§ 16-204 — Optional defined contribution benefit

Illinois § 16-204

• Jurisdiction: Illinois
• Topic: GOVERNMENT
• Ch. 40: PENSIONS
• Act 40 ILCS 5/: Illinois Pension Code.
• Art.: Article 16 - Teachers' Retirement System Of The State Of Illinois

Text

As soon as practicable after the effective date of this amendatory Act of the 100th General Assembly, the System shall offer a defined contribution benefit to active full-time or part-time contractual members of the System who are employed by an employer eligible to participate in the defined contribution benefit under applicable law. The defined contribution benefit shall be an optional benefit to any full-time or part-time contractual member who chooses to participate. The defined contribution benefit shall collect optional employee and optional employer contributions into an account and shall offer investment options to the participant. The benefit under this Section shall be operated in full compliance with any applicable State and federal laws, and the System shall utilize generally accepted practices in creating and maintaining the benefit for the best interest of the participants. In administering the defined contribution benefit, the System shall require that the defined contribution benefit recordkeeper agree that, in performing services with respect to the defined contribution benefit, the recordkeeper: (i) will not use information received as a result of providing services with respect to the defined contribution benefit or the participants in the defined contribution benefit to solicit the participants in the defined contribution benefit for the purpose of cross-selling nonplan products and services, unless in response to a request by a participant in the defined contribution benefit; and (ii) will not promote, recommend, endorse, or solicit participants in the defined contribution benefit to purchase any financial products or services outside of the defined contribution benefit, except that links to parts of the recordkeeper's website that are generally available to the public, are about commercial products, and may be encountered by a participant in the regular course of navigating the recordkeeper's website will not constitute a violation of this item (ii). The System may use funds from the employee and employer contributions to defray any and all costs of creating and maintaining the benefit. In addition, the System may use funds provided under Section 16-158 of this Code to defray any and all costs of creating and maintaining the benefit and then shall reimburse those costs from funds received from the employee and employer contributions under this Section. All employers must comply with the reporting and administrative functions established by the System and are required to implement the benefits established under this Section. The System shall produce an annual report on the participation in the benefit and shall make the report public. As soon as is practicable on or after January 1, 2022, the System shall automatically enroll any employee who first becomes an active full-time or part-time contractual member in the System. A member automatically enrolled under this Section shall have 3% of his or her pre-tax compensation deferred into his or her deferred compensation account. A member may elect, in a manner provided for by the System, to not participate in the defined contribution benefit or to increase or reduce the amount of pre-tax compensation contributed, consistent with State or federal law. A member shall be automatically enrolled in the benefit beginning the first day of the pay period following the close of the notice period, or as soon as practicable, unless the employee elects otherwise within the notice period. For the purposes of this Section, "notice period" means a reasonable period of time after the employee is provided with an automatic enrollment notice as required under Section 414(w) of the Internal Revenue Code of 1986, as amended. An active full-time or part-time contractual member who has been automatically enrolled in the benefit may elect, within 90 days following the member's initial contribution, to withdraw the contribution and receive a refund of amounts deferred, as adjusted for applicable earnings and fees. A member making such an election shall forfeit all employer matching contributions, if any, made with respect to the initial contribution and the forfeited amounts shall be used to defray plan expenses. Any refunded amount shall be included in the member's gross income for the taxable year in which the refund is issued. On or after January 1, 2023, the System may elect to increase the automatic annual contributions under this Section. The increase in the rate of contribution, however, shall not exceed 2% of a member's pre-tax compensation per year, and at no time shall any total contribution exceed any contribution limits established by State or federal law. Notwithstanding any other provision of this Section, active members eligible to participate in the defined contribution benefit do not include employees of a department as defined in Section 14-103.04.

Legislative History

(Source: P.A. 103-552, eff. 8-11-23; 104-284, eff. 1-1-26 .)