- Unlike some other states, Illinois counts Social Security benefits along with payments from employer-sponsored retirement plans as income from work and will deduct such payments from your unemployment benefit. Illinois in essence breaks down your monthly Social Security benefit into a weekly amount, then deducts 50 percent of that weekly Social Security amount from your weekly unemployment benefit. When you file for Illinois unemployment benefits, you must provide information about any Social Security payments and other retirement benefits you're receiving.
- For instance, if you were receiving the maximum $388 in weekly unemployment benefits for a single worker, and began receiving $1,600 monthly from Social Security, the state would divide the monthly Social Security benefit by 30 to get $53. Next it would multiply that result by seven to get $371, then it would divide that product by two to get a rounded $186. Lastly, the state would subtract $186 from each weekly $388 unemployment payment, leaving you with a $202 net unemployment benefit. The same formula applies to benefits you receive from any employer-sponsored retirement account or pension plan.
- The state’s policy of counting payments from Social Security and employer-sponsored retirement plans as work income affects around 10 percent of the state’s unemployed workers. As of August 2011, 6.4 percent of unemployed Illinois workers (11,165 individuals) were over the federal retirement age of 59½, allowing them to collect full benefits from retirement accounts or pensions and/or partial benefits from Social Security. Another 3.4 percent of unemployed workers (6,000 individuals) were age 65 or older, allowing them to collect full Social Security benefits along with other retirement benefits.
- Illinois unemployment rules are silent on whether distributions from individual retirement accounts are deducted from unemployment benefits as income from work. The regulations specify that your retirement plan payments count as work income if they're from a pension fully paid by your former employer, or from a retirement plan such as a 401(k) that's partially paid by a former employer. But the rules don’t mention IRAs, which are supported entirely by the individual.