Tier 2 Death Benefit
Upon the death of a member, the surviving spouse, minor children, disabled and dependent adult son or daughter, and disabled and dependent parents may be eligible for an annuity. All benefit claims should be submitted to the Claims Division. After you begin receiving benefits, you should notify SERS if you change your name, address, bank account for your direct deposit, or any other pertinent contact information.
First Survivor, Occupational Death Annuity Payment
SERS will process your first annuity payment after we receive the application and the supporting information needed to validate the survivor(s) eligibility and to determine the benefit amount. The normal processing time is 4-6 weeks.
Your benefit payments will first be issued by the Comptroller’s office in the manner you direct. 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 issued on the 19th of each month, unless the 19th is on a weekend or holiday, when they are issued on the last business day before the 19th. If your payment is mailed directly to your home, allow six business days for delivery. If you have not received your payment after six business days, call SERS. Failure to advise us 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 may be mailed to your home. All future payments will be deposited into your bank account by 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 a deceased retired member contributed to both SERS and Social Security and declined the Social Security Offset removal option at the time of their retirement, an offset of 50% of the survivor's Social Security benefit is applied to the applicable annuity payment issued by SERS to a survivor when the survivor reaches age 60. If the survivor is over age 60 when the benefit begins, the offset starts with the first payment. The offset does not reduce the SERS widows or survivor's benefit by more than 50%. This offset does not apply to occupational death benefits, annuity payments payable upon the death of active or inactive vested members, and annuity payments payable upon the death of the retired member who elected the Social Security Offset removal option.
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.
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 the member dies prior to retirement, the survivor benefit will first be increased on the January 1st following the first anniversary of the benefit, and subsequent increases will be applied every January. Each increase is the lesser of 3% or one-half of the Consumer Price Index for the preceding calendar year, and is determined by the original granted annuity amount. For a survivor of a retired SERS member, their first increase is payable effective January 1st following the benefit start date for that survivor.
The only employment restriction for individuals receiving a survivor, widow, or occupational death benefit from SERS is for those who qualify as a result of their disability and dependency on the member at the time of the member's death. This benefit is payable unless the disabled child earns more than $3660 from employment wages per calendar quarter.
Lump Sum Death Benefits Before Retirement
With Survivor Annuity
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 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.