-4P (Withholding Certificate for Pension or Annuity Payments). If the W-4P is not returned to SERS, taxes are withheld using the rate for a married person with three exemptions. (See the sample W-4P on page 22.)

Each year, the Comptroller’s office is required to send you a 1099-R form showing the total annuity amount you received for the past year, as well as any taxes withheld. Use the 1099-R when preparing your income tax return.

Increases for Survivor, Widow, Occupational Death Benefit Recipients

If you receive a monthly annuity from SERS due to the death of an active, inactive, or retired state employee, you will receive a 3% increase on January 1 following one full year of payments. Future increases of 3% will be made each January 1 thereafter.

Survivor Employment

The only employment restriction for individuals receiving a survivor, widow, or occupational death benefit from SERS is for disabled, unmarried children over age 18. This benefit is payable if the disabled child is not gainfully employed and earning less than $2490 per calendar quarter.


Lump Sum Death Benefits Before Retirement

With Survivor Annuity

If an active employee dies and a monthly survivor annuity is payable, the nominated beneficiary on file with SERS receives a lump sum death benefit. The lump sum death benefit consists of the member's retirement contributions and interest.

The beneficiary may choose to rollover the payment and defer tax on it until a later date. If all or part of a lump sum payment is rolled-over, you will receive a 1099-R form by January 31, which reflects the amount rolled-over. Refer to the Tax brochure for more information.

The Comptroller’s office is required to send you an IRS form 1099-R by January 31 of the year following receipt of this payment. The 1099-R shows the taxable portion of the lump sum benefit, the portion attributable to capital gains and ordinary income, and any tax withheld.

Without Survivor Annuity

If an active employee dies, the nominated beneficiary on file with SERS receives a lump sum death benefit. The payment consists of the member's contributions plus interest, and one month's salary for each year of service, up to a maximum of six months’ salary. If the member's spouse is the named beneficiary, the spouse may choose to rollover the payment and defer tax on it until a later date.

If all or part of a lump sum distribution is rolled-over , you will receive a 1099-R form by January 31 of the following year, which reflects the amount rolled-over. Refer to the Tax brochure for more information. The Comptroller’s office is required to send you a 1099-R by January 31 of the year following the receipt of this payment. The 1099-R shows the taxable portion of the lump sum benefit received, the portion attributable to capital gains and ordinary income, and any taxes withheld.


Lump Sum Death Benefits After Retirement

If a retired SERS member dies with no survivors, the nominated beneficiary(ies) receive any contributions and interest remaining in the retiree's account, or $500, whichever is greater. The Comptroller’s office is required to send you a 1099-R by January 31 of the year following the receipt of this payment. The 1099-R shows the taxable portion of the lump sum benefit received, the portion attributable to capital gains and ordinary income, and any taxes withheld. Refer to the Tax brochure for more information.

Survivor/Death Benefits

First Payment
Future Payments
Direct Deposit
Social Security Offset
Marriage
Taxation of Annuity Payments
Annuity Increase
Survivor Employment
Lump Sum Benefit Before Retirement
Lump Sum Benefit After Retirement
Tier 1 Retiree & Survivor Handbook
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