Can You Borrow Money From Your Illinois Teachers' Retirement Account (TRS)?

The Teachers' Retirement System of the State of Illinois (TRS) provides retirement benefits for full-time, part-time and substitute public school teachers, other than those teachers working in the city of Chicago. A new pension law took effect Jan. 1, 2011, that divides the system into two tiers. The different tiers have different retirement ages and cost-of-living adjustment provisions, but the treatment of loans is the same for both tiers.

TRS accounts are funded through a combination of employee contributions, employer contributions and state contributions. Employees are required to contribute 9.4 percent of their earnings each year. Additional employee contributions are allowed.

Illinois law prohibits you from borrowing money from your TRS account regardless of your tier. This includes your contributions, your employer's contributions and the state's contributions.

You may not borrow money from your retirement account even in the case of hardship. Your account also cannot be used as collateral for a loan, nor can the funds be seized by a creditor. These provisions are set out in Illinois Pension Code Section 16-190.

The only way to access your money in a TRS account before retirement is if you no longer work for an employer covered by the TRS. In that case, you may apply for a refund of the contributions you have made to the retirement fund, subject to a 1 percent reduction for survivor benefits. Your contributions to the Teachers' Health Insurance Security Fund are nonrefundable. Should you choose to get a refund of your contributions, you lose all your rights to benefits through the TRS as well as any service credits you have accumulated. There also may be federal tax consequences for getting a refund.