Section 1600.205  Compensation Subject to Withholding

Section 15-157 of the Illinois Pension Code requires every participating employee to make contributions of 8% of his or her pay to fund the benefits payable under SURS.  This contribution is deducted from the participating employee's pay on a pre-tax basis and remitted to SURS via payroll deduction.  The contributions are made as a percentage of the participating employee's "earnings".  Earnings are defined at Section 15-111 of the Code.  This Section states SURS' interpretation of what items of compensation are includable as earnings for the purposes of Section 15-111.  The following shall be used when determining whether certain payments to employees are subject to SURS withholding.

a)         Determination of the Purpose of the Payment

1)         If the payment is for services rendered, then the payment is subject to SURS withholding.

2)         If the payment is for a reason other than services rendered, it would not be subject to SURS withholding. 

3)         Other Payments

A)        Bonuses; Awards.  Bonuses received by an employee that are related to services rendered for a specific period of time, not to exceed one academic year, shall be included in earnings subject to SURS withholding.  Awards, such as longevity of service awards or outstanding employee awards, that are not associated with a particular time period are not subject to SURS withholding.      

B)        Retirement Payments or Incentives.  Payments made to induce someone to retire, or not to retire, are not for services rendered, but are made in conjunction with an employee's retirement and are not subject to SURS withholding.  These payments are also not includable in the final rate of earnings under Section 15-112.

C)        Group Fringe Benefits.  Group fringe benefits provided by the employer are not subject to SURS withholding.  However, employer paid premiums on employer-provided group term life insurance in excess of $50,000 are subject to SURS withholding.

D)        Housing Allowance.  A housing allowance, whether in the form of a direct salary payment or as a residence in which the employee resides, is subject to SURS withholding. 

E)         Automobile Allowance.  An automobile allowance in the form of a direct salary payment is subject to SURS withholding.  However, neither business use nor personal use of an employer-provided automobile is subject to SURS withholding.

F)         Non-Qualified Moving Expenses.  Non-qualified moving expenses (see 26 USC 217) are not subject to SURS withholding as they are not furnished in lieu of salary.

G)        Unused Sick Leave Paid at Termination of Employment.  These payments are not subject to SURS withholding, except for collectively bargained payments made in accordance with Section 15-112 of the Code. 

H)        Overtime.  Overtime is subject to SURS withholding. 

I)          Miscellaneous Other Benefits.  Fringe benefits that are provided in lieu of salary are subject to SURS withholding.  Items that are not provided in lieu of salary (such as reimbursement for out-of-pocket travel expenses, relocation expenses, etc.) are not subject to SURS withholding.  Items such as country club dues, tuition waivers, tickets to athletic and performing arts events for family members of employees, and other items that are reported as taxable income on the employee's Form W-2 are not subject to SURS withholding, unless those items are a negotiated fringe benefit in lieu of salary.

b)         Earning History

Certain earnings may be excludable from the "final rate of earnings" determined under Section 15-112 of the Code.  Earnings are always attributable to the period when earned, not when paid.  SURS reserves the right to reallocate reported earnings to the period when earned, when this is necessary to accurately reflect the employee's earning history. 

(Source:  Amended at 32 Ill. Reg. 16515, effective September 25, 2008)