Using Your Illinois Municipal Retirement Fund (IMRF) Pension For Your Loved One With Special Needs

The Illinois Municipal Retirement Fund (IMRF) offers benefits for certain Illinois workers. Since retirement funds’ rules and benefits can vary, it’s important to understand how you can use retirement funds to provide for your child with special needs. In this article, we focus on the IMRF plan and how participants may utilize their retirement funds to guarantee future assistance for a loved one with special needs.

Who Qualifies for IMRF benefits?

The IMRF’s purpose, according to the Illinois Pension Code, is to, “provide a sound and efficient system for the payment of annuities and other benefits, in addition to the annuities and benefits available, as herein provided, under the Federal Social Security Act, to certain officers and employees, and to their beneficiaries, of municipalities.” 

Municipal employees eligible for the IMRF include:

  • elected officials
  • police and firefighters
  • public defenders
  • probation officers
  • township officers
  • other specified local government workers.

These employees receive certain benefits upon retirement and may also designate a beneficiary to receive funds upon the employee’s retirement or death, depending on the employee’s designation.

Basic IMRF Participant Options

The Illinois Pension Code and the IMRF rules are complicated and can be confusing. How you designate a beneficiary with special needs, and how that person receives the funds is extremely important. In general, IMRF beneficiaries can include a person, a trust such as a Special Needs Trust, or a charity as designated by the municipal employee. These funds are paid to the beneficiary upon the death of the municipal employee.

All beneficiary designations must be submitted in writing on specific forms as required by the IMRF and must also provide for contingent beneficiaries should something happen to the first-named beneficiary. Also, as an aside, if the municipal employee was married and designated their spouse or partner as beneficiary, that action is automatically revoked upon a divorce, dissolution, or annulment. With so many alternatives, it is extremely important to decide who will receive the benefit of your retirement fund upon your death.

IMRF’s Special Needs Annuity

If you want to provide for a loved one during your life, the IMRF has a special annuity that allows you to receive a smaller pension payment upon your retirement and provide a lifetime monthly survivor pension for whomever you choose. The person receiving the survivor pension is called a Special Needs Beneficiary, but this person does not have to be an individual with special needs and does not even need to be a relative.

The IMRF automatically provides a surviving spouse pension and a lump sum death payment, but the Special Needs Annuity is separate from those benefits and must be elected by the municipal employee as a separate step. Keep in mind that the younger your Special Needs Beneficiary is, the more your monthly benefit will be reduced. Also, if you choose this option, you cannot change the beneficiary and your reduced pension amount is permanent.

Special Needs Annuity options depend on whether you have a spouse and if that spouse is eligible for a surviving spouse pension. If you would like to name a person with disabilities as the beneficiary under this type of annuity, there is one important restriction to consider. Under a Special Needs Annuity, you can only name one person and you cannot name a trust. In other words, you cannot name a Special Needs Trust to benefit your loved one with special needs.

Since IMRF does not allow payments to a Trust during the employee’s lifetime through the Special Needs Annuity option, that is not the best way to provide for someone with special needs. However, survivor benefits paid after the employee’s death can be placed into a Special Needs Trust, so it’s better to designate the survivor funds as part of your future plan.

Don’t Guess About Your Benefits

If you are an IMRF worker who will be receiving benefits upon your retirement, and you want to protect the financial future of a person with disabilities, you have options under the IMRF plan to allocate monthly funds to that person. Depending on the rest of your future planning, you may be able to set up an annuity during your life, or upon your death.

As you can see, future financial planning for individuals with special needs is complex. Making a small mistake could lead to an unintentional loss of benefits and financial hardship that you were hoping to avoid.

This is one example of why we focus on special needs legal and future planning. 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 or call 866-TO-RUBIN.