GARS Tier 1 Retirement Annuity (Pension)
First Retirement Annuity Payment
GARS processes your first annuity payment after receiving your pension application and other required information. We make every effort to process your first annuity payment as soon as possible, but the normal processing time can range from six to eight weeks following your last day of service. Processing time for members who have reciprocal service in another retirement system may take longer since GARS must receive information from the other systems to process the claim.
The Comptroller’s Office will mail your first annuity payment directly to your home. You will also receive a pension approval letter containing important information about your retirement annuity and a fact sheet explaining the taxation of your annuity.
Future Retirement Annuity Payments
Future annuity payments are issued on the 19th of each month, unless the 19th is on a weekend or holiday. In this case, they are mailed or deposited on the last working day before the 19th.
Benefit recipients who do not have direct deposit will have their payment mailed directly to their home address. Because the Comptroller’s Office has a 30-day waiting period for lost checks, members are strongly advised to sign up for direct deposit to avoid payment delays. If you don’t receive it in the allotted time, contact our office. Failure to advise GARS of an address change can result in a payment delay.
Direct Deposit (Electronic Funds Transfer)
When you apply for benefits with GARS, you receive a depository agreement form. If you choose direct deposit, your financial institution must complete the lower portion of the form before returning it to GARS. You may also fax the form to GARS at 217-524-9039.
Your first retirement annuity is always mailed to your home address. If you elect direct deposit, all payments after the initial one will be deposited into your bank account.
Increases For Retirees
If you retired at age 60 or over, you will receive a 3% pension increase every year on January 1 or July 1, whichever occurs first, following your first full year of retirement. This annual increase is compounded on your previous year’s annuity. Pension increases are not limited to the 85% maximum.
If you retired prior to age 60 and are retired for at least one full year, you will be eligible for your first 3% pension increase the first of the month following your 60th birthday. For members with a birthday on the 1st of the month, the first 3% pension increase will be given on the actual birthday. The second pension increase will occur on January 1 or July 1 that follows the benefit anniversary date, whichever is earlier. Pension increases subsequent to the second increase will occur on the anniversary of the second increase.
Taxation of Your Retirement Annuity
General Assembly Retirement System benefits are exempt from Illinois income tax but are subject to federal tax. When you initially apply for benefits, a W-4P federal withholding form is part of your retirement packet.
The W-4P form lets you designate the amount of taxes withheld from your annuity or opt out of having taxes withheld. If the W-4P form is not completed, taxes will be withheld using the filing status of married with three exemptions. You can change your withholding at any time by submitting a revised W-4P form to GARS. The form is available under the Forms link on the GARS website and in your online Member Services account.
The Comptroller’s Office issues a 1099-R by January 31 of each year. This form shows the annuity amount you received for the past year, the taxable portion and any federal or state income tax withheld.
Taxation of Refund Associated with Retirement
GARS members who retire without a surviving spouse or eligible dependent and have contributed to the survivor’s annuity provision can elect to take a refund of their survivor contributions prior to retirement. Once a member retires, survivor contributions can no longer be refunded. Survivor contribution refunds are subject to federal income tax withholding if payment is made directly to the member. Federal tax is not withheld if the lump-sum payment is rolled over to another qualified retirement plan.
If you elect to receive a survivor contribution refund at retirement, the Comptroller’s office will issue a 1099-R by January 31 following the date of the refund. The refund will be considered taxable income in the year it is received unless it was transferred to another qualified plan.
If you elect to receive a survivor contribution refund at retirement and later remarry, you can repay the refund with interest. Once the refund is repaid, survivor benefits would be payable to an eligible spouse after you have been married one full year.
Returning to Employment
As a Tier 1 retiree, your GARS retirement benefit will be suspended if:
- You retired using the Reciprocal Act and exceed the post retirement employment limits in a reciprocal system from which you are receiving retirement benefits.
- You return to a GARS-covered position after retirement.
Retired members who return to a GARS-covered position have an option to:
- Repay pension benefits already received. After your subsequent retirement, your pension will be recalculated as if you had not previously retired. This may benefit you if your salary upon re-entry is higher than what was used for your previous retirement.
- Upon returning to service, you will resume contributions to GARS and accrue additional service credit. Upon subsequent retirement, you will be entitled to a retirement benefit consisting of the amount of your original pension, plus the amount of additional service credit earned during your return to service. However, the total pension cannot exceed the total maximum applicable at the date of your last retirement.
Bridging Your Service
If you re-enter service in the General Assembly after you are retired, you may qualify to have your subsequent retirement benefit calculated as though you have not retired. To do so, you must repay all benefits you received. The repayment can be made in a lump sum or by installment payments. It must be repaid within six years after your re-entry, or before the next retirement date, whichever is first. If you do not complete the installment payments within the six-year period, your installment payments will be refunded and your pension will not be recalculated.