This article is for State University Retirement System (SURS) participants who want to learn how to use their SURS retirement benefits to provide for a loved one with special needs. While it may seem like a simple process, ensuring that your child with special needs receives the largest benefit possible from SURS is more complicated than completing a few forms.
Pension participants are listed on the official SURS website as, “all faculty and support staff of Illinois public higher education including universities, colleges, scientific surveys, and other related agencies.” You can view a complete list of SURS-covered employers to be sure your employer qualifies under the SURS system.
SURS offers three different 401(a) qualified pension plans. Participants must choose one of those plans within the first six months of employment, and that choice is irrevocable. Upon the participant’s death, the survivor(s) has the option to receive a pension annuity amount or a lump sum settlement.
Who, Or What, To Name As A Beneficiary For SURS Death Benefits
According to SURS rules, a participant can name, “any person, firm, corporation, or other legal entity (including your estate) as primary or contingent beneficiary for a death benefit.” Survivor’s benefits can go to a child with a disability who is 18 or older if the disability began before age 18. However, if you want to provide for a person with special needs, you should not name them individually or as part of your estate.
Instead, creating a Third-Party Special Needs Trust is the best way to ensure your loved one with special needs receives the maximum amount of pension benefits available. By designating a special needs trust as your beneficiary, the assets are placed into an account that is managed by a Trustee who is responsible to use those assets for the benefit of the person with a disability.
For more details about special needs trusts and why you should consider a special needs trust for the benefit of your loved one with special needs, see this article, “What are the different types of Special Needs Trusts and how can they benefit my child with special needs?”
Since the special needs trust beneficiary has no direct access to the funds in the trust account, those funds are not considered when determining if the beneficiary qualifies for government benefits. Also, the deposit of your pension benefits into a special needs trust will not disqualify the beneficiary from benefit plans already in place. Lastly, assets held in a third-party special needs trust are not subject to Medicaid reimbursement after the beneficiary has passed away.
How To Designate A Special Needs Trust As A SURS Beneficiary
If you want to provide for the future of a child with special needs by leaving SURS retirement benefits to them upon your death, follow these 3 steps as soon as possible:
- Create a special needs trust following the applicable rules and regulations that will allow the trust to receive and protect assets from SURS on behalf of your intended beneficiary.
- Contact SURS to name the special needs trust as the designated beneficiary of your pension account so the trust will receive the retirement assets you wish to be used for the benefit of your child with special needs.
- Provide all necessary trust documents and SURS forms, including the application for a Child’s Survivor Benefit (Form #3) and Agreement to Hold or Use Payments for the Benefit of Minor, Disabled Child, and/or Student (Form #8) to ensure your SURS benefits are distributed correctly in the future.
You don’t need to struggle through the complicated maze of State retirement benefit options. If you have any questions, remember we’re here to help.
Rubin Law is the only law firm in Illinois exclusively limited to providing compassionate special needs legal and future planning to guide our fellow Illinois families of children and adults with intellectual disabilities, developmental disabilities, or mental illness down the road to peace of mind. For more information, email us at email@example.com or call 866-TO-RUBIN.