Can You Collect Unemployment If You Take Money Out of Retirement Accounts in Illinois?
Illinois provides unemployment insurance benefits to most individuals who unexpectedly lose their jobs and aren't at fault for the loss. However, if you withdraw money from a pension or other retirement account while receiving unemployment insurance compensation, the Illinois Department of Employment Security may suspend or reduce your weekly benefits.
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Illinois Unemployment
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To qualify for unemployment compensation in Illinois, you must have earned at least $1,600 during the first four of the five quarters that precede the filing of your claim. You must also show that you lost your job for reasons you couldn't control, and you must be able and willing to accept a full-time position. You must wait at least one week after losing your job to file for unemployment compensation.
Retirement Money
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To continue receiving unemployment compensation, you must file weekly claims and report any income you earned during the week. If you received money from a pension account or Social Security, you must report the amount as income, and the Illinois Department of Employment Security will deduct a portion of it from your benefits. If you paid a portion of the pension contributions, the Illinois Department of Employment Security divides your retirement income in half before deducting it from your benefit. Because you always pay a portion of your Social Security retirement contributions, only 50 percent of what you receive counts against you for unemployment purposes in Illinois.
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Determining Your Weekly Benefit
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At the time of publication, Illinois provides unemployment compensation recipients with benefits ranging from $51 to $531, depending on the worker's earned wages and number of dependents. If you receive benefits from a pension account or Social Security retirement, your weekly retirement payment is equal to your total monthly payment divided by 30 and multiplied by 7. If you didn't contribute to the account, then your adjusted weekly benefit is your total weekly benefit minus your weekly retirement payment. If you contributed to the account, however, then your adjusted weekly benefit is your total weekly benefit minus half of your weekly retirement benefit.
Example
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Assume your total weekly benefit based on your base period earnings and dependent allowances is $500 and you receive $1,200 in monthly pension benefits from an account comprised of contributions from both you and your employer. In this case, your weekly retirement benefit is $280 [(1200/30) x 7 = 280]. Since you contributed to the retirement account, your adjusted weekly benefit amount for unemployment compensation is $360 [500 - (280/2) = 360].
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