AUTHORITY: Implementing and authorized by Articles 1 and 16 of the Illinois Pension Code [40 ILCS 5]; Freedom of Information Act [5 ILCS 140]; Internal Revenue Code (26 U.S.C. 1 et seq.); Section 5-15 of the Illinois Administrative Procedure Act [5 ILCS 100].

SOURCE: Filed June 20, 1958; emergency rules adopted at 2 Ill. Reg. 49, p. 249, effective November 29, 1978, for a maximum of 150 days; adopted at 3 Ill. Reg. 9, p. 1, effective March 3, 1979; codified at 8 Ill. Reg. 16350; amended at 9 Ill. Reg. 20885, effective December 17, 1985; amended at 12 Ill. Reg. 16896, effective October 3, 1988; amended at 14 Ill. Reg. 18305, effective October 29, 1990; amended at 15 Ill. Reg. 16731, effective November 5, 1991; amended at 17 Ill. Reg. 1631, effective January 22, 1993; amended at 18 Ill. Reg. 6349, effective April 15, 1994; emergency amendment at 18 Ill. Reg. 8949, effective May 24, 1994, for a maximum of 150 days; emergency modified at 18 Ill. Reg. 12880; amended at 18 Ill. Reg. 15154, effective September 27, 1994; amended at 20 Ill. Reg. 3118, effective February 5, 1996; emergency amendment at 21 Ill. Reg. 483, effective January 1, 1997, for a maximum of 150 days; amended at 21 Ill. Reg. 2422, effective January 31, 1997; amended at 21 Ill. Reg. 4844, effective March 27, 1997; emergency amendment at 21 Ill. Reg. 17159, effective December 9, 1997, for a maximum of 150 days; amended at 22 Ill. Reg. 7243, effective April 9, 1998; emergency amendment at 22 Ill. Reg. 7314, effective April 9, 1998, for a maximum of 150 days; emergency amendment at 22 Ill. Reg. 9374, effective May 14, 1998, for a maximum of 150 days; emergency rule modified in response to JCAR Objection at 22 Ill. Reg. 11640; emergency amendment at 22 Ill. Reg. 13151, effective June 29, 1998, for a maximum of 150 days; amended at 22 Ill. Reg. 15620, effective August 17, 1998; amended at 22 Ill. Reg. 19079, effective October 1, 1998; amended at 22 Ill. Reg. 22090, effective December 1, 1998; amended at 23 Ill. Reg. 3079, effective February 23, 1999; amended at 24 Ill. Reg. 2440, effective January 27, 2000; amended at 24 Ill. Reg. 10300, effective June 26, 2000; amended at 25 Ill. Reg. 203, effective December 22, 2000; amended at 26 Ill. Reg. 2758, effective February 11, 2002; amended at 26 Ill. Reg. 11476, effective July 11, 2002; amended at 27 Ill. Reg. 1668, effective January 17, 2003; amended at 27 Ill. Reg. 9209, effective May 28, 2003; amended at 28 Ill. Reg. 10055, effective June 29, 2004; amended at 29 Ill. Reg. 1546, effective January 14, 2005; amended at 29 Ill. Reg. 13244, effective August 9, 2005; amended at 30 Ill. Reg. 194, effective December 23, 2005; amended at 30 Ill. Reg. 472, effective December 21, 2005; amended at 30 Ill. Reg. 11728, effective June 23, 2006; amended at 30 Ill. Reg. 17525, effective October 18, 2006; amended at 31 Ill. Reg. 10688, effective July 13, 2007; amended at 32 Ill. Reg. 4073, effective February 28, 2008; amended at 32 Ill. Reg. 7979, effective May 6, 2008; amended at 32 Ill. Reg. 13534, effective August 6, 2008; amended at 33 Ill. Reg. 4401, effective March 3, 2009; amended at 33 Ill. Reg. 15863, effective November 2, 2009; amended at 34 Ill. Reg. 4900, effective March 22, 2010; amended at 34 Ill. Reg. 7787, effective May 21, 2010; amended at 35 Ill. Reg. 2413, effective January 21, 2011; amended at 35 Ill. Reg. 2788, effective January 25, 2011; amended at 35 Ill. Reg. 3781, effective February 18, 2011; amended at 35 Ill. Reg. 19541, effective November 18, 2011; amended at 36 Ill. Reg. 7688, effective May 4, 2012; amended at 36 Ill. Reg. 18914, effective December 14, 2012; amended at 37 Ill. Reg. 5150, effective April 4, 2013; amended at 38 Ill. Reg. 21239, effective October 21, 2014; amended at 39 Ill. Reg. 5259, effective March 20, 2015; amended at 39 Ill. Reg. 14989, effective October 30, 2015; amended at 40 Ill. Reg. 14099, effective September 28, 2016; amended at 41 Ill. Reg. 718, effective January 11, 2017; amended at 41 Ill. Reg. 14256, effective November 8, 2017; amended at 42 Ill. Reg. 13666, effective June 29, 2018; amended at 42 Ill. Reg. 22238, effective November 20, 2018; amended at 43 Ill. Reg. 5115, effective April 22, 2019; amended at 43 Ill. Reg. 10791, effective September 23, 2019; amended at 44 Ill. Reg. 7905, effective April 24, 2020; amended at 47 Ill. Reg. 9473, effective June 22, 2023; amended at 48 Ill. Reg. 6116, effective April 5, 2024.

SUBPART A: REPORTS BY BOARD OF TRUSTEES

 

Section 1650.10  Annual Financial Report (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

SUBPART B: BASIC RECORDS AND ACCOUNTS

 

Section 1650.110  Membership Records

 

a)         Every member shall provide information with respect to his or her date of birth, Social Security number and home address including a facsimile of his or her signature.

 

b)         Creditable service and salary is established by submission of annual reports (filed by the member's employer), an affidavit of a school official based upon existing school records, or copies of contracts, board minutes, memoranda, payroll records and other materials as requested by the System for assistance in making the necessary determinations.  If the preceding documentation is unavailable, the member shall submit at least one of the following types of documentation in the following order of priority:

 

1)         Certified records of the Chief Educational Officer of the County in which the member was employed.

 

2)         Income tax records for the entire time period showing employment as a teacher.

 

3)         Certified records of another retirement system.

 

4)         Other contemporaneous documentation that reliably supports the service credit to be established while eliminating the possibility of mistake or fraud.

             

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.120  Claims Records (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.130  Individual Accounts (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.140  Ledger and Account Books (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.150  Statistics (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.160  Confidentiality of Records

 

The Board, its Executive Director, and agents and employees of the System are prohibited from disclosing the contents of a member's, annuitant's, or beneficiary's files, records, papers, or communications except: for purposes connected with the official responsibility of the Teachers' Retirement System; to other systems subject to and participating in the Reciprocal Act; to the Department of Central Management Services for annuitant health insurance purposes; to the Social Security Administration for government pension offset determination and windfall elimination purposes; upon express (e.g., mail, verbal, personal) authorization from the individual whose record is to be released; in response to a subpoena; or when required pursuant to the Freedom of Information Act [5 ILCS 140].

 

(Source:  Amended at 39 Ill. Reg. 14989, effective October 30, 2015)

 

Section 1650.180  Filing and Payment Requirements

 

a)         All employers must file reports with the System including demographic, enrollment and earnings information, together with contributions required under Article 16 of the Illinois Pension Code (Code) [40 ILCS 5], on a pay-period basis.

 

b)         Reports and contributions due for the month must be remitted to the System by the 10^th day of the following month. Late contributions and filings will be assessed penalties prescribed by Section 16-155 of the Code, as determined by the System. 

 

c)         The employer's report shall be properly completed and shall report service, creditable earnings, and contributions in accordance with applicable laws and rules.  The exact statutory amount of contributions must be:

 

1)         deducted from the member's pay; and/or

 

2)         paid on behalf of the member, based on the member's earnings each pay period.

 

d)         Employers are required to file the report via the System's employer portal.  All contributions and payments must be remitted to the System via electronic means.

 

e)         Contributions for work performed during the fiscal year are due to the System by July 10 of the following fiscal year. Effective July 1, 2020, employers cannot accelerate the payment of contributions (i.e., send more than the statutory contribution rate) in order to meet the July 10 deadline. Rather, the employer must remit all contributions corresponding with each payroll occurring within that month. To be allowed to remit the appropriate contributions to TRS by the July 10 deadline, employers must report all payrolls that will cover the work performed during the fiscal year ended June 30, even if the members will be paid in July and August. The contributions due are based on the statutory rates in effect for the fiscal year of the report.

 

f)         All employers are required to complete an Annual Certification/Annual Report via the System’s employer portal on or before August 15 of each year. Failure to complete the Annual Certification/Annual Report by the due date shall result in additional amounts due as prescribed by Section 16-155 of the Code.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.181  Early Retirement Incentive Payment Requirements (Repealed)

 

(Source:  Repealed at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.182  Waiver of Additional Amounts Due

 

a)         The System may waive additional amounts due upon good cause shown when:

 

1)         The delinquency is attributable to circumstances commonly known as an "act of God", such as fire, flood, tornado and the like; or

 

2)         The delinquency is attributable to other administrative reasons where no employer negligence is involved; the employer's record indicates a history of good faith and consistent compliance with the System's contribution and reporting requirements; and the employer remits the pay-period reports and required contributions within a reasonable time as determined by the System taking into consideration the reason for delinquency and the period of delinquency.

 

b)         Circumstances purporting to justify a waiver of the additional amounts due must be certified in writing to the System by an authorized representative of the employer requesting a waiver.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.183  Definition of Employer's Normal Cost

 

The employer's normal cost is the employer's portion of the total normal cost of benefits earned by active members during the fiscal year (which shall include the System's estimated administrative expenses for the fiscal year) that is not funded by the estimated contributions of active members for the fiscal year.  The total cost of benefits and the employer's normal cost are expressed as percentages of projected active member payroll, actuarially determined, and are approved by the Board of Trustees before the fiscal year begins.  The employer's normal cost rate approved by the Board of Trustees shall be used for all calculations that are to be based on the employer's normal cost, except that, for purposes of determining the contribution for optional creditable service under Section 16-128(a)(ii) of the Act, the employer's normal cost rate shall be the total cost of benefits rate for the fiscal year in which such service is verified reduced by the member contribution rate used to determine the amount under Section 16-128(a)(i) of the Act.

 

(Source:  Added at 20 Ill. Reg. 3118, effective February 5, 1996)

SUBPART C: FILING OF CLAIMS

 

Section 1650.201  Disability Benefits − Application Procedure; Effective Date

 

a)         Any member claiming a disability benefit under 40 ILCS 5/16-149 or 16-149.1 shall begin the process by filing a written notice with the System.

 

b)         For purposes of determining when nonoccupational disability benefits become payable under 40 ILCS 5/16-149, the following shall apply:

 

EFFECTIVE DATE

 

Member files written notice of disability within 90 days from the later of commencement of disability or the date eligibility for salary ceases*.

Yes

No

TRS receives all documentation within six months from the later of the commencement of disability or the date eligibility for salary ceases.

TRS receives all documentation within six months after written notice of disability.

Yes

No

Yes

No

Benefits become payable from the later of the 31st calendar day the member is absent from teaching due to the disability for which benefits are sought or exhaustion of the member's sick leave**.

Benefits become payable on the date TRS receives all documentation required by law.

Benefits become payable on the date TRS receives written notice of disability.

Benefits become payable on the date TRS receives all documentation required by law.

*    Eligibility for salary ceases is equal to the later of the date last worked plus 31 days or when sick leave days are completely exhausted

**  If sick leave is not paid by the employer, the date sick leave would have been exhausted had the member been paid by the employer.

 

c)         For purposes of determining when occupational disability benefits become payable under 40 ILCS 5/16-149.1, the following shall apply:

 

EFFECTIVE DATE

 

Member files written notice of disability within 90 days from the later of commencement of disability or the last day for which salary was paid.

Yes

No

TRS receives all documentation within six months from the later of the commencement of disability or the last day for which salary is paid.

TRS receives all documentation within six months after written notice of disability.

Yes

No

Yes

No

Benefits become payable on the date after the last day for which salary is paid.

Benefits become payable on the date TRS receives all documentation required by law.

Benefits become payable on the date TRS receives written notice of disability.

Benefits become payable on the date TRS receives all documentation required by law.

 

d)         When a member claiming disability benefits is employed under an agreement for less than 12 full months, neither the 31-day waiting period nor the utilization of sick leave requirement, as contained in the definition of "date eligibility for salary ceases" in Section 1650.202, can be satisfied during periods not covered by the agreement.  For purposes of granting disability benefits, all employment agreements are presumed to cover one full school term and are automatically renewable at the commencement of the next school term.  Satisfactory evidence must be presented of an employment agreement covering a period longer than a full school term (e.g., 10, 11 or 12 months).

 

e)         Whenever a member becomes ineligible to receive a non-occupational or occupational disability benefit due to gainful employment but is subsequently disabled for the same cause within 90 days after the member's or annuitant's last date of eligibility for benefits, benefits shall be reinstated at the previous benefit rate upon written application.  Benefits shall commence the day following the last day the member is eligible to receive salary.  If more than 90 days have elapsed, benefits shall be reinstated based on the greater of the member's most recent annual contract salary rate at the time the disability benefit becomes payable or the member's annual contract rate on the date the disability commenced.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

 

Section 1650.202  Disability Benefits − Definitions

 

For purposes of non-occupational disability benefits under Section 16-149 of the Code  and occupational disability benefits under Code Section 16-149.1, the following terms and phrases shall have the following definitions:

 

"Code" means the Illinois Pension Code [40 ILCS 5].

 

"Commencement of disability" shall mean the date upon which a member is determined by required medical examination to be "incapacitated to perform the duties of his or her position as a teacher" as defined in this Section.

 

"Date of application" shall mean the day upon which the System receives in its business offices the written or telefax notice required in this Section notifying the System the member is applying for disability benefits under the provisions of Section 16-149 or 16-149.1 of the Code.

 

"Date eligibility for salary ceases" shall mean the last date worked plus 31 days, or the date on which all of the member's sick leave is exhausted, whichever occurs later.

 

"Gainful employment" shall mean current employment from which a member realizes "earned income" as that term is defined in section 32(c)(2) of the Internal Revenue Code in excess of $10,000 in any calendar year, unreduced by contributions to a tax deferred retirement plan account authorized by the Internal Revenue Code, or the pro rata share of $10,000 if less than a calendar year, while in receipt of a disability or occupational disability benefit.

 

"Incapacitated to perform the duties of his or her position as a teacher" shall mean the physical or mental inability to perform substantially all of the member's assigned job duties at the commencement of disability.

 

"Licensed physician" shall mean any individual licensed by the state in which he or she practices medicine.  All reports submitted to the System shall include the registration number of the physician submitting the report.

 

"Teacher", for purposes of Sections 16-149(a) and 16-149.1(a) of the Code, shall mean employment in any equivalent position set forth in Code Section 16-106 in this State or another state, territory or by or under the auspices of the United States government.

 

"Upon application of a member" shall mean the filing of a written or telefax notice by or on behalf of a member notifying the System that the member is applying for disability benefits under the provisions of Section 16-149 or 16-149.1 of the Code.

 

(Source:  Amended at 40 Ill. Reg. 14099, effective September 28, 2016)

 

Section 1650.203  Disability Retirement Annuity – Definitions

 

For purposes of Section 16-149.2 of the Code, the following terms shall have the following definitions:

 

            "Amount earned by the member" shall mean the member's "earned income" as that term is defined in section 32(c)(2) of the Internal Revenue Code in any calendar year while in receipt of a disability retirement annuity, unreduced by contributions to a tax-deferred retirement plan or account authorized by the Internal Revenue Code.

 

            "Licensed physician" shall have the same definition as in Section 1650.202.

 

            "No longer disabled" shall mean the member is no longer "incapacitated to perform the duties of his or her positions as a teacher" as that phrase is defined in Section 1650.202.

 

            "Teacher" shall have the same definition as in Section 1650.202.

 

            "The standard of disability provided in Section 16-149" shall mean "incapacitated to perform the duties of his or her position as a teacher" as that phrase is defined in Section 1650.202.

 

(Source:  Amended at 40 Ill. Reg. 14099, effective September 28, 2016)

 

Section 1650.204  Gainful Employment - Consequences

 

A member in receipt of a disability benefit under the provisions of 40 ILCS 5/16-149 or 16-149.1 who engages in "gainful employment" as defined in Section 1650.202 shall have his or her disability or occupational disability benefit terminated as provided in Section 16-149(c) or Section 16-149.1(c), whichever is applicable.

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.205  Medical Examinations and Investigation of Disability Claims

 

a)         A member applying for or receiving benefits pursuant to Section 16-149, 16-149.1 or 16-149.2 of the Code shall furnish the System medical records, earnings statements, Social Security benefit or claim information, federal and state tax returns, and any other information deemed relevant by the System to process the member or annuitant's disability claim.

 

b)         A member or annuitant shall submit to an independent medical examination at the discretion of the System.  The cost of independent medical examinations shall be borne by the System.

 

c)         In order to verify continued eligibility to receive disability benefits under the provisions of Section 16-149 or 16-149.1 of the Code, a member shall provide to the System at least annually written certifications by two state licensed and practicing physicians verifying that the member remains disabled and is unable to perform the duties of the position he or she held at the time his or her disability commenced.  The physicians' examinations must have occurred within the 90 days prior to the re-examination due date.  Certifications shall be accompanied by a medical report fully explaining the basis for the physician's conclusion that the member remains disabled.  However, this requirement may be waived, at the System's discretion, if it is determined that the member's medical condition or prognosis is irreversible or terminal and will result in a permanent inability to return to his or her former position.

 

d)         When a disability or occupational benefit terminates and a member elects to retire on a disability retirement annuity, the member shall submit to medical examinations, unless the member's last examinations within the preceding six months substantiate a continuing disability, in which case no new medical examinations are required.

 

e)         An annuitant in receipt of a disability retirement annuity who becomes eligible for an age retirement annuity shall submit to medical examinations to retain disability retirement annuity status, unless the annuitant's last examinations within the preceding six months substantiate a continuing disability, in which case no new medical examinations are required.

 

f)         Failure of a member or an annuitant to submit to medical examinations or to provide information required pursuant to Section 16-149, 16-149.1 or 16-149.2 of the Code will result in a suspension of benefit payments.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.206  Physician Certificates

 

a)         Physician certificates are required to be completed by the certifying physician or his or her staff.

 

b)         A physician certificate completed in any part by a member shall not meet the physician certification requirements of 40 ILCS 5/16-149, 16-149.1 or 16-149.2.

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.207  Disability Due to Pregnancy

 

a)         A member who is disabled due to pregnancy as provided in 40 ILCS 5/16-149 shall be allowed to receive a maximum of:

 

1)         eight weeks of disability benefits for a pregnancy involving a Cesarean delivery; or

 

2)         six weeks of disability benefits for a pregnancy involving a normal delivery.

 

b)         However, if complications arise during the pregnancy or as the result of delivery, the period of disability may, upon the submission of appropriate medical documentation, be extended until the member no longer qualifies for benefits under 40 ILCS 5/16-149(c).

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.208  Disability Payments

 

In determining whether a member is receiving salary as a teacher and, therefore, ineligible to receive disability benefits under the provisions of 40 ILCS 5/16-149, 16-149.1 or 16-149.2, proceeds from disability insurance provided by the employer through a private insurance carrier or through a self-insured disability program shall not be considered salary for purposes of 40 ILCS 5/16-149, 16-149.1 or 16-149.2.

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.209  Computation of Annual Salary When Member Has Different Semester Salary Rates (Repealed)

 

(Source:  Repealed at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.210  Claim Applications

 

Any individual claiming a retirement annuity, a disability retirement annuity, a survivor benefit, a disability benefit or an occupational disability benefit shall file an application therefor in the form prescribed by the System. This application, together with the membership record, and such other information as may have been compiled during the membership of the member or submitted by the applicant shall constitute the complete record forming the basis of the claim. An application for survivor benefits shall be accompanied by a certified copy of the death certificate, other public record of death, or a physician's certificate of death.  The System may require the claimant to provide a valid depository agreement authorizing funds to be electronically deposited into the recipient's bank account in lieu of paper warrants.

 

(Source:  Amended at 43 Ill. Reg. 10791, effective September 23, 2019)

 

Section 1650.211  Disability Recipient Eligible to Receive an Age or Disability Retirement Annuity

 

a)         A member may file an application to transfer from a nonoccupational or occupational disability benefit to an age retirement annuity or a disability retirement annuity prior to the expiration of the eligibility period for nonoccupational or occupational disability benefits.  The effective date of the annuity shall be the first of the month following receipt of the application.  An annuitant receiving a disability retirement annuity may, any time after becoming eligible for age retirement, file an application to  transfer to an age retirement annuity.  The effective date of the age retirement annuity shall be the first day of the month following receipt of the application.

 

b)         At the time a disability retirement annuitant becomes eligible to receive an age retirement annuity, the disability retirement annuitant shall provide the System written certification by two state licensed and practicing physicians verifying that the member remains disabled and is unable to perform the duties of the position he or she held at the time the annuitant's disability commenced.  The certifications shall be accompanied by a medical report fully explaining the basis for the physicians' conclusion that the member remains disabled.  If the disability retirement annuitant is found to no longer be disabled, he or she shall be placed upon age retirement and receive an age retirement annuity.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.220  Reclassification of Disability Claim (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.221  When Member Becomes Annuitant

 

A member becomes an annuitant of the System upon cashing his or her first retirement annuity payment or ten calendar days after the date the first retirement annuity payment is deposited in the member's designated bank account by electronic fund transfer.

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.222  Death Out of Service

 

Death occurring after the System has received an application for a retirement annuity and any outstanding payments from the member is deemed to be a death out of service when calculating survivor benefits.

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.230  Medical Examinations and Investigations of Claims (Repealed)

 

(Source:  Repealed at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.240  Refunds; Canceled Service; Repayment

 

a)         Any member eligible to receive a refund of contributions pursuant to the provisions of Section 16-151 of the Act shall, if he or she so elects, make a written request for the refund upon a form prescribed by the System.  A refund is deemed accepted and membership in the System terminates upon the cashing of a refund warrant.

 

b)         To be credited toward the calculation of a retirement annuity, survivors benefit, or disability benefit, the service canceled by such refund must have been re-established in accordance with the provisions of the Act, by repayment of the refund in full, including statutory interest, prior to the member's retirement, death, or commencement of disability benefits.

                       

c)         A member receiving a disability benefit under the provisions of Section 16-149 of the Act is not eligible to receive a refund of contributions until four months following the date for which disability benefits are last paid.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.250  Death Benefits

 

a)         When two or more beneficiaries are eligible for a survivor benefit and only one qualifies for a periodic payment, the System shall not split the benefit payments so that one person receives a lump sum payment and the other receives an annuity.  The beneficiaries shall be paid either the lump sum benefit, or the dependent beneficiary may receive an annuity, provided the non-dependent beneficiary disclaims a lump sum benefit.

 

b)         The phrase "providing for the support of the deceased member's eligible child", as provided in Section 16-141(b)(2) of the Act means providing that support necessary so that the surviving spouse may claim the child as a dependent for federal income tax purposes.

 

c)         The phrase "substantial gainful activity", as provided in Section 16-140(4) of the Act, means the performance of significant duties over a reasonable period of time while working for pay or profit.  Full-time work or part-time work done at the employer's convenience in a competitive work situation for at least the minimum wage conclusively shows that the person is able to engage in substantial gainful activity.  Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. The fact that an impaired person has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.260  Evidence of Age

 

a)         Whenever evidence of age is required by the System, a birth certificate shall be required unless one cannot be acquired.

 

b)         If no such record can be acquired, the following documents may be substituted:

 

1)         Military records;

 

2)         Marriage record showing date of birth;

 

3)         Evidence of Social Security payments that require attainment of specific age;

 

4)         Church record of birth or baptism;

 

5)         Passport;

 

6)         Valid driver's license; or

 

7)         Two or more documents showing birth dates, such as, but not limited to naturalization papers, insurance policies, school records or medical records.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.270  Reversionary Annuity - Evidence of Dependency

 

For the purposes of the reversionary annuity provided in Section 16-136 of the Act, the term "dependent" shall include a spouse, an unmarried natural or adopted child under age 18, or any other individual meeting the support requirements set forth herein.  If any individual other than a spouse or unmarried natural or adopted child under age 18 is designated by the retiring member, the retiring member must furnish the System with evidence that the retiring member provided over 50% of the support of the designated individual during the 12 calendar months immediately preceding retirement. A copy of the member's federal income tax return, filed for the tax years covering the above 12 month period, shall be required as evidence of dependency.

 

(Source:  Amended at 39 Ill. Reg. 14989, effective October 30, 2015)

 

Section 1650.271  Evidence of Parentage

 

a)         A child born to the wife of a member is presumed to be legitimate.

 

b)         A child conceived out of lawful wedlock shall not receive benefits as an eligible child until parentage has been established.

 

c)         The following evidence shall establish parentage:

 

1)         Certified copy of a court order finding the member was the natural father of the illegitimate child; or

 

2)         Certified copy of a Settlement Agreement which has been approved by a court for the support of an illegitimate child; or

 

3)         Written acknowledgment of paternity (e.g., pleadings filed in any proceeding pending before a court, or submittals to a public agency, or a document signed by the putative father) and evidence (e.g., cancelled checks or receipts from the mother) that the member contributed to the support of the child; or

 

4)         Certified copy of a court order entered pursuant to a declaratory judgment action establishing either a support obligation or visitation rights; or

 

5)         Copy of the public record of marriage when a child is born to a bigamous marriage; or

 

6)         Copy of the public record of marriage of the parents of an illegitimate child who marry and the putative father acknowledges parentage in writing (e.g., pleadings filed in any proceeding pending before a court, or submittals to a public agency, or a document signed by the putative father).

 

d)         Submission of the following evidence shall prohibit a finding of parentage.

 

1)         The child's mother has admitted someone other than the member is the father.

 

2)         The child has been adopted by a person other than the member.

 

(Source:  Added at 12 Ill. Reg. 16896, effective October 3, 1988)

 

Section 1650.272  Eligible Child Dependent By Reason of a Physical or Mental Disability

 

a)         To establish eligibility for a survivor benefit as an eligible child dependent by reason of a physical or mental disability under the provisions of Section 16‑140(4) of the Act, a claimant or his or her duly authorized representative shall furnish the following to the System:

 

1)         A copy of the member's federal income tax return filed for the tax year preceding the death, evidencing that the deceased member provided over 50% of the support of the eligible disabled child; and

 

2)         Written reports by two or more licensed physicians certifying that the claimant is physically or mentally unable to engage in substantial gainful activity as defined in Section 1650.250(c) and will remain disabled for a period of not less than twelve months.  Claimant physician reports are subject to review by the System, and the claimant may be required to be examined by a physician or physicians selected by the System to verify eligibility.

 

b)         Unless the claimant's disability has been determined to be permanent or expected to result in death within two years by the claimant's examining physicians, the claimant shall be required to furnish the System annual physician certifications of disability.  Recertifications are due to the System 30 days prior to the annual anniversary of the claimant's survivor benefits start date.

 

(Source:  Amended at 39 Ill. Reg. 14989, effective October 30, 2015)

 

Section 1650.280  Evidence of Marriage

 

a)         Applicants claiming benefits as a surviving spouse shall submit as evidence of marriage a copy of the public record of marriage.  If the record is unavailable due to loss or destruction, then a copy of the religious record of the marriage shall be submitted.

 

b)         If no such records exist, the following will be accepted for consideration:

 

1)         A copy of the federal income tax return for the year preceding the death.

 

2)         A notarized statement from the individual who performed the marriage.

 

3)         Notarized statements from at least two individuals in attendance of the marriage.

 

4)         Written certification from the Social Security Administration of acceptance of the marriage and its date.

 

5)         Such other documentation found by the System to be trustworthy, such as that produced by independent third parties.

 

c)         The only document acceptable as evidence of dissolution or invalidity of marriage is a certified copy of the declaration or decree entered by a court of competent jurisdiction.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.290  Offsets

 

Benefits received by a member under the Workers' Compensation Act [820 ILCS 305] or the Workers' Occupational Diseases Act [820 ILCS 310] with respect to a disability shall be applied as an offset against any occupational disability benefit provided by the System with respect to the same accident, illness or disease.

 

a)         If the amount of compensation received is less than the monthly benefit provided under the Illinois Pension Code, only the amount of the excess of such monthly benefit over the amount of such compensation shall be payable by the System.  If the amount of compensation received equals or exceeds the monthly benefit provided under the Illinois Pension Code, no benefit shall be payable by the System during the period compensation is paid under the Workers' Compensation Act or Workers' Occupational Diseases Act.

 

b)         If the compensation for disability or death is received in a commuted lump sum or partly in a commuted lump sum and partly in monthly or weekly sums, the System shall, for offset purposes, consider the compensation as if it had been paid at a weekly rate as prescribed under the Workers' Compensation Act or Workers' Occupational Diseases Act.

 

c)         In the event the whole or any part of the benefits received under the Workers' Compensation Act or Workers' Occupational Diseases Act is commuted into one sum, the aggregate sum of the benefits so commuted and not the commuted value thereof shall be used for purposes of ascertaining the amount of offset.

 

d)         The amount considered for offset purposes shall not be reduced by any legal expenses granted from the award to the member.

 

e)         An offset shall not be applied to medical expenses paid on behalf of or to the claimant.

 

(Source:  Amended at 22 Ill. Reg. 7243, effective April 9, 1998)

SUBPART D: MEMBERSHIP AND SERVICE CREDITS

 

Section 1650.301  Early Retirement Without Discount – Return to Teaching from a Break in Service

 

To be eligible to elect early retirement without discount when a member returns from a break in teaching service, a member must meet the following requirements:

 

a)         The member must be employed as a teacher as defined in 40 ILCS 5/16-106 within 6 months prior to his or her effective date of retirement:

 

1)         In a full-time position (five days per week, four or more clock hours daily) for at least one full pay period (minimum two weeks); or

 

2)         In a substitute or part-time non-contractual teacher position (daily or hourly) working 85 or more days for the same employer.

 

b)         The member employed under subsection (a)(1) must be paid for each day worked with the daily salary rate equal to or greater than employer's minimum salary on the employer's salary schedule.

 

(Source:  Added at 30 Ill. Reg. 194, effective December 23, 2005)

 

Section 1650.310  Effective Date of Membership

 

a)         The effective date of membership in the System shall be the date of employment by an employer, as recorded by the employer.

 

b)         In the absence of a record of the date of employment in the official proceedings of the qualifying employer, the date of membership shall be the first payroll day for which contributions were required.

 

c)         For purposes of calculating the required contributions to purchase military service not immediately following employment under the provisions of 40 ILCS 5/16-128(a)(iii), and/or to purchase private school teaching under the provisions of 40 ILCS 5/16-128(d-5) in the absence of official records documenting the date of first full-time employment as a teacher, the date of first membership shall be defined as July 1 of the first year of System contributing service.

 

(Source:  Amended at 29 Ill. Reg. 1546, effective January 14, 2005)

 

Section 1650.315  Establishing Salary and Assessing Contributions for Optional Service Credit

 

a)         The System shall establish a salary and assess contributions for optional service utilizing the first year of service as a contributing member of the System by determining a salary equal to the member's first full-time actual salary paid as a contributing member of the System immediately succeeding the time period in question and assess contributions on the first full-time salary at the applicable statutory rate in the following instances:

 

1)         For out-of-system service, as defined in Sections 16-127(b)(2) and 16-128(b) of the Code, that has not been verified by the System as of January 1, 2020; or

 

2)         For all other optional service as defined in Sections 16-127 and 16-128, when salary information for a period of creditable service is unavailable.

 

b)         In the absence of a first full-time actual salary, the System shall determine a salary rate equal to the member's first full-time equivalent salary paid as a contributing member of the System immediately succeeding the time period in question and shall assess contributions on the first full-time equivalent salary at the applicable statutory rate.

 

(Source:  Amended at 43 Ill. Reg. 10791, effective September 23, 2019)

 

Section 1650.320  Method of Calculating Service Credits

 

a)         No more than one year's service credit shall be granted for total service rendered between July 1 of one year through June 30 of the following year.

 

b)         If the service rendered on a full-time basis, substitute basis, or part-time basis after June 30, 1990 is less than 170 days between July 1 of one year through June 30 of the following year, then credit for service shall be at a ratio of the actual number of days of service to 170 days.

 

c)         Service credit for service rendered on a permanent and continuous part-time basis prior to July 1, 1990, between July 1 of one year through June 30 of the following year, shall be at the ratio of creditable earnings to the annual salary rate. Provided, however, that for service after June 30, 1959, if that ratio equals or exceeds the ratio of 170 days to the days in the legal school term, one year of service credit shall be granted.

 

d)         If service prior to July 1, 1990 is rendered partially on a full-time basis and partially on a permanent and continuous part-time basis between July 1 of one year through June 30 of the following year, then credit for service shall be at the ratio of creditable earnings to the annual salary rate. Provided, however, that for service after June 30, 1959, if that ratio equals or exceeds the ratio of 170 days to the days in the legal school term, one year of service credit shall be granted.

 

e)         Whenever the actual number of days of service is unavailable because of lack of employer records, the number of days the System uses to grant service credit shall be equal to the actual number of hours for which the member was paid, divided by four.

 

f)         Days of service shall include any weekday, Monday through Friday, for which periodic payment is made to the member for:

 

1)         Service rendered that requires teacher certification under the School Code;

 

2)         Attendance, during the work week, at teacher's institutes, workshops and parent/teacher conferences scheduled in the school calendar;

 

3)         Legal school holidays;

 

4)         Vacation, sick or personal leave days (except when the payment is for severance pay);

 

5)         Sabbatical leaves meeting the requirements of Section 24-6.1 of the School Code [105 ILCS 5/24-6.1];

 

6)         Absence from duty without loss of pay and benefits and without use of accrued time until the member resumes active employment or until the resignation date, whichever occurs first; or

 

7)         Service rendered on e-learning days authorized by Section 10-20.56 of the School Code [105 ILCS 5].

 

g)         A day of service may be credited for Saturday service if that day would otherwise qualify as a day of service and the service was required due to a lawful day of attendance.

 

(Source:  Amended at 48 Ill. Reg. 6116, effective April 5, 2024)

 

Section 1650.325  Method of Calculating Service Credit for Recipients of a Disability Benefits or Occupational Disability Benefit

 

a)         Service credit is earned during periods in which disability benefits are paid.

 

b)         Service credit is earned during periods of occupational disability.

 

c)         When a member teaches a partial school year and receives disability or occupational disability benefits a partial school year, one full year of service credit is earned when the member receives earnings from teaching and disability or occupational disability benefits for a total of 170 days during the school term or the term of the employment agreement if longer.  To determine the service credit a member would have received and the contribution that a member would have made in active employment during any period for which benefits are paid or the member is on occupational disability, the System shall establish on an annual basis two school calendars; a 185-day calendar for members on nine-month contracts and a 260-day calendar for members with greater that nine-month contracts.  Service credit and credit for contributions shall be earned and calculated upon the days deemed creditable therein.

 

d)         One full year of service credit is earned when the member receives disability or occupational disability benefits for a total of 170 days during any school year.

 

(Source:  Amended at 20 Ill. Reg. 3118, effective February 5, 1996)

 

Section 1650.330  Duplicate Service Credit

 

a)         Credit will be denied those members who elect to receive or have received a monthly retirement allowance based on the same service used for pension purposes in another public, statutory retirement system other than Social Security or a military retirement allotment.

 

b)         When it is established by receipt of written certification from a prior employer or another retirement system that an annuitant has used service credited in this System for pension purposes in another public, statutory retirement system, the duplicated credit will be removed from his or her record in this System, and his or her retirement allowance will be reduced accordingly. The System shall assert an offset in accordance with Section 1650.595 for any additional benefits paid as a result of such overpayment, against future benefits to be paid the annuitant or his or her beneficiaries.

 

(Source:  Amended at 26 Ill. Reg. 11476, effective July 11, 2002)

 

Section 1650.335  Unreported Regular Service Credit and Earnings

 

If an employer fails to report a member's regular service credit and earnings for a period of teaching and, at the time of the discovery of the error, more than four fiscal years have elapsed since the fiscal year in which the error occurred, the member will be required to:

 

a)         provide sufficient documentation (e.g., official school records) to establish the unreported service credit and earnings; and

 

b)         pay the contributions required by Section 16-128(a)(i) and (iii) of the Illinois Pension Code to purchase optional service credit under Section 16-127(b)(2) of the Code.

 

(Source:  Added at 29 Ill. Reg. 13244, effective August 9, 2005)

 

Section 1650.340  Service Credit for Out-of-System Service and Leaves of Absence

 

a)         Granting Out-of-System Service

 

1)         For purposes of granting out-of-system service as provided in Section 16-127(b)(2) of the Code, once the statutory minimum service requirement has been met, the member may purchase the portion of out-of-system service available at the time of purchase based on total creditable service years, provided one of the following conditions are met:

 

A)        If a refund from the other system is available to the member, that refund must be taken prior to the purchase of the out-of-system service; or

 

B)        If the member is unable to take a refund from the other system, the member must be ineligible for a benefit from that system.

 

2)         The member may purchase additional qualifying out-of-system service, after the initial purchase, on a fiscal year basis, upon further request by the member, to a maximum of 2/5 of the total creditable service of the member or 10 years, whichever is less.

 

b)         For purposes of granting service credit for an approved leave of absence as provided in Section 16-127(b)(5)(i) of the Code, the statutory return-to-teaching requirement is met when the member returns to teaching service creditable under this System or the State Universities Retirement System for the period of the leave or one year, whichever is less.  A leave of absence is creditable as an approved leave if:

 

1)         The member did not resign prior to the effective date of the leave; or

 

2)         The employer promised renewed employment at the end of the leave; and

 

A)        The employer took official action to approve the request for leave; or

 

B)        The leave qualifies as a leave under the Family and Medical Leave Act (29 USC 2601), as certified by the employer.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.341  Service Credit for Involuntary Layoffs

 

a)         An involuntary layoff occurs when a member's employment is terminated as result of a reduction in force due to lack of funding, lack of work, an elimination of position, or a material reorganization.

 

b)         Involuntary layoffs shall not include non-renewals of employment unrelated to reasons set forth in subsection (a) or dismissals for cause or other performance related reasons.

 

c)         To receive service credit for an involuntary layoff, a member must be re-employed in a contractual teaching position under this System or the State Universities Retirement System for the creditable period of the layoff or one year, whichever is less.

 

(Source:  Amended at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.342  Service Credit for Paid Student Teaching Service

 

For purposes of determining eligibility to receive optional service credit for paid student teaching service under Section 16-127(b)(11) of the Code, the member must:

 

a)         Have rendered the paid student teaching service on or after August 7, 2019, the original effective date of 105 ILCS 5/24-8.5 of the School Code, authorizing school districts to pay salary for student teaching service;

 

b)         Provide sufficient documentation acceptable to the System, for example, official school records, to establish the paid student teaching service credit and earnings; and

 

c)         Pay the contributions required under Section 16-128 of the Code to purchase optional service credit.

 

(Source:  Added at 48 Ill. Reg. 6116, effective April 5, 2024)

 

Section 1650.345  Service Credit for Periods Away From Teaching Due to Pregnancy

 

a)         Service credit of up to three years shall be granted for periods beginning prior to July 1, 1983, during which a teacher ceased covered employment due to pregnancy.  The maximum lifetime amount of credit available for any type of leave of absence, including pregnancy related absences, is 3.000 years.  Type of leave of absences include pregnancy, leave of absence, involuntary layoff, and adoption.

 

b)         For purposes of determining eligibility to receive optional service credit under the provisions of 40 ILCS 5/16-127(b)(5)(iii), the following definitions shall apply:

 

1)         "Pregnancy" shall mean the period beginning at the moment of conception and continuing through termination of the pregnancy or delivery of the child.

 

2)         "Due to pregnancy" shall mean due to the state of being pregnant and recovery therefrom due to the termination of a pregnancy or due to the delivery of a child.

 

3)         "Covered employment" means employment in a position requiring membership contributions to the System as a condition of employment.

 

4)         "Teaching service creditable under this System or the State Universities Retirement System" means employment in a position requiring membership contributions to the System or the State Universities Retirement System as a condition of employment.

 

c)         The documents necessary to establish service credit under this Section shall include:

 

1)         School employment records;

 

2)         Medical records;

 

3)         Birth or death certificates; and/or

 

4)         Other contemporaneous documentation that reliably supports the service credit to be established while eliminating the possibility of mistake or fraud.

 

d)         For purposes of granting service credit for periods away from teaching due to pregnancy, the statutory return-to-teaching requirement is met when the member returns to teaching service creditable under this System or the State Universities Retirement System for the period the member was away from teaching due to pregnancy or one year, whichever is less.

 

(Source:  Amended at 41 Ill. Reg. 14256, effective November 8, 2017)

 

Section 1650.346  Service Credit for Periods Away From Teaching Due to Adoption

 

a)         Service credit of up to three years shall be granted for periods beginning prior to July 1, 1983, during which a teacher ceased covered employment for the purpose of adopting an infant under three years of age or caring for a newly adopted infant  under three years of age.  The maximum lifetime amount of credit available for any type of leave of absence, including pregnancy related absences, is 3.000 years.  Type of leave of absences include pregnancy, leave of absence, involuntary layoff, and adoption.

 

b)         For purposes of determining eligibility to receive optional service credit under the provisions of 40 ILCS 5/16-127(b)(5)(iv), the following definitions shall apply:

 

1)         "Ceased covered employment" shall mean the submission of a resignation that terminated employment in a position requiring membership contributions to the System as a condition of employment.

 

2)         "For the purpose of adopting an infant under three years of age" shall mean the termination of covered employment:

 

A)        To meet the requirements of an adoption agency or similar entity resulting in the adoption of an infant who is under the age of three at the time the member terminates covered employment;

 

B)        To formally commence judicial or administrative proceedings to adopt an infant who is under the age of three at the time the adoption proceedings were initiated; or

 

C)        To care for an infant under the age of three while an adoption proceeding is ongoing which results in the adoption of the infant.

 

3)         "Caring for a newly adopted infant under three years of age" shall mean providing care to an adopted infant of less than three years of age when the interruption of service begins within 180 days after the court order declaring the member the adoptive parent of such an infant.

 

4)         "Teaching service creditable under this System or the State Universities Retirement System" means employment in a position requiring membership contributions to the System or the State Universities Retirement System as a condition of employment.

 

c)         The documents necessary to establish service credit under this Section shall include:

 

1)         Employment records;

 

2)         Birth certificates;

 

3)         Court records;

 

4)         Adoption agency records;

 

5)         Governmental records; and/or

 

6)         Other contemporaneous documentation that reliably supports the service credit to be established while eliminating the possibility of mistake or fraud.

 

d)         For purposes of granting service credit for periods away from teaching due to adoption, the statutory return-to-teaching requirement is met when the member returns to teaching service creditable under this System or the State Universities Retirement System for the period the member was away from teaching due to adoption or one year, whichever is less.

 

(Source:  Amended at 41 Ill. Reg. 14256, effective November 8, 2017)

 

Section 1650.350  Service Credit for Unused Accumulated Sick Leave Upon Retirement

 

a)         To be creditable for retirement purposes, sick leave days must actually be available for use by a member in the event of illness.  Service credit is not available and shall not be computed for sick leave days added to the record of a member for the purpose of increasing a member's retirement service credit. To determine if any sick leave days granted by an employer in excess of the member's normal annual sick leave allotment during a member's final years of employment are actually available for use and reportable to the System as service credit, the System shall apply the following formula:

 

1)         from the date upon which the sick leave days were granted, the number of days remaining in the school term or the member's employment agreement, whichever is greater, until termination shall be determined;

 

2)         from the resulting number of days the System shall subtract the number of sick leave days previously accrued by the member; and

 

3)         the difference is the maximum number of sick leave days that may be reported in addition to those days previously accrued, provided that the employer will allow the member to use those days in the event of illness prior to termination.

 

b)         Unused and uncompensated sick leave days are not eligible for service credit at retirement when the member receives compensation for those days.  Effective July 1, 1998, if a member receives payment for accumulated sick leave days that is also reportable to the System as creditable earnings, no service credit shall be available for the days so compensated.

 

c)         For purposes of calculating a retirement annuity, the System shall not grant service credit for any days withdrawn by the member from a sick leave bank in excess of the days deposited in the sick leave bank and unused by the member.

 

d)         Accumulated business, personal, or other non-vacation leave days are governed by the same standards set forth in subsections (a) and (b) for sick leave days, but only if they were actually available for use by a member in the event of illness.

 

e)         Accumulated, unused vacation days are not creditable with the System.

 

(Source:  Amended at 43 Ill. Reg. 5115, effective April 22, 2019)

 

Section 1650.351  Employer Contribution for Excess Sick Leave

 

a)         The phrase "normal annual sick leave allotment" shall mean the amount of annual sick leave granted by a TRS employer under a collective bargaining agreement, contract or employment policies, including any business, personal or other non-vacation leave days that may be used as sick leave.

 

b)         If an employer grants sick leave days in excess of the normal annual sick leave allotment as defined in subsection (a) in the last four school years prior to retirement, the employer is subject to the employer contribution provided in Section 16-128(d-10) of the Code.

 

c)         The employer contribution required in Section 16-128(d-10) shall be computed as follows:

 

The member's highest salary rate reported by the granting employer during the four-year sick leave review period in subsection (c) x the total normal cost rate (the employer's normal cost as defined in Section 1650.183 plus the member contribution required under Section 16-152 of the Code) applicable to the last fiscal year of contributing service x the portion of sick leave service credit attributed to sick days in excess of the normal annual allotment granted by that specific employer = employer's contribution.

 

d)         If more than one employer in the last four school years prior to retirement grants sick leave days in excess of the normal annual sick leave allotment, the contribution from each employer will be determined from sick leave days granted earliest to latest.

 

e)         An award of sick days as part of a retirement incentive shall not constitute a normal annual sick leave allotment.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.355  Purchase of Optional Service - Required Minimum Payment

 

The required minimum payment upon a member's outstanding optional service account balance shall be $50.00 or the balance due, whichever is less.

 

(Source:  Added at 21 Ill. Reg. 2422, effective January 31, 1997)

 

Section 1650.356  Payroll Deduction Program (Repealed)

 

(Source:  Repealed at 26 Ill. Reg. 11476, effective July 11, 2002)

 

Section 1650.357  Employer Payment of Member's Optional Service and/or Upgrade Contribution Balance (Repealed)

 

(Source:  Repealed at 26 Ill. Reg. 11476, effective July 11, 2002)

 

Section 1650.360  Settlement Agreements and Judgments

 

a)         In the event a member and employer enter into a settlement agreement to resolve employment issues which affect service and earnings credit, the following provisions shall govern the computation of creditable service and the reporting of creditable earnings.

 

b)         To ensure the reportability of service and earnings credit in settlement agreements covering a retroactive time period, the settlement agreement must contain the following:

 

1)         the time period for which the member would have received salary or service credit;

 

2)         a statement the settlement is an award of back salary; and

 

3)         the amount of salary the member would have been paid during the period covered by the settlement agreement had the employment issue not arisen.

 

c)         Contributions on retroactive settlement agreements are based upon the salary a member would have otherwise earned but for the employment issue.

 

d)         All required contributions due on retroactive settlement agreements must be paid within one year after the date of the settlement agreement; otherwise interest shall be charged at the applicable statutory rate from the date of the settlement agreement.

 

e)         To ensure the reportability of service and earnings credit in settlement agreements covering a prospective time period, the settlement agreement must contain the following:

 

1)         the time period for which the member is to receive service credit, not to exceed one year.

 

2)         a statement confirming the member is to be employed as a teacher.

 

3)         a statement that the member will continue to receive the same salary on regular pay dates and fringe benefits to which he or she would be entitled.

 

4)         If a resignation date is contained in the settlement agreement, it must not be prior to the end of the time period covered by the settlement agreement.

 

f)         Service credit is not presumed available nor salary presumed reportable for prospective settlement agreements covering in excess of one year.

 

g)         To ensure the reportability of service and earnings credit awarded pursuant to a judgment of a court of competent jurisdiction, the judgment order must contain:

 

1)         the time period for which the court determines the member should have received salary or service credit.

 

2)         a statement the judgment is an award of salary.

 

3)         the amount of salary the member would have received during the period covered by the judgment.

 

h)         Contributions on judgments are based upon the salary a member would have otherwise earned but for the issue being litigated.

 

(Source:  Amended at 22 Ill. Reg. 7243, effective April 9, 1998)

 

Section 1650.370  Calculation of Average Salary (Renumbered)

 

(Source:  Section 1650.370 renumbered to Section 1650.460 at 18 Ill. Reg. 6349, effective April 15, 1994)

 

Section 1650.380  Definition of Actuarial Equivalent (Repealed)

                       

(Source:  Repealed at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.390  Independent Contractors

 

Any individual claiming to be an independent contractor exempt from System membership or the post-retirement work limits governing annuitants as set forth in 40 ILCS 5/16-118 must file Form SS-8 (Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding) with the Internal Revenue Service (IRS) seeking confirmation of independent contractor status.  An IRS Form SS-8 independent contractor determination must be filed with the System before an individual can be considered to be exempt from System membership or Article 16 post-retirement work limits.

 

(Source:  Added at 21 Ill. Reg. 2422, effective January 31, 1997)

 

Section 1650.391  Optional 2.2 Upgrade of Earned and Credited Service

 

a)         Electing to upgrade.

 

1)         A member's 2.2 upgrade cost becomes fixed on the date the member elects to upgrade and remains fixed until the expiration of the 60-month period commencing on the August 15 following election or full payment of the upgrade cost, whichever is first.  The 60-month period will be extended due to suspension of a payroll deduction agreement as provided in Section 1650.1202(d).

 

2)         Once a member has elected to upgrade his or her service credit in accordance with Section 16-129.1 of the Illinois Pension Code [40 ILCS 5/16-129.1], the member is prohibited from electing another upgrade until the fixed cost period described in subsection (a)(1) for the upgrade election has expired.

 

3)         After filing an upgrade election, a member may upgrade any optional or refunded service added to the member's service credit record within the period provided in subsection (a)(1) at the same salary rate used to determine the original upgrade cost, provided the additional service is purchased within the same five-year period.

 

b)         Determining the contribution necessary for upgrade.

 

1)         The "member's highest salary rate in the 4 consecutive school years immediately prior to but not including the school year in which the election occurs" shall be based upon the 4 most recent employer's annual reports, as amended, required to be filed in accordance with Section 16-155 of the Pension Code [40 ILCS 5/16-155].

 

2)         When determining the contribution necessary for the upgrade, that part of a member's salary with the same employer that exceeds the annual full-time salary rate for the preceding year by more than 20% shall be excluded.

 

3)         If a member has less than one year of creditable service in any of the 4 consecutive school years immediately prior to but not including the school year in which the election occurs, and was a part-time non-contractual teacher or a substitute teacher in such year, the annualized salary rate for the school year shall be determined by dividing the creditable service fraction into the salary paid to the member during that school year.

 

4)         The service credit given to a member at retirement pursuant to Section 16-127(b)(6) of the Pension Code [40 ILCS 5/16-127(b)(6)] shall be disregarded for the purpose of the calculation of the optional contribution necessary for the upgrade feature.

 

c)         Failing to make contribution.

 

1)         A member has failed to make the full contribution in a timely fashion:

 

A)        if the full contribution is not paid within the effective period of the election; or

 

B)        upon termination of employment as a teacher for any cause other than death or retirement, if the member requests in writing that the election be terminated at least 4 months after ceasing to teach.

 

2)         If the member has failed to make the full contribution in a timely fashion, the election shall be terminated and shall be no longer in effect.

 

3)         If the member has failed to make the full contribution in a timely fashion, the payments made under this Section shall be refunded to the member, without interest [40 ILCS 5/16-129.1].  However, if the member is able to re-elect, and does re-elect, for the 2.2 upgrade feature prior to the refund being made, the amount of the refund shall be used as a partial lump sum contribution towards the cost of the 2.2 upgrade feature.

 

4)         If the member dies before making the full contribution, the payments under this Section, together with regular interest thereon, shall be refunded to the member's designated beneficiary for benefits under Section 16-138 of the Pension Code [40 ILCS 5/16-129.1].

 

d)         Interest on upgrade refunds shall be calculated from the first day of the month following the date of any payment to the date of refund as provided in 40 ILCS 5/16-129.1 based upon the earliest to the latest payments.

 

e)         In the event an actuarial calculation provides a member a greater benefit than an upgraded final average salary calculation, the System shall refund the upgrade cost plus interest to the member.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.392  2.2 Upgrade of Optional Service Not Credited at Initial Upgrade

 

a)         This Section shall apply only to a member who has elected to upgrade the graduated rate applicable to all of the member's years of service earned and credited before July 1, 1998, pursuant to Section 16-129.1 of the Pension Code [40 ILCS 5/16-129.1] and 80 Ill. Adm. Code 1650.391 and who has less than 20 years of service earned and credited before July 1, 1998.

 

1)         A member participating in a pre-July 1, 1998 service upgrade may upgrade any optional service credit added within the 5-year period provided in Section 16-129.1(b)(ii) at the same salary rate as that of the original upgrade, provided that the added optional service upgrades are paid off within the 5-year period.

 

2)         The effective period of the election shall begin as of the date on which the election is received by the System and shall end upon the expiration of a 60-month period commencing on the August 15 following the date of election or payment in full, whichever is first.  The 60-month period will be extended due to suspension of a payroll deduction agreement as provided in Section 1650.1202(d).

 

b)         A member subject to this Section shall be required to pay an upgrade charge for any optional service credited to the member's service on or after July 1, 1998, if the time of employment or other qualifying event upon which the service is based is prior to July 1, 1998, unless the charge is reduced or eliminated by the contribution reduction provided in Section 16-129.1(b) of the Pension Code [40 ILCS 5/16-129.1(b)].

 

1)         The "member's highest salary rate in the 4 consecutive school years immediately prior to but not including the school year in which the election occurs" shall be based upon the 4 most recent employer's annual reports, as amended, required to be filed in accordance with Section 16-155 of the Pension Code [40 ILCS 5/16-155].

 

2)         When determining the contribution necessary for the upgrade, that part of a member's salary with the same employer that exceeds the annual full-time salary rate for the preceding year by more than 20% shall be excluded.

 

3)         If a member has less than one year of creditable service in any of the 4 consecutive school years immediately prior to but not including the school year in which the election occurs and was a part-time non-contractual teacher or a substitute teacher in such year, the annualized salary rate for the school year shall be determined by dividing the creditable service fraction into the salary paid to the member during that school year.

 

4)         The service credit given to a member at retirement pursuant to Section 16-127(b)(6) of the Pension Code [40 ILCS 5/16-127(b)(6)] shall be disregarded for the purpose of the calculation of the contribution necessary for the upgrade feature.

 

c)         Failing to make contribution.

 

1)         A member has failed to make the full contribution in a timely fashion:

 

A)        if the full contribution is not paid within the effective period; or

 

B)        upon termination of employment as a teacher for any cause other than death or retirement, if the member requests in writing that the election be terminated at least 4 months after ceasing to teach.

 

2)         If the member has failed to make the full contribution in a timely fashion, the election shall be terminated and shall be no longer in effect.

 

3)         If the member fails to make the full contribution within the appropriate time period described in subsection (c)(1), and:

 

A)        if the payment is for the repayment of a refund, the amount contributed for both the refund and upgrade shall be refunded to the member, without interest; or

 

B)        if the payment is for optional service other than a refund, and:

 

i)          if the member has made the full upgrade contribution for the years of service earned and credited prior to July 1, 1998, pursuant to 80 Ill. Adm. Code 1650.391, the portion of the upgraded optional service credit determined by the System to have been paid shall be credited to the member's account; or

 

ii)         if the member fails to make the full contribution for the years of service earned and credited prior to July 1, 1998, pursuant to 80 Ill. Adm. Code 1650.391, the payments made for the upgrade shall be refunded to the member, without interest.

 

4)         However, if the reason for the failure is the death of the member:

 

A)        if the member has made the full upgrade contribution for the years of service earned and credited prior to July 1, 1998, pursuant to 80 Ill. Adm. Code 1650.391, the portion of the upgraded optional service credit determined by the System to have been paid shall be credited to the member's account; or

 

B)        if the member fails to make the full contribution for the years of service earned and credited prior to July 1, 1998, pursuant to 80 Ill. Adm. Code 1650.391 or if the payment is for a refund, the payments made for the upgrade, together with regular interest thereon, shall be refunded to the member's designated beneficiary for benefits under Section 16-138 of the Pension Code [40 ILCS 5/16-129.1].

 

5)         The date of election for the purpose of determining the amount of optional service credit paid shall be deemed to be:

 

A)        if pursuant to subsection (c)(3)(B)(i), the date upon which the failure to contribute in a timely fashion occurred; or

 

B)        if pursuant to subsection (c)(4)(A): the date of the election that terminated upon the member's death, if the member had elected the upgrade prior to his or her death; or the date of death if the member had not previously elected the upgrade.

 

d)         Interest on upgrade refunds shall be calculated from the first day of the month following the date of any payment to the date of refund as provided in 40 ILCS 5/16-129.1(b) based upon the earliest to the latest payments.

 

e)         In the event an actuarial calculation provides a member a greater benefit than an upgraded final average salary calculation, the System shall refund the upgrade cost plus interest to the member.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

SUBPART E: CONTRIBUTION CREDITS AND PAYMENTS

 

Section 1650.410  Return of Contributions for Duplicate or Excess Service

 

a)         In the event contributions to the System are made in error for service covered by another public employee pension system in Illinois, such contributions shall be returned to the member.

 

b)         If a member contributes to the System for optional teaching service, but is unable to claim all of this service at the date of retirement or death because the service is determined to be excess service, then the contributions for such excess service or a portion thereof may upon request be returned to the member or the member's beneficiaries.

 

1)         The term "excess service" shall mean that period of service exceeding the amount of service allowed to be purchased under Section 16-127(b)(2) [40 ILCS 5/16-127(b)(2)].

 

2)         The return of contributions under subsection (b) shall be limited to the amount attributable to the purchase of optional service under Section 16-127 [40 ILCS 5/16-127].

 

3)         No interest shall be payable upon the amount returned.

 

(Source:  Amended at 38 Ill. Reg. 21239, effective October 21, 2014)

 

Section 1650.415  Return of Optional Increase in Retirement Annuity Contributions

 

a)         A member who has made contributions toward the optional increase in retirement annuity provided in 40 ILCS 5/16-129.1, and who determines such optional annuity increase is not in his or her best financial interest, may elect at retirement not to qualify for such increase in annuity and request a return of the member's optional increase in retirement annuity contributions from the System.

 

b)         Upon such request, the member's optional increase in retirement annuity contributions will be returned to the member without interest.

 

(Source:  Added at 25 Ill. Reg. 203, effective December 22, 2000)

 

Section 1650.416  Optional Increase in Retirement Annuity – 1% Contribution Reduction

 

a)         Section 16-129.1(b) of the Pension Code [40 ILCS 5/16-129.1(b)] entitles a member who chooses to upgrade creditable service accrued prior to July 1, 1998 to the 2.2% level established by Section 16-133(a)(B)(1) of the Code to a reduction in the cost of the upgrade.  The reduction shall equal 1% of the salary used to calculate the contribution required for the upgrade for each 3 years of regular creditable service earned after June 30, 1998.  The System will calculate this reduction at the time of retirement, when the number of years of post-June 30, 1998 service is known, and refund that amount to the member.

 

b)         If a member has upgraded creditable service to the 2.2% level more than once (i.e., an upgrade of regular service credit and a subsequent purchase and upgrade of optional service credit) at times when different salary rates were used in determining the contribution required for the individual upgrades, the System will calculate the reduction by the following formula:

 

•     the number of years of creditable service after June 30, 1998

 

•     divided by 3 (omitting any fractional period)

 

•     divided by the number of years of upgraded service

 

•     multiplied by the member's total upgrade contribution

 

EXAMPLE:

 

A member has 15 years of pre-July 1, 1998 service and chooses to upgrade that service to the 2.2% flat formula on August 15, 1998.  The cost of the upgrade is determined as follows:

 

$50,000 (highest salary of the 4 years prior to 1998) x 1% = $500 x 15 years = $7500

 

The $7500 cost is paid in full by August 15, 2003 as required by Section 16-129.1(b) of the Code.

 

In early 2006, the member purchases 5 years of pre-July 1, 1998 optional service credit and must upgrade that past service to the 2.2% level as well.  The cost to upgrade the 5 years of optional service credit is determined as follows:

 

$60,000 (highest salary of the 4 years prior to 2006) x 1% = $600 x 5 years = $3000

 

The $3000 cost is paid in full by the retirement date.

 

The member retires late in 2008, having accumulated 10 years of service between July 1, 1998 and the date of retirement.  The reduction to be refunded to the member is determined as follows:

 

10 years of service

 

÷ 3 = 3% reduction (fractional period deleted)

 

÷ 20 years of service credit upgraded = 15%

 

x $10,500 (total upgrade cost: $7500 + $3000)

 

= $1575

 

(Source:  Added at 28 Ill. Reg. 10055, effective June 29, 2004)

 

Section 1650.417  Mandatory Distributions Pursuant to Section 401(a)(9) of the Internal Revenue Code

 

When the System is required to make a mandatory distribution pursuant to section 401(a)(9) of the Internal Revenue Code and the member is eligible to receive either a single-sum benefit under 40 ILCS 5/16-136.4 or a refund under 40 ILCS 5/16-151, but fails to make the required election, the member shall be deemed to have elected a single-sum benefit under Section 16-136.4 of the Code.

 

(Source:  Amended at 43 Ill. Reg. 10791, effective September 23, 2019)

 

Section 1650.420  Interest on Deficiencies (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.430  Installment Payments (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.440  Small Deficiencies, Credits or Death Benefit Payments (Repealed)

 

(Source:  Repealed at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.450  Compensation Recognized As "Salary"

 

a)         "Salary" means any form of creditable compensation received by a member in consideration of services rendered as a teacher, subject to all applicable limits and restrictions imposed on qualified plans under the Internal Revenue Code.  "Salary" directly related to specific work performed during a school year is recognized on an accrual basis.  Other creditable compensation is recognized on a cash basis.  The System reserves the right to determine the year of salary recognition.  The following common examples are for illustration only and do not limit the System's right to evaluate and determine other forms of creditable and non-creditable compensation.

 

b)         Examples of creditable compensation recognized as "salary":

 

1)         The gross amount of compensation earned or accruing to the member during the school year in a function requiring certification as a teacher.

 

2)         Additional compensation earned during the school year for the performance of extra duties, not requiring teacher licensure, but which involve the supervision of students or are related to the academic program, provided the member has established active service credit with the System in the same school year.

 

3)         The amount of back salary awarded to a member as a result of a settlement or judgment obtained due to a disputed dismissal, suspension or demotion. Court costs, attorney's fees, other compensatory damages and punitive damages shall not be reportable as salary.  The back salary amount reported to the System under this Section shall be equal to the amount the member would have earned had the dispute not occurred, regardless of the actual amount paid.

 

4)         Lump-sum payments (e.g., retirement incentives, bonuses, payments for unused vacation and sick days) becoming due and payable to the member prior to or concurrent with receipt of final paycheck for regular earnings or last paid day of work, whichever occurs last.

 

5)         Contributions made by or on behalf of the member to qualified deferred compensation plans (sections 401(a) and 457(b) of the Internal Revenue Code), salary reduction plans or tax sheltered annuities under section 403(b) of the Internal Revenue Code.

 

6)         Amounts that would otherwise qualify as salary under subsections (b)(1) through (b)(5) but are not received directly by the member because they are used to finance benefit options in a flexible benefit plan; provided, however, that to be reportable, a flexible benefit plan cannot include non-qualifying deferred compensation.  For the System's purposes, a flexible benefit plan is an option offered by an employer to its employees covered under the System to receive an alternative form of creditable compensation in lieu of employer-provided insurance.

 

c)         Examples of non-creditable compensation not recognized as "salary":

 

1)         At termination, lump-sum payments (e.g., retirement incentives, bonuses, payments for unused vacation and sick days) becoming due and payable to the member subsequent to receipt of final paycheck for regular earnings or last paid day of work, whichever occurs last.

 

2)         Any lump sum payment made after the death of the member.

 

3)         Expense reimbursements, expense allowances, or fringe benefits unless included in a reportable flexible benefit plan.

 

4)         Any monies received by the member under the Workers' Compensation Act or the Workers' Occupational Diseases Act.

 

5)         Any amount paid in lieu of discontinued or decreased non-reportable benefits, or reported in lieu of previously non-reported compensation, where the conversion occurs in the member's final seven years of service.  If any form of non-creditable or non-reported compensation in any of the member's last seven creditable school years of employment exceeds that of any other subsequent year, the System will presume the difference to have been converted into salary in the subsequent year.  To overcome the presumption, the member must submit documentary evidence to the System that clearly and convincingly proves that the change in compensation structure was due to a change in a collectively bargained agreement applicable to all individuals covered by the agreement, a change in employer policies affecting a group of similarly situated members some of whom are not within seven years of retirement eligibility, or a change in family status, and not to increase final average salary.

 

6)         Any amount paid by an employer as the employer's one time contribution (or on behalf of the employee as the employee's one-time contribution) required by the System as part of the statutory early retirement option in Section 16-133.2 of the Act.

 

7)         Options to take salary in lieu of employment-related expense allowances or reimbursements.

 

8)         Employer payment of the member's Teachers Health Insurance Security Fund contribution.

 

9)         Commissions (i.e., payments to a member based upon a percentage formula).

 

10)         Contributions to and distributions from nonqualified deferred compensation arrangements.

 

11)         Employer contributions to and distributions from medical spending accounts.

 

(Source:  Amended at 48 Ill. Reg. 6116, effective April 5, 2024)

 

Section 1650.451  Reporting of Conditional Payments

 

Payments that are conditioned upon the occurrence of a future event (e.g., retirement) shall be reported in the school year paid to the member. However, if the condition upon which payment is predicated does not occur and the payment is repaid to the employer, an adjustment is required to remove the payment from the school year in which the payment was originally reported.

 

(Source:  Amended at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.460  Calculation of Average Salary

 

a)         The member's annual salary rate shall be used by the System when calculating average salary.   If a member has a full year of service credit and the annual salary includes leave of absence earnings and substitute earnings or part-time noncontractual earnings, the annual salary rate for average salary purposes will never be less than the salary rate the leave of absence earnings is based upon.  If a member receives less than one year of service credit in any school year, salary shall consist of creditable earnings.

 

b)         The highest four consecutive school years of service within the last ten years of creditable service shall be deemed the four highest consecutive credit years posted to the member's account.  Provided, however, if a member is credited with less than one school year, the System shall use partial consecutive years to establish four consecutive years of salary.

 

c)         For average salary calculation purposes, a school year is the period July 1 to the following June 30.

 

d)         When a member's employer consolidates or annexes with another employer, the consolidation or annexation shall not constitute a change of employer and the average salary shall be computed as though all salary were earned under the same employer.

 

e)         Where there are creditable earnings for less than a full year of service credit, and those earnings are used in the calculation of the average salary, the annual salary rate for those earning is considered in the calculation of any member and employer contributions under Sections 16-133.2, 16-133.3, 16-133.4 and 16-133.5 of the Act.

 

(Source:  Amended at 21 Ill. Reg. 2422, effective January 31, 1997)

 

Section 1650.470  Rollover Distributions

 

a)         An eligible recipient entitled to receive a refund of contributions, lump-sum benefit, or other nonperiodic distribution from the System may elect, subject to the provisions of this Section, to have all or a portion of the distribution paid in a direct rollover from the System to an eligible retirement plan designated in writing by the eligible recipient; provided, however, that any portion thereof which is a required distribution pursuant to any applicable provision of the Internal Revenue Code is not payable in a direct rollover. A distribution made to correct a failed nondiscrimination test or because legal limits on certain contributions were exceeded cannot be rolled over.

 

b)         If the distribution from the System is less than $200, it is not payable in a direct rollover.

 

c)         If the distribution from the System is at least $200 but less than $500, the entire sum must either be paid in a single direct rollover or to the eligible recipient.

 

d)         If the distribution is greater than $500, the eligible recipient may have a portion thereof paid to him or her and the balance paid in a direct rollover; provided, however, that the direct rollover must be at least $500.

 

e)         Multiple direct rollovers from the System to more than one eligible retirement plan are not allowed.

 

f)         An "eligible retirement plan" for purposes of this Section means:

 

1)         A plan described in 26 USC 402(c)(8)(B), which includes:

 

A)        An individual retirement account described in 26 USC 408(a);

 

B)        An individual retirement annuity described in 26 USC 408(b) (other than an endowment contract);

 

C)        A qualified trust under 26 USC 401(a);

 

D)        An annuity plan described in 26 USC 403(a);

 

E)        An eligible deferred compensation plan described in 26 USC 457(b) that is maintained by an eligible employer described in 26 USC 457(e)(1)(A);

 

F)         An annuity contract described in 26 USC 403(b); and

 

G)        Pursuant to 26 USC 408A(c)(6) and (e)(1), a Roth IRA as defined in 26 USC 408A(b).

 

2)         Any other type of plan that is designated as an eligible retirement plan by federal law.

 

g)         A "direct rollover" for purposes of this Section is a payment by the System to an eligible retirement plan specified by the eligible recipient as provided in subsection (a) of this Section.

 

h)         An "eligible recipient" for purposes of this Section is:

 

1)         A member of the System as defined in Section 16-107 of the Illinois Pension Code [40 ILCS 5/16-107];

 

2)         An alternate payee under a valid Qualified Illinois Domestic Relations Order (QILDRO) on file with the System in accordance with Section 1-119 of the Illinois Pension Code [40 ILCS 5/1-119], as allowed by 26 USC 402(e)(1)(B);

 

3)         A member's surviving spouse, as allowed by 26 USC 402(c)(9); or

 

4)         A non-spouse beneficiary, as defined in 26 USC 401(a)(9)(E), of a deceased member, provided the distribution is rolled to an individual retirement plan that is treated as an inherited individual retirement account or individual retirement annuity pursuant to 26 USC 402(c)(11).

             

i)          If the eligible recipient elects a direct rollover from the System as provided in this Section, the eligible recipient shall certify in writing the following:

 

1)         That he or she has read the "Special Tax Notice Regarding Payments from TRS"; and

 

2)         That the direct rollover is being made into an eligible retirement plan as defined in subsection (f) of this Section.

 

j)          If the eligible recipient elects a direct rollover from the System as provided in this Section, the eligible recipient shall identify the type of eligible retirement plan to which the direct rollover is being made and shall obtain the certification in writing of the entity that is to receive the direct rollover as to the following:

 

1)         That the entity receiving the direct rollover is legally eligible to receive such direct rollover;

 

2)         That the entity receiving the direct rollover has agreed to accept such direct rollover; and

 

3)         That the direct rollover is being made to an eligible retirement plan as defined in subsection (f) of this Section.

             

k)         In order to receive payment from the System in a direct rollover pursuant to this Section, the System must receive from the eligible recipient all of the following together, in the form or forms prescribed by the System:

 

1)         An application for lump-sum distribution;

 

2)         A rollover election;

 

3)         A certification from the eligible recipient as provided above in subsection (i) of this Section; and

 

4)         A certification from the entity receiving the direct rollover as provided in subsection (j) of this Section.

 

l)          Payments from the System that are part of a series of equal or substantially equal periodic payments made at least once a year cannot be paid in a direct rollover, if the payments will last for:

 

1)         The life or life expectancy of the person entitled to receive the payments;

 

2)         The lives or joint life expectancies of the person entitled to receive the payments and that person's beneficiary; or

 

3)         A period of ten years or more.

           

(Source:  Amended at 33 Ill. Reg. 15863, effective November 2, 2009)

 

Section 1650.480  Rollovers to the System

 

a)         The System will accept rollovers to purchase optional service credit, repay refunds, or pay any other employee contribution authorized by Article 16 of the Pension Code [40 ILCS 5/Art. 16].

 

b)         Members are required to establish an account or accounts receivable with the System prior to initiating a rollover.  The amount of the rollover cannot exceed the amount due the System.

 

c)         The System will accept member rollover contributions and/or direct rollovers of distributions as defined in 26 USC 402(f)(2)(A).

 

d)         Prior to accepting a rollover, the System may require the member to establish that the amounts to be transferred to the System meet the requirements of this Section, and may also require the member to provide an opinion of counsel satisfactory to the System that the amounts to be transferred meet the requirements of this Section.

 

e)         The System's acceptance of a rollover shall be subject to any applicable regulations, procedures, or other guidance issued by the Internal Revenue Service.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.481  Employer Contribution Required for Salary Increases in Excess of 6% or 3%

 

a)         The employer contribution required under 40 ILCS 5/16-158(f) will be determined as follows:

 

1)         Calculate the member's monthly benefit using salaries as reported, excluding that part of the member's salary that exceeds the member's annual full-time salary rate with the same employer for the preceding year by more than 20%.

 

2)         Calculate the member's monthly benefit using salaries as reported, excluding that part of the member's salary that exceeds the member's salary with the same employer for the preceding year by more than 6%.

 

3)         Subtract (a)(2) from (a)(1).

 

4)         Multiply (a)(3) by a Monthly Benefit Factor for the member's exact age at the retirement date.  The Monthly Benefit Factors are based on the actuarial assumptions of the System for life expectancy and investment return as determined by the System's actuaries pursuant to 40 ILCS 5/16-176.

 

5)         If a member's monthly benefit is calculated pursuant to 40 ILCS 5/16-133(a), this Section will not apply.

 

6)         If there is more than one employer during the final average salary period, each employer will pay its respective contribution based on salary increases granted by that employer in excess of 6%.

 

7)         If the member's benefit is increased as a result of applying the provisions of Section 20 of the Retirement Systems Reciprocal Act [40 ILCS 5/20], no additional employer contribution will be due.

 

8)         If the member's benefit is reduced as a result of applying proportional reductions required by 40 ILCS 5/20-124, no employer contribution will be assessed for any salaries attributable to any reciprocal employment used in the calculation.

 

9)         If the average salary is calculated using salary earned through employment covered by another participating system under 40 ILCS 5/20, no employer will be assessed for any salaries attributable to that employment.

 

10)        The member's salary for any school year used to determine final average salary shall be excluded for purposes of determining the employer contribution required for salary increases in excess of 6% in any year in which the member's creditable earnings are less than 50% of the preceding year's mean salary for downstate teachers as determined by the survey of school district salaries provided in Section 2-3.103 of the School Code.

 

b)         The employer contribution required under 40 ILCS 5/16-158(f-1) will be determined as follows:

 

1)         Calculate the member's monthly benefit using salaries as reported, excluding that part of the member's salary that exceeds the member's annual full-time salary rate with the same employer for the preceding year by more than 20%.

 

2)         Calculate the member's monthly benefit using salaries as reported, excluding that part of the member's salary that exceeds the member's salary with the same employer for the preceding year by more than 3%.

 

3)         Subtract (b)(2) from (b)(1).

 

4)         Multiply (b)(3) by a Monthly Benefit Factor for the member's exact age at the retirement date.  The Monthly Benefit Factors are based on the actuarial assumptions of the System for life expectancy and investment return as determined by the System's actuaries pursuant to 40 ILCS 5/16-176.

 

5)         If a member's monthly benefit is calculated pursuant to 40 ILCS 5/16-133(a), this Section will not apply.

 

6)         If there is more than one employer during the final average salary period, each employer will pay its respective contribution based on salary increases granted by that employer in excess of 3%.

 

7)         If the member's benefit is increased as a result of applying the provisions of Section 20 of the Retirement Systems Reciprocal Act [40 ILCS 5/20], no additional employer contribution will be due.

 

8)         If the member's benefit is reduced as a result of applying proportional reductions required by 40 ILCS 5/20-124, no employer contribution will be assessed for any salaries attributable to any reciprocal employment used in the calculation.

 

9)         If the average salary is calculated using salary earned through employment covered by another participating system under 40 ILCS 5/20, no employer will be assessed for any salaries attributable to that employment.

 

10)        The member's salary for any school year used to determine final average salary shall be excluded for purposes of determining the employer contribution required for salary increases in excess of 3% in any year in which the member's creditable earnings are less than 50% of the preceding year's mean salary for downstate teachers as determined by the survey of school district salaries provided in Section 2-3.103 of the School Code.

 

(Source:  Amended at 42 Ill. Reg. 22238, effective November 20, 2018)

 

Section 1650.482  Contracts and Collective Bargaining Agreements – Loss of Exemption from Employer Contributions

 

A contract or collective bargaining agreement shall lose its exemption from employer contributions under 40 ILCS 5/16-128(d-10), 16-158(f), and/or 16-158(f-1) upon the following:

 

a)         An increase in an existing salary or sick leave retirement incentive or the addition of a new salary or sick leave retirement incentive.

 

b)         A renegotiated increase in salary (excluding employer payment of the .40% of salary toward the cost of the early retirement without discount option under 40 ILCS 5/16-152(a)(4)) or sick leave unless specifically provided for in a salary reopener provision in the contract or collective bargaining agreement or as permitted in Section 1650.483(c).

 

c)         Failure to follow the retirement incentive age, service, notification or payment provisions contained in the contract, collective bargaining agreement or policy.

 

(Source:  Amended at 42 Ill. Reg. 22238, effective November 20, 2018)

 

Section 1650.483  Employer Contributions for Salary Increases in Excess of 6% or 3% and Excess Sick Leave – Exemption from Contributions

 

a)         The exemptions from employer contributions provided under 40 ILCS 5/16-128(d-10) and 40 ILCS 5/16-158(f) for those members who notify their employer of the intent to retire under the terms of an exempt contract or collective bargaining agreement but do not receive the retirement incentives until after the expiration of the contract or collective bargaining agreement shall cease no later than three school years after the expiration of the contract or collective bargaining agreement or June 30, 2011, whichever is earlier.

 

b)         The exemptions from employer contributions provided under 40 ILCS 5/16-158(f-1) for those members who notify their employer of the intent to retire under the terms of an exempt contract or collective bargaining agreement but do not receive the retirement incentives until after the expiration of the contract or collective bargaining agreement shall cease no later than four consecutive school years after the expiration of the contract or collective bargaining agreement.

 

c)         If a contract or collective bargaining agreement terminates or is amended during the school year, for the purpose of calculating the employer contribution:

 

1)         If the contract or collective bargaining agreement expires July 1 through December 31, the System will consider the expiration date to be the last day of the prior fiscal year.

 

2)         If the contract or collective bargaining agreement expires January 1 through June 29, the System will consider the expiration date to be the last day of the current fiscal year.

 

d)         An amendment to an exempt contract or collective bargaining agreement to reduce a retirement incentive for purposes of 40 ILCS 5/16-128(d-10), 16-158(f), or 16-158(f-1) shall not terminate an employer's exempt status.

 

(Source:  Amended at 42 Ill. Reg. 22238, effective November 20, 2018)

 

Section 1650.484  Members Not Covered by Collective Bargaining Agreements or Employment Contracts

 

a)         For members not covered by collective bargaining agreements or employment contracts, the System will accept employment policies as evidence of a contractual agreement under which salary increases paid and sick leave granted shall be exempt from employer contributions under 40 ILCS 5/16-128(d-10) and 16-158(f), provided those policies were in effect prior to June 1, 2005.

 

b)         Employees operating under employment policies will be deemed to be employed under a one school year contract for exemption from employer contribution purposes under 40 ILCS 5/16-128(d-10) and 16-158(f) unless the salary increases and/or granting of sick leave under the policy are governed by provisions in the employer's collective bargaining agreement, in which case the employer exemption shall end at the same time the exemption ends for that collective bargaining agreement.

 

c)         For members not covered by collective bargaining agreements or contracts, the System will accept employment policies in effect prior to June 4, 2018 as evidence of a contractual agreement under which salary increases paid shall be exempt from employer contributions under 40 ILCS 5/16-158(f-1).

 

d)         Payments made to employees operating under an employment policy in effect prior to June 4, 2018 will be exempt from the provisions of 40 ILCS 5/16-158(f-1) if notice was provided as required by the employment policy prior to June 4, 2018 and payments are made pursuant to the term of the policy prior to June 30, 2022.

 

(Source:  Amended at 42 Ill. Reg. 22238, effective November 20, 2018)

 

Section 1650.485  Employer Contributions for Salary Increases in Excess of 6% or 3% − Receipt of Bill

 

For purposes of determining the 30 day period to dispute the amount of a bill for an employer contribution for salary increases in excess of 6% or 3% and the 90 day interest grace period provided in 40 ILCS 5/16-158(f) and 16-158(f-1), an employer shall be deemed to have received a bill for employer contributions on the first day of the month following the bill date indicated on the bill.

 

(Source:  Amended at 42 Ill. Reg. 22238, effective November 20, 2018)

 

Section 1650.486  Employer Payment of Member's Optional Service, Refund and/or Upgrade Contribution Balance

 

Once per school year, an employer may make a payment toward a member's 2.2 upgrade, optional service and/or refund balance.  The employer contribution under this option may be picked up pursuant to section 414(h)(2) of the Internal Revenue Code of 1986, as amended (26 USC 414(h)(2)), or paid on an after-tax basis as certified by the employer.  The employer shall certify to the System whether the payment being made is done so on a tax-deferred or after-tax basis by completing and returning the appropriate form with the payment.

 

(Source:  Added at 41 Ill. Reg. 718, effective January 11, 2017)

SUBPART F: ANNUITANTS AND BENEFICIARIES

 

Section 1650.505  Beneficiary (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.510  Re-entry Into Service (Repealed)

                       

(Source:  Repealed at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.511  Separation from Service

 

a)         Under the provisions of section 401(a) of the Internal Revenue Code (26 USC 401(a)), a member must "separate from service" to be eligible to receive a retirement benefit from the System. 

 

b)         To meet the "separation from service" requirement of the Internal Revenue Code, an annuitant cannot return to work with his or her last employer in a certified position unless:

 

1)         Re-employment was not discussed nor arranged until 30 days after the annuitant's date of retirement.

 

2)         The annuitant is not employed by the annuitant's last employer prior to 30 days after the annuitant's last day of contributing service.  However, as provided in Section 16-118(a)(1) of the Pension Code [40 ILCS 5/16-118(a)(1)], an annuitant may not accept employment as a teacher during the school year in which the member terminated service.

 

3)         The annuitant is employed  no more than the limit provided in Section 16-118(a)(2) of the Pension Code in the school year following the school year in which the member terminated service.

 

c)         An annuitant and employer cannot avoid the limitations in post-retirement employment provided in Section 16-118 of the Pension Code by allowing the annuitant to relinquish his or her teaching certificate and continue in the same position.

 

d)         An annuitant and employer cannot avoid the limitations in post-retirement employment provided in Section 16-118 of the Pension Code by changing the annuitant's pre-retirement job title or by a minor adjustment in the annuitant's pre-retirement job duties causing the annuitant's former position to no longer require certification under the laws governing the certification of teachers.

 

e)         Failure to "separate from service" shall nullify an annuitant's retirement and constitute a return to service under Section 16-150(d) of the Pension Code.

           

(Source:  Amended at 36 Ill. Reg. 18914, effective December 14, 2012)

 

Section 1650.512  Verification of Compliance with Post-Retirement Employment Limitations

 

a)         Section 16-118 of the Pension Code [40 ILCS 5/16-118] sets forth the amount of time an annuitant is allowed to be employed as a teacher by employers specified in 40 ILCS 5/16-106.

 

b)         To ensure compliance with the post-retirement employment limitations established in Section 16-118, upon demand of the System, annuitants are required to furnish the following:

 

1)         A certification signed by the annuitant verifying that post-retirement employment limitations were not exceeded and acknowledging that the filing of a false certification is a Class 3 felony under Section 1-135 of the Pension Code.

 

2)         Copies of the annuitant's federal income tax returns.

 

3)         Other substantiating documentation, such as employment records, timesheets, etc.

 

(Source:  Added at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.520  Suspension of Benefits

 

a)         Monthly benefit payments may be suspended when four monthly warrants remain uncashed.  The System shall notify the benefit recipient in writing of the suspension. To remove the suspension of benefits, the System may require the recipient to provide a valid depository agreement authorizing funds to be electronically deposited into the recipient's bank account in lieu of paper warrants.

 

b)         Recipients of a non-occupational disability benefit, occupational disability benefit, disability retirement annuity, or monthly survivor benefit who fail to return documentation of continued eligibility within the specified time period shall have their monthly benefit payment suspended.  Upon receipt of the required documentation and upon determination of continued eligibility, these and subsequent payments shall be made.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.530  Power of Attorney

 

a)         Any annuitant or beneficiary receiving a monthly benefit through payment to his or her attorney-in-fact acting under a power of attorney shall be required to notify the System in writing that such power of attorney is in full force and effect, when reasonably requested to do so by the System.  In default of such notice, payment to the attorney-in-fact shall be suspended until notice is received, whereupon payments will be resumed from the date of the last payment.

 

b)         A member information and beneficiary designation (nomination of beneficiary) form may be signed by an attorney-in-fact, provided the attorney-in-fact is given specific power to execute a nomination of beneficiary form on behalf of the member or annuitant.

 

c)         If a member or annuitant is not capable of signing the form, he or she may make a mark on the signature line if the mark is witnessed by two individuals who will not receive any benefit under the member information and beneficiary designation.

 

(Source:  Amended at 41 Ill. Reg. 718, effective January 11, 2017)

 

Section 1650.540  Conservators/Guardians

 

Any legally appointed conservator or guardian receiving benefits for an annuitant or a beneficiary adjudged incompetent shall be required to furnish a court certification that the appointment is in force and effect, when reasonably requested to do so by the System.  In default of such notice, payment shall be suspended until satisfactory certification is received, whereupon payments will be resumed from the date of the last payment.

 

(Source:  Amended at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.550  Presumption of Death

 

a)         Whenever any member, annuitant, or beneficiary has been so out of communication with the System that the fact of his or her being alive cannot be ascertained, he or she shall be presumed to be dead.  In the event this presumption of death shall be removed by proof that he or she is alive, benefits shall be paid or resumed from the date of the last payment.

 

b)         Whenever any inactive member reaches age 75 and has not been in communication with the System for longer than 20 years, he or she shall be presumed dead and the member's account shall be terminated with no interest credited.  In the event this presumption shall be removed by proof the member is alive or deceased, his or her account shall be reinstituted with interest and included in the System's next required minimum distribution process in accordance with Section 1650.417, Section 1-116.1 of the Code, and Internal Revenue Code Section 401(a)(9).

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.560  Benefits Payable on Death

 

Survivor benefits shall be paid in accordance with the applicable provisions of Article 16 in effect on the date of the member's or annuitant's death.  If the member or annuitant has failed to name a beneficiary, the System may make payment through a small estate affidavit provided the requirements of 755 ILCS 5/Art. 25 are met.   If the assets of the estate are greater than the limit allowed for small estate affidavits, letters of administration or proof of heirship deemed reliable by the System shall be required by the System in order to process any death benefits.

 

(Source:  Amended at 21 Ill. Reg. 2422, effective January 31, 1997)

 

Section 1650.561  Valid Beneficiary Designations

 

To be considered valid and timely filed, a beneficiary designation under 40 ILCS 5/16-138, 16-141 and 16-142 must be received and date stamped by the System prior to or on the date of the death of the member or annuitant.

 

(Source:  Added at 32 Ill. Reg. 7979, effective May 6, 2008)

 

Section 1650.570  Survivors' Benefits

 

Survivors annuity payments on account of dependent children accepted by the spouse after the children have legally been removed from the spouse's care will be considered benefit over-payments and will be subject to collection in accordance with Section 1650.595.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.571  Payment of Monthly Survivor Benefits to a Trust

 

a)         A member may designate a trust to receive monthly survivor benefits on behalf of a dependent beneficiary.

 

b)         However, to do so, the trust must provide that the survivor benefit annuity will be used solely for the care and benefit of the member's dependent beneficiary.

 

c)         Prior to the processing of a claim for survivor benefits, the trustee of the trust shall furnish the System that part of the trust demonstrating that the conditions set forth in subsection (b) of this Section are met.

 

(Source:  Added at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.575  Full-time Student - Receipt of Survivors Benefits Until Age 22

 

a)         For purposes of 40 ILCS 5/16-140(4), a full-time student shall be one who is enrolled in a course of study in an accredited educational institution (other than a program of study by correspondence), and who is carrying a full-time workload as determined by the educational institution during the regular school year for the course of study the student is pursuing.

 

b)         Accredited educational institutions include schools, colleges, universities, and post-secondary vocational institutions whose courses of study are approved by appropriate state or federal educational accreditation authorities.

 

c)         A regular school year is the eight to nine months which includes two semester terms or three quarter terms (or their equivalent), excluding the summer term.  Terms that begin after April 15 and end before September 16 are considered summer terms.

 

d)         Survivors benefits shall be payable during the period between regular school years if the benefit recipient was a full-time student the preceding semester term or quarter term (or their equivalent).

 

e)         To verify that an eligible child is a full-time student, the System must receive a certification signed by an official of the educational institution confirming that the student is a full-time student as provided in subsection (a) above.

 

f)         Payment of survivor benefits under this Section will begin on the 15th of the month preceding the start of the full-time student's first semester or quarter of matriculation.

 

(Source:  Amended at 24 Ill. Reg. 2440, effective January 27, 2000)

 

Section 1650.580  Evidence of Eligibility

 

Beneficiaries receiving monthly benefits shall furnish evidence of eligibility to receive such benefits when requested to do so by the System. The System shall request evidence of eligibility when it receives any information indicating the beneficiary is not eligible to receive a benefit. Failure to do so will result in suspension of payments until evidence of eligibility is received, whereupon payments will be resumed from the date of the last payment.

 

(Source:  Amended at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.590  Comptroller Offset

 

Prior to the referral of any debt owed the System to the Office of the Comptroller for collection through the Comptroller Offset System as authorized under Section 10.05 of the State Comptroller Act [15 ILCS 405/10.05] and Section 5 of the Illinois State Collection Act [30 ILCS 210/5], the System shall provide the debtor:

 

a)         Written notice that the debt is being referred to the Comptroller for offset.  The notice shall set forth the amount of and basis for the debt.  The notice shall further advise the debtor of the debtor's right to a hearing to contest the debt by filing a written request with the System within 30 days after receipt of the notice by the debtor. Failure to request a hearing within the 30 days provided shall terminate any right to a hearing before the System.

 

b)         A hearing with the System, if requested by the debtor, to allow the debtor an opportunity to establish the debt has been paid or is not owed.  The hearing shall be held before a three-member panel appointed by the System's Executive Director.

 

c)         A written decision advising the debtor of the basis for the panel's decision.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.595  Overpayments

 

a)         When the System determines benefits, except for an impermissible refund as defined in Section 1650.240, have been paid erroneously in an amount greater than $50 to a member, annuitant or beneficiary (recipient), the System shall record such overpayment as an accounts receivable and make demand upon the recipient for the amount due.

 

b)         Interest shall accrue on overpayments at the rate of 0.83% per month beginning on the first day of the month following 30 days from the date of notification to the recipient of the overpayment.

 

c)         The System shall use its best efforts to ensure repayment of overpayments within 36 months after such overpayment.

 

d)         If the recipient of an overpayment fails to repay the amount due plus any  applicable interest within 36 months, the System will collect any amount plus applicable interest outstanding at the time the recipient next receives a benefit from the System by withholding 10% of the recipient's gross payment, if a periodic payment, including any reciprocal system payments, or 100% if a lump sum payment.

 

e)         The System shall retain the option to refer any debt due the System to the Attorney General, the Debt Collection Board, the Comptroller's Offset System, or private collection agencies at any time it deems appropriate.

 

(Source:  Added at 22 Ill. Reg. 7243, effective April 9, 1998)

SUBPART G: ATTORNEY GENERALS' OPINION

 

Section 1650.605  Policy of the Board Concerning Attorney Generals' Opinion (Repealed)

 

(Source:  Repealed at 9 Ill. Reg. 20885, effective December 17, 1985)

SUBPART H: ADMINISTRATIVE REVIEW

 

Section 1650.610  Staff Responsibility

 

The administrative staff of the System shall be responsible for the daily functioning of the System including interpretation of the Illinois Pension Code (The Act) and processing all claims for benefits or service credit.

 

(Source:  Added at 9 Ill. Reg. 20885, effective December 17, 1985)

 

Section 1650.620  Right of Appeal

 

Any member, beneficiary, annuitant or employer may appeal a staff disposition of a claim or interpretation of the Act to the Board of Trustees within 6 months after the staff disposition or interpretation, by filing a written request for an administrative review with the Executive Director.  The appeal will be scheduled to be heard at the next meeting of the Board's Claims Hearing Committee (Committee) having space on the agenda for such hearing.  The Committee shall be composed of 3 members of the Board of Trustees, plus a designated alternate Trustee, all elected by the Board, and an attorney retained by the System to serve as the Committee's Presiding Hearing Officer.  Any members of the Committee may be disqualified from hearing an appeal due to bias or conflict of interest in the appeal.

 

(Source:  Amended at 25 Ill. Reg. 203, effective December 22, 2000)

 

Section 1650.630  Form of Written Request

 

A written request for an administrative review shall include the following information: the name and address of the petitioner; the name and address of his or her authorized representative if applicable; a complete explanation of the factual and/or legal basis for the request, including relevant documentation supporting the petitioner's position; and the relief sought by the petitioner.

 

(Source:  Amended at 25 Ill. Reg. 203, effective December 22, 2000)

 

Section 1650.635  Presiding Hearing Officer − Duties and Responsibilities

 

The Presiding Hearing Officer of the Claims Hearing Committee shall have the following powers and duties and shall perform the following functions during administrative review proceedings.

 

a)         Pre-hearing:

 

1)         The Presiding Hearing Officer shall monitor and supervise the pre-hearing proceedings to ensure that the Committee is presented with the information necessary to make an informed and legally supported decision on the matters being presented for administrative review.

 

2)         The Presiding Hearing Officer shall facilitate cooperation between the petitioner and the System's Legal Counsel in the preparation of issue and fact statements.  Whenever appropriate, the Presiding Hearing Officer shall encourage the use of stipulated materials to enhance the efficiency of the proceedings.

 

3)         The Presiding Hearing Officer shall ensure the timely exchange of exhibits, witness lists and testimony summaries.

 

4)         The Presiding Hearing Officer shall rule on discovery requests and procedural matters.  The rules of civil procedure shall not be strictly applied; however, the Presiding Hearing Officer shall make necessary and appropriate legal or evidentiary rulings to ensure that both parties receive fair and timely consideration of all pre-hearing motions and discovery requests.

 

5)         The Presiding Hearing Officer shall establish pre-hearing position statements and briefing schedules.

 

6)         The Presiding Hearing Officer shall make any necessary and appropriate inquiries or requests of the parties in order to assure that the Committee has the requisite information to rule on the issues raised by the claim.

 

7)         The Presiding Hearing Officer shall develop hearing procedures that assure that the hearing process remains focused on pertinent issues while providing a full and fair hearing for the petitioner and the System. Whenever appropriate, the Presiding Hearing Officer shall encourage the parties to submit the matter to the Committee on the written record.

 

8)         When appropriate, the Presiding Hearing Officer shall facilitate settlement of the claim prior to hearing.

 

b)         Hearing:

 

1)         The Presiding Hearing Officer shall preside at the administrative review hearing and shall assure that the proceedings remain focused on the issues to be decided by the Committee and that both the petitioner and the System are treated fairly and equally in the presentation of their respective positions.

 

2)         The Presiding Hearing Officer shall ensure that the agreed upon hearing format is followed.

 

3)         The Presiding Hearing Officer shall ensure that repetitious and irrelevant arguments and evidence are excluded.

 

4)         The Presiding Hearing Officer shall make necessary and appropriate legal or evidentiary rulings.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.640  Prehearing Procedure

 

a)         Upon written notice by the Presiding Hearing Officer, the petitioner, or his or her attorney, and counsel for the System shall make themselves available at mutually agreeable times for pre-hearing conferences for the following purposes:

 

1)         The simplification of issues;

 

2)         The amendment of pleadings;

 

3)         The making of admissions of facts or stipulations for the purpose of avoiding the unnecessary introduction of evidence;

 

4)         Establishing the procedure at the hearing;

 

5)         The limitation of the number of witnesses;

 

6)         The disclosure of all witnesses (expert and non-expert) to be called to testify at hearing;

 

7)         Disclosure of the substance of the testimony of all witnesses to be called;

 

8)         The exchange of all exhibits to be introduced at hearing;

 

9)         Establishing briefing schedules for the submission of position statements and accompanying documentation; and

 

10)        Such other matters as may aid in the simplification of the evidence and disposition of the proceeding.

 

b)         To the extent that the parties are unable to agree or stipulate to matters at the pre-hearing conference, the Presiding Hearing Officer shall make the rulings and determinations necessary to assure that the issues, discovery, witnesses, evidence, and procedures prior to and at hearing remain focused on relevant and material matters.  Failure to attend a pre-hearing conference or failure to adhere to rulings, schedules or agreements made at the pre-hearing conference may, in the discretion of the Presiding Hearing Officer, result in delay of the hearing or limitations on the presentation of certain positions or the use of certain evidence at the hearing.

 

c)         Upon agreement of the parties or with the express consent of the Presiding Hearing Officer, the parties may undertake discovery, which may include interrogatories, requests for production of documents, discovery depositions, and evidence depositions.  If the parties are unable to agree to all or any form of discovery, any party may submit a written request to the Presiding Hearing Officer with a copy to all other parties setting forth with sufficient particularity the information sought and the form of discovery requested.  The Presiding Hearing Officer shall grant such request upon determining the information is necessary to the requesting party's case and the Committee's full understanding of the issues presented.  Any additional witnesses or exhibits identified during further discovery must be exchanged in writing by certified mail at least 14 days prior to hearing.

 

d)         Any witnesses not disclosed or exhibits not exchanged at the prehearing conference or 14 days prior to hearing, if additional discovery is allowed, shall be barred at hearing unless good cause is shown for such failure to provide.  At the discretion of the Presiding Hearing Officer, a hearing may be postponed in the interest of fairness to allow a party time to investigate and prepare to respond to newly submitted evidence.

 

e)         The parties may agree to submit the matter for the Committee's decision solely on the written record.

 

f)         Either party may file motions necessary to resolve matters and to focus the remaining issues for hearing.  The motions may include motions to dismiss and motions for summary judgment, where appropriate.  Procedural matters may be resolved by the Presiding Hearing Officer.  Substantive matters will be submitted to the Claims Hearing Committee for ruling.

 

g)         If, in the judgment of the Presiding Hearing Officer, the petitioner has not diligently pursued his or her claim, the Presiding Hearing Officer may find the petitioner to be in default and dismiss the petitioner's claim.  Prior to dismissing a claim, however, the Presiding Hearing Officer shall provide the petitioner with an opportunity to show cause why the claim should not be dismissed.  A dismissed claim may be re-filed within 6 months after the date of its dismissal, but shall be barred thereafter.  A claim may not be re-filed after a second dismissal.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.641  Claims Hearing Committee Hearing Packet

 

a)         A hearing packet shall be submitted to the members of the Committee prior to the hearing on the claim, or alternatively, prior to submission of the matter for decision based solely upon the record.  The hearing packet shall contain:

 

1)         An agreed statement of issues, and if not agreed, the proposed issues statement of each party.

 

2)         An agreed statement of facts, and if not agreed, the proposed statement of facts of each party.

 

3)         The position statements of the parties, including the legal arguments being made and all applicable statutory, regulatory and case law in support of those arguments, and an analysis of all relevant documentary evidence and testimony to be given in support of each party's respective positions.

 

4)         Witness affidavits, if agreed by the parties to be admissible.

 

5)         All exhibits to be presented at hearing.

 

b)         The System's position statement may also include an analysis of the results or consequences of a decision affirming or overturning the original staff disposition of the matter.

 

(Source:  Amended at 26 Ill. Reg. 11476, effective July 11, 2002)

 

Section 1650.650  Hearing Procedure

 

a)         All administrative review hearings shall be recorded by a court reporter.

 

b)         The Presiding Hearing Officer of the Claims Hearing Committee shall preside over the hearing and shall assure that the proceedings are consistent with any agreements or rulings on issues, evidence, witnesses or hearing format established prior to the hearing.

 

1)         All agreed to or stipulated issues, facts, documents or exhibits shall be considered as evidence in the proceeding.

 

2)         Witnesses, exhibits, evidence, issues or legal arguments not disclosed prior to the hearing shall be barred unless good cause is shown for the failure to provide such information to the other party.  At the discretion of the Presiding Hearing Officer, the hearing may be postponed in order to allow a party time to investigate and prepare to respond to the new information.

 

c)         The Presiding Hearing Officer shall make the necessary and appropriate procedural and evidentiary rulings to assure that the proceedings remain focused on the issues to be resolved by the Committee.

 

d)         The rules of evidence shall not be strictly applied; however, the Presiding Hearing Officer shall apply the rules of evidence to assure production of relevant and material evidence and shall further assure that testimony is subjected to such examination and cross-examination as is necessary for a full and fair disclosure of the facts.

 

1)         Irrelevant or unduly repetitious evidence shall be excluded.

 

2)         All individuals testifying at the hearing shall be sworn.

 

3)         Originals of documents may be introduced into evidence with leave to substitute copies.

 

e)         Order of Presentation. Unless otherwise agreed to by the parties:

 

1)         The petitioner or his or her attorney will present the petitioner's position and supporting evidence subject to cross-examination and legal challenge.

 

2)         The System's legal counsel will present the System's position and supporting evidence subject to cross-examination and legal challenge.

 

3)         The parties may make closing arguments if they so desire.

 

4)         Following the presentations of both the System and the petitioner, any member of the Committee may ask questions necessary to clarify the Committee's understanding of the facts or law.

 

f)         Upon conclusion of all arguments, the Committee shall decide, in private executive-session deliberations, on a recommendation as to the disposition of the appeal, which recommendation shall be communicated to the Board at its next regular meeting. The Executive Director of the System may be present during the Committee's deliberations.

 

g)         The Committee shall arrive at one of three decisions regarding a recommendation to the Board:

 

1)         A recommendation to affirm the administrative action.

 

2)         A recommendation to reverse the administrative action.

 

3)         A recommendation to remand the proceedings back to the administrative staff for further consideration.

 

h)         The Committee shall direct that a Recommended Decision reflecting the Committee's decision be prepared for consideration by the Board and the parties.

 

i)          Any party adversely affected by the Committee's Recommended Decision shall have 15 days from receipt of the Recommended Decision to file with the Board exceptions and a brief in support of their exceptions.

 

j)          At its next regular meeting following the time for filing exceptions, the Board of Trustees shall act on the Recommended Decision by either:

 

1)         Adopting the Recommended Decision; or

 

2)         Rejecting, in whole or in part, the Recommended Decision and directing that:

 

A)        A revised Recommended Decision be prepared to reflect the Board's decision;

 

B)        The matter be remanded to the Committee for further consideration; or

 

C)        The matter be remanded to the System staff for further consideration.

 

k)         The decision of the Board of Trustees shall be a final administrative decision for purposes of the Illinois Administrative Review Law [735 ILCS 5/Art. III].

 

l)          The decision of the Board of Trustees shall be communicated to the petitioner in writing within 30 days after the meeting at which the recommendation of the Committee was acted upon.

 

m)        The Board of Trustees may grant a re-hearing or further written appeal for the purpose of considering new or additional evidence not previously available.  The procedures set forth in this Section shall apply to such proceedings.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.660  Rules of Evidence (Repealed)

 

(Source:  Repealed at 25 Ill. Reg. 203, effective December 22, 2000)

SUBPART I: AMENDMENT TO BYLAWS AND RULES

 

Section 1650.710  Amendments

 

The Bylaws and Rules may be altered or amended by a majority vote of all members of the Board of Trustees provided such alterations or amendments shall not be inconsistent with all provisions of the law, and provided further that notice of any proposed alteration or amendment shall be given each member of the Board of Trustees by the Director at least ten days prior to the regular or special meeting at which the amendment is to be considered.

SUBPART J: RULES OF ORDER

 

Section 1650.810  Parliamentary Procedure

 

The rules of parliamentary practice contained in "Robert's Rules of Order," latest edition, shall govern the business before the Board of Trustees provided they are not inconsistent with the Bylaws or Rules of the Board.

SUBPART K: PUBLIC RECORD REQUESTS

 

Section 1650.910  Summary and Purpose (Repealed)

 

(Source:  Repealed at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.920  Definitions (Repealed)

 

(Source:  Repealed at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.930  Submission of Requests

 

a)         Public record requests made in accordance with the Freedom of Information Act (FOIA) [5 ILCS 140] should be submitted via the System’s Public Records Center, accessible on the TRS website: trsil.org.  Record requests may also be sent to the attention of the FOIA Officer, Teachers' Retirement System of the State of Illinois, P.O. Box 19253, 2815 West Washington, Springfield, Illinois  62794-9253, FOIAOfficer@trsil.org.

 

b)         The request must be in writing and include the following information:

 

1)         A specific description of the public records requested.

 

2)         Whether the requestor seeks copies or personal inspection of the public records.

 

3)         Whether the public record is being obtained for a commercial purpose.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.940  Form and Content of FOIA Requests (Repealed)

 

(Source:  Repealed at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.950  Appeal of a Denial (Repealed)

 

(Source:  Repealed at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.960  Executive Director's Response to Appeal (Repealed)

 

(Source:  Repealed at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.970  Response to FOIA Requests (Repealed)

 

(Source:  Repealed at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.980  Inspection of Records at System Office

 

a)         Public records not exempt from disclosure under FOIA may be inspected at the System's Springfield Office.    Records may be inspected during normal business hours through prior arrangement with the System's General Counsel's Office.

 

b)         Documents the requestor wishes to have copied shall be segregated during the course of the inspection.  All copying shall be done by System employees, except that, if work load requires, the System may refer the copying to an outside printer or copy service.

 

c)         An employee of the System may be present throughout the inspection.  A requestor may be prohibited from bringing bags, briefcases or other containers into the inspection room.

 

(Source:  Amended at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.990  Copies of Public Records

 

a)         Copies of public records not exempt from disclosure under FOIA will be provided unless the requestor makes arrangements to personally inspect the public records as provided in Section 1650.980.  The first 50 pages are provided free of charge. The System reserves the right to charge fees to reimburse its actual cost for reproducing public records exceeding 50 pages, as allowed by FOIA.

 

b)         If the System incurs extraordinary shipping expenses for sending copies of public records to the requestor, the System reserves the right to seek reimbursement of those actual shipping expenses from the requestor.

 

c)         Charges may be reduced or waived for requests in the public interest, as allowed by FOIA.

 

(Source:  Amended at 34 Ill. Reg. 4900, effective March 22, 2010)

 

Section 1650.995  Materials Immediately Available

 

Detailed information about the System is publicly and immediately available at the TRS website: trsil.org.  The TRS website provides contact information, a description of purpose, membership, key statutory provisions, benefits, funding, administrative structure and budget, the most recent Annual Comprehensive Financial Report (ACFR), member brochures and publications, employer services, legislative matters, investments, board of trustees, board and committee meeting minutes, administrative review decisions, administrative rules, an online pressroom, and vendor information.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

SUBPART L: BOARD ELECTION PROCEDURES

 

Section 1650.1000  Nomination of Candidates

 

a)         Any candidate for a vacant teacher position on the System's Board of Trustees shall be nominated by a written petition in a format prescribed by the System or a petition with electronic signatures submitted via an independent, secure, third-party vendor selected by the System, signed by no fewer than 500 individuals who, as of the date of signing, were teachers as defined in Section 16-106 of the Illinois Pension Code [40 ILCS 5/16-106].

 

b)         Any candidate for a vacant annuitant position on the System's Board of Trustees shall be nominated by a written petition in a format prescribed by the System or a petition with electronic signatures submitted via an independent, secure, third-party vendor selected by the System, signed by no fewer than 500 individuals who, as of the date of signing, were annuitants as defined in Section 16-111.1 of the Illinois Pension Code [40 ILCS 5/16-111.1].

 

c)         Petitions may be circulated for signatures for a period of time as follows:

 

1)         For a regular election, commencing the November 1 immediately preceding the election date and ending with the time for filing such petition with the System as provided in subsection (c) of Section 1650.1010;

 

2)         For a special election as provided in Section 1650.1090, commencing the date that the Board's secretary announces that a special election will be held and for a two-week period thereafter.

 

d)         An individual eligible to sign a petition nominating a candidate for a vacant teacher position on the Board may sign petitions for as many candidates as desired.

 

e)         An individual eligible to sign a petition nominating a candidate for a vacant annuitant position on the Board may sign petitions for as many candidates as desired.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1001  Election Date/Election Day – Defined

 

a)         For a regular election, the term "election date" or "election day" shall mean May 1.

 

b)         For a special election as provided in Section 1650.1090, the term "election date" or "election day" shall mean the date prescribed by the Board's secretary.

 

c)         If the election day falls on a Saturday, Sunday, or holiday observed by the System, the election will be held the next day on which the System is open for business. 

 

(Source:  Amended at 30 Ill. Reg. 11728, effective June 23, 2006)

 

Section 1650.1010  Petitions

 

a)         All petitions shall be in the form adopted by the System.  Petition forms may be obtained from the System's website (trsil.org) beginning November 1 immediately preceding the election date.

 

b)         A valid petition nominating a candidate for a vacant teacher position or a vacant annuitant position on the System's Board of Trustees must bear the requisite number of signatures of individuals eligible to nominate the candidate pursuant to Section 1650.1000(a) or (b).

 

c)         Petitions shall be filed with the System during the following time periods:

 

1)         For a regular election, not less than 90 nor more than 120 days prior to the election day.

 

2)         For a special election as provided in Section 1650.1090, beginning with the Board's secretary's announcement that a special election will be held and no later than 45 days prior to the election day.

 

3)         Petitions filed after the prescribed petition-filing period will not be accepted.

 

4)         Petitions filed before the prescribed petition-filing period will be returned to the party submitting the petition for filing but may be refiled within the prescribed petition-filing period.

 

d)         The System shall determine the validity of petitions for regular elections not less than 75 days prior to the election day, and for special elections not less than 20 days prior to the election day. (See Section 16-165(d) of the Code.)

 

e)         Any individual may, upon reasonable notice to the System, examine the petitions that have been filed with the System with respect to the election to take place; provided, however, in order to protect the signing teachers' and annuitants' privacy and confidentiality, the examination shall only take place subject to the following limitations:

 

1)         Petitions may only be examined at the System's offices after the validity of the petitions has been verified by the System as provided in subsection (d);

 

2)         Petitions shall not be transferred, copied, or duplicated by any means; and

 

3)         Petitions, including any information in the petition, shall not be subject to production or disclosure under the Illinois Freedom of Information Act (FOIA) [5 ILCS 140].

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1020  Eligible Voters

 

a)         An individual is eligible to vote for a vacant teacher position on the Board of Trustees of the System if he or she was a "teacher", as defined in Section 16-106 of the Illinois Pension Code [40 ILCS 5/16-106], determined as of the following dates:

 

            1)         For a regular election, March 1 of the year in which the election is held.

 

2)         For a special election as provided in Section 1650.1090, the date the Board's secretary determines the validity of petitions.

 

b)         An individual is eligible to vote for a vacant annuitant position on the Board of Trustees of the System if he or she was an "annuitant", as defined in Section 16-111.1 of the Illinois Pension Code [40 ILCS 5/16-111.1], determined as of the following dates:

 

1)         For a regular election, March 1 of the year in which the election is held.

 

2)         For a special election as provided in Section 1650.1090, the date the Board's secretary determines the validity of petitions.

 

c)         A person who is eligible to vote for a vacant teacher position pursuant to subsection (a) of this Section is not eligible to vote for a vacant annuitant position.

 

d)         A person who is eligible to vote for a vacant annuitant position pursuant to subsection (b) of this Section is not eligible to vote for a vacant teacher position.

 

(Source:  Amended at 37 Ill. Reg. 5150, effective April 4, 2013)

 

Section 1650.1030  Election Materials

 

a)         An eligible voter who has provided the System with a valid electronic mail address will receive electronic election materials at least 20 days prior to the election day. The System's electronic ballot and voting processes may be conducted via an independent, secure, third-party vendor selected by the System and shall conform in all material aspects with the manual balloting provisions provided in Section 16-165 of the Illinois Pension Code [40 ILCS 5/16-165].

 

b)         An eligible voter who does not wish or is unable to vote electronically may request that manual election materials be sent to the eligible voter via U.S. mail in accordance with the manual balloting provisions provided in Section 16-165 of the Illinois Pension Code [40 ILCS 5/16-165].

 

c)         An eligible voter who has not provided the System with a valid electronic mail address will receive manual election materials via U.S. mail as provided in Section 16-165 of the Illinois Pension Code [40 ILCS 5/16-165].

 

d)         An eligible voter who has not received any or all of the election materials must contact the System at least 10 days prior to the election day, to request that the System send manual election materials to the eligible voter. After verifying that the requesting individual is an eligible voter as provided in Section 1650.1020, the System shall send a written certification of nonreceipt in the form prescribed by the System and the manual election materials via U.S. mail.

 

e)         If previously mailed manual election materials are returned to the System undelivered at least 10 days prior to the election day and a forwarding address has been provided, the System shall mail manual election materials to the forwarding address via U.S. mail.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1040  Marking of Ballots

 

A valid ballot must conform to the following requirements:

 

a)         All choices of candidates must be clearly indicated as prescribed by the instructions accompanying the ballot. If the marking of the ballot does not conform to all instructions accompanying the ballot, the ballot is invalid and will not be counted.

 

b)         Each eligible voter is entitled to only one vote for any particular candidate.

 

c)         When there are two trustees to be elected, each eligible voter may vote for only one candidate for each position to be elected.  If more than two candidates are selected, the ballot is invalid and will not be counted.  If only one candidate is selected, the selection will count as only one vote.

 

d)         Manual entries of candidates not listed on the ballot are invalid and will not be counted.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1050  Return of Ballots

 

a)         Written Ballots

 

1)         For written ballots, upon receipt of the election materials specified in Section 1650.1030, the eligible voter shall:

 

A)        Mark the ballot in accordance with Section 1650.1040;

 

B)        Write the member's signature, address, and member ID or the last four digits of the member's social security number on the signature card;

 

C)        Detach the completed ballot and signature card along the perforated lines;

 

D)        Place the completed ballot into the envelope marked "For Ballot Only";

 

E)        Place the completed signature card and the ballot envelope into the return envelope; and

 

F)         Attach postage, seal and mail, via U.S. mail or express delivery service, the return envelope in time to reach the address provided by the System in the election materials at or prior to 10:00 a.m. on the election day.

 

2)         Written ballots not returned in the "For Ballot Only" envelope are invalid and will not be counted.

 

b)         Ballots must be received at or prior to 10:00 a.m. on the election day.  Ballots received after 10:00 a.m. on the election day are invalid and will not be counted. (See Section 16-165(d) of the Code.)

 

c)         All eligible voters must return their ballots to the System electronically via the independent, secure, third-party vendor selected by the System, or for written ballots, individually to the address provided by the System in the election materials via electronic mail, U.S. mail or express delivery service.  Ballots returned to the System in bulk, via hand delivery, or delivery other than as specified in this subsection, are invalid and will not be counted.

 

d)         Ballots that do not conform to all instructions accompanying the ballot are invalid and will not be counted.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1060  Observation of Ballot Counting

 

Any person may observe the ballot counting process beginning at 10:00 am on the election day as specifically designated by the System. Observer identification will be verified by the System. An observer who attempts to challenge or disrupt the ballot counting process will be removed from observation.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1070  Certification of Ballot Counting

 

The System's ballot tabulating program shall be certified in writing by an independent consultant. Such certification shall provide that the System's ballot tabulation process correctly tabulates ballots.

 

(Source:  Added at 20 Ill. Reg. 3118, effective February 5, 1996)

 

Section 1650.1080  Challenges to Ballot Counting

 

a)         Any person who observed the ballot counting, as provided in Section 1650.1060, may submit to the System, within seven days after the election day, a written statement identifying the specific aspect or aspects of the ballot counting process that are being challenged.

 

b)         The System shall consider the challenge and notify the challenger and all candidates of the results within 30 days after the election day.

 

(Source:  Amended at 37 Ill. Reg. 5150, effective April 4, 2013)

 

Section 1650.1090  Special Election to Fill Un-Expired Term of Elected Trustee

 

a)         On the date that an elected trustee position becomes vacant, if more than six months remain until the term expires, the Board's secretary will hold a special election in accordance with this Subpart L; provided, however, that if the Board's secretary determines there is inadequate time to hold a special election so as to allow the newly elected trustee to participate in at least one regularly scheduled Board meeting, then no special election will be held and the vacancy will remain until the next regular election.

 

b)         The Board's secretary will notify the System's membership that a special election will be held as soon as administratively feasible upon receiving notice of a vacancy and will announce the schedule for the special election, which will include the following:

 

1)         The date the vacancy occurred;

 

2)         The time period for circulating petitions for nominating signatures;

 

3)         The deadline for filing petitions with the System;

 

4)         The date the Board's secretary will verify the validity of petitions;

 

5)         The date ballots will be sent to eligible voters;

 

6)         The election date; and

 

7)         The date results of the election will be announced.

 

(Source:  Added at 30 Ill. Reg. 11728, effective June 23, 2006)

SUBPART M: QUALIFIED ILLINOIS DOMESTIC RELATIONS ORDERS

 

Section 1650.1110  Definitions

 

a)         The definitions in Section 1-119(a) of the Illinois Pension Code (the "Act") [40 ILCS 5/1-119(a)] shall apply to this Subpart.

 

b)         The phrase "death benefit" in Section 1-119(a)(2) of the Act [40 ILCS 5/1-119(a)(2)] includes:

 

1)         A refund of any remaining accumulated contributions;

 

2)         A refund payable to a deceased member's designated beneficiary because the member elected a 2.2 upgrade and dies before making the full upgrade contribution; or

 

3)         A survivor benefit under Section 16-141 or Section 16-142 of the Act [40 ILCS 5/16-141, 16-142] if and only if payable as a lump sum.

 

c)         The phrase "member's refund" in Section 1-119(a)(5) of the Act [40 ILCS 5/1-119(a)(5)] does not include an "error refund" as defined in subsection (d) of this Section.

 

d)         The phrase "error refund" as used in this Subpart includes:

 

1)         A refund paid to a member as the result of an error in a payment to the System; or

 

2)         A refund payable to a living member resulting from an overpayment made by a TRS-covered employer for a 2.2 upgrade.

 

e)         The phrase "disability benefit" in Section 1-119(a)(3) of the Act [40 ILCS 5/1-119(a)(3)] includes:

 

1)         A disability benefit under Section 16-149 of the Act [40 ILCS 5/16-149];

 

2)         An occupational disability benefit under Section 16-149.1 of the Act [40 ILCS 5/16-149.1]; or

 

3)         A disability retirement annuity under Section 16-149.2 of the Act [40 ILCS 5/16-149.2].

 

f)         The phrase "member's retirement benefit" as used in this Subpart means the total amount of the "retirement benefit" as defined in Section 1-119(a)(8) of the Act [40 ILCS 5/1-119(a)(8)] that would be payable to the member in the absence of a QILDRO.

 

g)         The phrase "partial member's refund" as used in this Subpart includes:

 

1)         A refund of survivor benefit contributions;

 

2)         A partial refund of retirement contributions as provided under Section 16-152(d) of the Act [40 ILCS 5/16-152(d)];

 

3)         An upgrade contribution refund payable to a living member who has elected a 2.2 upgrade, because:

 

A)        The member has creditable service in excess of 34 years;

 

B)        The member is entitled to a 1% reduction in the upgrade contribution for every three full years of creditable service;

 

C)        An actuarial calculation provides a greater benefit than an upgraded final average salary calculation; or

 

D)        The member failed to make the full upgrade contribution in a timely fashion;

 

4)         A refund of contributions for excess optional service as provided in Section 1650.410(b); or

 

5)         A refund of contributions for the Early Retirement Option under Section 16-152(e) of the Act [40 ILCS 5/16-152(e)].

 

h)         The phrase "effective date of the QILDRO" or any similar phrase as used in this Subpart means the date that a retirement benefit, refund, or lump-sum death benefit to which the QILDRO applies becomes payable.

                       

i)          The phrase "valid receipt date" or any similar phrase as used in this Subpart means the date the System received a valid court order.

 

j)          The phrase "valuation procedures established by the retirement system" in Section 503(b)(2) of the Illinois Marriage and Dissolution of Marriage Act [750 ILCS 5/503(b)(2)], with respect to the Teachers' Retirement System, means the benefit information provided by the System for divorce purposes in accordance with Section 1650.1122.

 

k)         The phrase "percentage QILDRO" or any similar phrase as used in this Subpart means any portion of the QILDRO that expresses an amount payable to the alternate payee as a percentage rather than a specified dollar amount.

 

l)          The phrase "alternate payee share" or any similar phrase as used in this Subpart means that portion of any benefit or refund allocated to the alternate payee in the QILDRO.

 

(Source:  Amended at 32 Ill. Reg. 4073, effective February 28, 2008)

 

Section 1650.1111  Requirements for a Valid Qualified Illinois Domestic Relations Order

 

The System will accept a court order as a valid Qualified Illinois Domestic Relations Order, or "QILDRO", that meets all of the following requirements:

 

a)         The order must be accompanied by a $50 non-refundable processing fee, by check payable to the Teachers' Retirement System.

 

b)         If the order applies to a person who became a member of the System before July 1, 1999, the order must be accompanied by the original Consent to Issuance of QILDRO signed by the member.  If the original has been filed with the court, a certified copy of the original is acceptable.

 

c)         The order must be a certified copy of the original.

 

d)         The order must have been issued by an Illinois court of competent jurisdiction in a proceeding for declaration of invalidity of marriage, legal separation, or dissolution of marriage that provides for the distribution of property, or any proceeding to amend or enforce such a property distribution, prior to the death of the member.

 

e)         The order must contain the name, mailing address, and Social Security number of the member.

 

f)         The order must contain the name, mailing address, and Social Security number of the alternate payee.

 

g)         If the full Social Security number is not shown on the face of the order, the order must be accompanied by a Notice of Confidential Information Within Court Filing in the form adopted by the System containing the full Social Security numbers omitted from the order.

 

h)         The order must identify the Teachers' Retirement System as the retirement system to which it is directed.

 

i)          The order must apply only to benefits that are statutorily subject to QILDROs as provided in Section 1-119(b)(1) of the Act [40 ILCS 5/1-119(b)(1)].

 

j)          The order and, if applicable, the Consent to Issuance of QILDRO must be in the form adopted by the System as of the valid receipt date of the order.

 

k)         No language may be added to, or omitted from, the QILDRO form or the consent form adopted by the System.

 

l)          All required portions of the order must be filled out completely and consistently with all directions provided in the form.

 

m)        If a consent form is required, the names and Social Security numbers identified in the consent form must match the names and Social Security numbers identified in the order or in an accompanying Notice of Confidential Information Within Court Filing.

 

(Source:  Amended at 39 Ill. Reg. 5259, effective March 20, 2015)

 

Section 1650.1112  Requirements for a Valid QILDRO Calculation Order

 

The System will accept a court order as a valid QILDRO Calculation Order that meets all of the following requirements:

 

a)         The order must be accompanied by a $50 non-refundable processing fee, by check payable to the Teachers' Retirement System.

 

b)        The order must be a certified copy of the original.

 

c)         The order must have been issued by an Illinois court of competent jurisdiction in a proceeding for declaration of invalidity of marriage, legal separation, or dissolution of marriage that provides for the distribution of property, or any proceeding to amend or enforce such a property distribution.

 

d)        The order must contain the name, mailing address, and Social Security number of the member.

 

e)         The order must contain the name, mailing address, and Social Security number of the alternate payee.

 

f)         If the full Social Security number is not shown on the face of the order, the order must be accompanied by a Notice of Confidential Information Within Court Filing in the form adopted by the System containing the full Social Security numbers omitted from the order.

 

g)        The order must identify the Teachers' Retirement System as the retirement system to which it is directed.

 

h)        The order must be in the form adopted by the System as of the valid receipt date of the order.

 

i)          No language may be added to, or omitted from, the form adopted by the System.

 

j)         All required portions of the order must be filled out completely and consistently with all directions provided in the form.

 

k)         The order must correspond with a valid underlying QILDRO that has been filed with the System applicable to the same member, the same alternate payee, and the same benefits and refunds.

 

(Source:  Amended at 39 Ill. Reg. 5259, effective March 20, 2015)

 

Section 1650.1113  Required Forms

 

a)         A QILDRO, a Consent to Issuance of QILDRO, a Calculation Order, or a Notice of Confidential Information Within Court Filing must be in the form adopted by the System as of the valid receipt date. 

 

b)         The forms adopted by the System are available on the System's web site, trsil.org, or upon request.

 

c)         A QILDRO, a Consent Form, a Calculation Order, or a Notice of Confidential Information Within Court Filing that is not in the form adopted by the System as of the receipt date is invalid.

 

d)         Re-typed forms and obsolete forms will be returned, unprocessed, to the sender.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.1114  Filing a QILDRO or a Calculation Order with the System

 

a)         A QILDRO or a Calculation Order must be sent to the System's General Counsel's Office, each accompanied by the $50 non-refundable processing fee.

 

b)         A QILDRO or a Calculation Order will be deemed received by the System on the date that a certified copy of the order accompanied by the processing fee and, if applicable, Consent to Issuance of QILDRO and/or Notice of Confidential Information Within Court Filing, is received in the System's General Counsel's Office.

 

c)         Within 45 calendar days after receipt, the System will review the order and notify the member and each alternate payee by first class mail that it has received the order, and whether the order is a valid QILDRO or Calculation Order.  If the System determines that the order is not valid, the notice will specify the reason or reasons.

 

d)         A QILDRO or a Calculation Order that has been amended by the issuing court must be submitted in the same manner as the original order.  A separate $50 non‑refundable processing fee is required for each new or amended order.

 

(Source:  Amended at 39 Ill. Reg. 5259, effective March 20, 2015)

 

Section 1650.1115  Benefits Affected by a QILDRO

 

a)         A QILDRO may apply only to the following benefits administered by the System:

 

1)         A monthly retirement benefit;

 

2)         A single sum retirement benefit;

 

3)         A termination refund;

 

4)         A partial member's refund; or

 

5)         A return of accumulated contributions payable to a member's designated beneficiary upon death; or

 

6)         A survivor benefit, if and only if payable as a lump sum.

 

b)         If a QILDRO applies to any partial member's refund that becomes payable, the aggregate amount paid to the alternate payee from all partial member's refunds shall not exceed the amount specified in the QILDRO.

 

c)         A QILDRO shall not apply to any of the following:

 

1)         A monthly survivor benefit;

 

2)         A disability benefit as defined in Section 1650.1110(e) of this Subpart;

                       

3)         A Teachers' Retirement Insurance Program ("TRIP") benefit or any other health insurance benefit; or

 

4)         An error refund as defined in Section 1650.1110(d) of this Subpart.

 

d)        If a benefit or refund subject to a QILDRO is also subject to tax lien or withholding order, the System will deduct the amount due pursuant to the tax lien or withholding order prior to deducting the amount due pursuant to the QILDRO, until the System receives different instructions from the court that issued the QILDRO.  It is the member's or alternate payee's responsibility to obtain clarification from the court if the QILDRO should take priority ahead of a competing tax lien or withholding order.

 

(Source:  Amended at 32 Ill. Reg. 4073, effective February 28, 2008)

 

Section 1650.1116  Effect of a Valid QILDRO

 

a)         If the QILDRO applies to a member who is not an annuitant of the System, the QILDRO will be placed in the member's file and will not be implemented until an affected benefit or refund to which the QILDRO applies becomes payable.

 

b)         If the QILDRO applies to a member who is an annuitant of the System, payment to the alternate payee will begin with the first benefit or refund to which the QILDRO applies that falls at least 30 days after the valid receipt date of the QILDRO.

 

c)         If the QILDRO expresses any amount payable to the alternate payee as a percentage, the System cannot pay the alternate payee such amount until the System receives a valid Calculation Order corresponding to the percentage in the underlying QILDRO.

 

1)         When a retirement benefit subject to a percentage QILDRO on file with the System becomes payable and the System has not received a valid Calculation Order corresponding to the retirement benefit, the System will determine an anticipated payment to the alternate payee based on information in the QILDRO, if it is possible to do so.  The System will hold the alternate payee's anticipated payment and begin paying the member's retirement benefit, less the amount held for the alternate payee, until the System receives a valid Calculation Order corresponding to the retirement benefit.

 

2)         When a member's refund, partial member's refund, or lump-sum death benefit subject to a percentage QILDRO on file with the System becomes payable and the System has not received a valid Calculation Order corresponding to that refund or lump-sum death benefit, the System will hold the refund or lump-sum death benefit until the System receives a valid Calculation Order corresponding to that benefit or refund.

 

3)         Once the System receives a Calculation Order, the System will adjust the amounts payable in accordance with the Calculation Order and begin paying the alternate payee.

 

4)         If it is not possible for the System to determine an anticipated payment based only on the percentage QILDRO, then neither the member nor the alternate payee will be paid until the System receives a valid corresponding Calculation Order.

 

d)         If the System receives a valid QILDRO that purports to apply to a member's refund, partial member's refund, or lump-sum death benefit that will be paid within 30 days after the valid receipt date, but the payment has not yet been vouchered, the System will hold the portion of the refund or lump-sum death benefit that would be payable to the alternate payee until it receives clarification from the court as to whether the QILDRO applies to that refund or lump-sum death benefit.  It is the member's or alternate payee's responsibility to obtain such clarification from the court and to notify the System of the court's clarification.

 

e)         If payment has already been vouchered when the System receives a QILDRO that purports to apply to the refund or lump-sum death benefit, the QILDRO shall not apply to that payment.

 

f)         "Vouchered" as used in this Section means that the voucher has been signed and dated, even though the warrant has not been issued by the Office of the State Comptroller.

 

(Source:  Amended at 32 Ill. Reg. 4073, effective February 28, 2008)

 

Section 1650.1117  QILDROs Against Persons Who Became Members Prior to July 1, 1999

 

a)         A QILDRO that applies to a person who became a member of the System prior to July 1, 1999 must be accompanied by the original Consent to Issuance of QILDRO signed by the member.  If the original has been filed with the court, a certified copy of the original is acceptable.

 

b)         The Consent to Issuance of QILDRO must be in the form adopted by the System as of the valid receipt date of the QILDRO.  The required consent form is available from the System on the System's website trsil.org, or upon request.  A consent form that is not in the form adopted by the System is invalid.

 

c)         In accordance with Section 1-119(m)(1) of the Act [40 ILCS 5/1-119(m)(1)], a consent form must be signed by the member to whom the QILDRO applies.  A consent form signed by a judge or any person other than the member is invalid.  In the event of a dispute regarding the validity of a member’s consent to issuance of a QILDRO, the System may, in its sole discretion, require a consent form bearing the member’s notarized signature.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1118  Alternate Payee's Address

 

a)         An alternate payee is responsible to report to the System in writing of each change in his or her name and mailing address.

 

b)         When a member's retirement benefit, lump-sum death benefit, or refund subject to a QILDRO becomes payable, the System will send notice to the last address of the alternate payee reported to the System that the benefit or refund is payable.  Other than sending such notice, the System shall have no duty to take any other action to locate an alternate payee.

 

c)         The 180-day period during which the System will hold the retirement benefit, lump-sum death benefit, or refund as provided in Section 1-119(e)(2) of the Act [40 ILCS 5/1-119(e)(2)] begins on the date that the notice described in subsection (b) of this Section is sent to the last address of the alternate payee reported to the System, or on the date that the retirement benefit, lump-sum death benefit, or refund becomes payable, whichever is later.

 

d)         If the System does not receive written confirmation of the alternate payee's current mailing address within the 180-day period, any amounts held will be paid to the regular payee, except for the situation described in subsection (e) of this Section.

 

e)         For partial member's refunds as defined in Section 1650.1110(g), if the System knows the alternate payee's current mailing address but does not receive a completed withholding election form within the 180-day period, any amount held will be paid to the alternate payee, subject to mandatory 20 percent federal income tax withholding.

 

(Source:  Amended at 32 Ill. Reg. 13534, effective August 6, 2008)

 

Section 1650.1119  Electing Form of Payment

 

a)         A member's election either to receive or forego a proportional annuity under Section 20 of the Retirement Systems Reciprocal Act [40 ILCS 5] is not a prohibited election under Section 1-119(j)(1) of the Code.

 

b)         A member's election to take a refund is not a prohibited election under Section 1-119(j)(1) of the Code.  However, a member's election to roll over a refund payment does not affect the alternate payee's right to payment of the amount designated in the QILDRO.

 

c)         A member's election of a form of payment of annuity that reduces the member's total benefit, while still allowing full payment to the alternate payee under a QILDRO at the date of the election, is not a prohibited election under Section 1-119(j)(1) of the Code.

 

d)         A member's failure to elect a 2.2 upgrade, or failure to make all upgrade contributions in a timely fashion, is not a prohibited election under Section 1-119(j)(1) of the Code.

 

e)         A dependent beneficiary's election to receive monthly survivor benefits is not a prohibited election under Section 1-119(j)(1) of the Code.

 

f)         A member's election of the Accelerated Annual Increase (AAI) provided in Section 16-190.6 of the Code, or the Accelerated Pension Benefit (APB) provided in Section 16-190.5 of the Code, is a prohibited election under Section 1-119(j)(1) of the Code, if so provided in Section 1650.3330.

 

g)         The System may, in its sole discretion, hold a proposed election until clarification is obtained from a court of competent jurisdiction as to whether the proposed election is a prohibited election under Section 1-119(j)(1) of the Code.  It shall be the duty of the member or alternate payee to obtain such clarification upon request of the System.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.1120  Automatic Annual Increases

 

a)         The alternate payee will or will not receive a proportionate share of any automatic annual increase in the member's retirement benefit under Section 16-136.1 of the Act [40 ILCS 5/16-136.1], according to the designation in the QILDRO.

 

b)         Except as provided in subsection (c) of this Section, the initial increase in the amount due the alternate payee under the QILDRO is payable with the next succeeding increase due the member after the effective date of the QILDRO.

 

c)         In the event that the effective date of the QILDRO is in the same month that the member's benefit is increased, the alternate payee's initial increase is not payable until the next succeeding increase in the member's benefit.

 

d)         The System will calculate the amount of any increase payable to the alternate payee under the QILDRO.

 

e)         The amount of any increase payable to the alternate payee (other than any increase resulting from the member's initial automatic annual increase) is the percentage of increase due the member under Section 16-133.1 or Section 16-136.1 of the Act [40 ILCS 5/16-133.1, 16-136.1], multiplied by the alternate payee's monthly benefit as of the date of the increase.

 

f)         The amount of any increase payable to the alternate payee resulting from the member's initial automatic annual increase is the percentage of increase due the member under Section 16-133.1 or Section 16-136.1 of the Act [40 ILCS 5/16-133.1, 16-136.1], multiplied by the alternate payee's monthly benefit as of the date of the increase, multiplied by the following fraction:

 

1)         The numerator is the number of months elapsed between:

 

A)        The later of the effective date of the QILDRO or the date of retirement, and

 

B)        The date that the initial increase becomes payable; and

 

2)         The denominator is the number of months elapsed between:

 

A)        The date of retirement, and

 

B)        The date that the initial increase becomes payable.

 

(Source:  Amended at 27 Ill. Reg. 1668, effective January 17, 2003)

 

Section 1650.1121  Reciprocal Systems QILDRO Policy Statement (Repealed)

 

 

(Source:  Repealed at 30 Ill. Reg. 17525, effective October 18, 2006)

 

Section 1650.1122  Providing Benefit Information for Divorce Purposes

 

a)         Within 45 days after receiving a subpoena or request from a member, the System will provide a statement for divorce purposes regarding the value of a member's retirement benefit through June 30 of the last completed school year for which data are on file with the System.  If requested, the System will also provide the TRS Member Guide, the TRS QILDRO publication, and this Subpart.

 

b)         Within 45 days after receiving a percentage QILDRO, if the System receives the percentage QILDRO before the member has commenced receiving retirement benefits, the System will provide a statement including the following information:

 

1)         School year of initial membership in the System;

 

2)         Amount of permissive and regular service credit;

 

3)         Non-reduced monthly retirement benefit estimate;

 

4)         Earliest date when non-reduced monthly retirement benefit will become payable;

 

5)         Permissive service credit purchased;

 

6)         2.2 upgrade information;

 

7)         Refund upon termination of employment;

 

8)         Survivor benefit contribution refund;

 

9)         Lump-sum death benefit amount;

 

10)        Whether the member has filed a retirement application; and

 

11)        Intended retirement date, if the member has filed a retirement application.

 

c)         Within 45 days after receiving a valid percentage QILDRO that designates an alternate payee share of the retirement benefit, and after the System receives all information necessary to determine the actual benefit payable, if the System receives the percentage QILDRO after the member has applied for or commenced receiving retirement benefits, the System will provide a statement including the following information:

 

1)          Effective date of retirement;

 

2)          Date retirement benefits commenced (or will commence);

 

3)          Amount of permissive and regular service credit;

 

4)          Actual monthly retirement benefit;

 

5)          Survivor benefit contribution refund;

 

6)          2.2 upgrade refund; and

 

7)          Lump-sum death benefit amount.

 

d)         Within 45 days after the effective date of retirement of a member subject to a valid percentage QILDRO on file with the System that designates an alternate payee share of the retirement benefit, and after the System receives all information necessary to determine the actual benefit payable, the System shall provide a statement including the following information:

 

1)         Effective date of retirement;

 

2)         Date retirement benefits commenced (or will commence);

 

3)         Amount of permissive and regular service credit;

 

4)         Actual monthly retirement benefit;

 

5)         Survivor benefit contribution refund;

 

6)         2.2 upgrade refund;

 

7)         Lump-sum death benefit amount; and

 

8)         If the QILDRO expresses any alternate payee share as a percentage, the notice will specify that the System must receive a valid corresponding Calculation Order before the System can implement that portion of the QILDRO.

 

e)         Within 45 days after receiving notice of the death of a member, if lump-sum death benefits are subject to a valid QILDRO on file with the System, the System shall provide a statement indicating the lump-sum death benefit amount. 

 

f)         Information provided by the System for divorce purposes does not include the value of a member's retirement benefit accrued during a school year for which data are not yet on file with the System.

 

g)         Information provided by the System for divorce purposes does not reflect an actuarial opinion as to the present values of a member's retirement benefit, refund, or other interests.

 

h)         Information provided by the System for divorce purposes reflects the member's total service career for which service credit in the System has accrued, does not include reciprocal service accrued with another retirement system, and is not isolated as to the marital period only.

 

i)          The System does not calculate the amount of a member's retirement benefit or refund that would be payable to a former spouse pursuant to a divorce decree or dissolution judgment.

 

j)          While the System makes every effort to provide accurate information for divorce purposes, benefit estimates are by their nature approximate and subject to revision due to errors, omissions, erroneous assumptions, or future changes in the rules and laws governing the System.

 

k)         In accordance with Section 1650.160 of this Part pertaining to the confidentiality of member records, the System does not disclose information for divorce purposes to spouses, former spouses, relatives, or other third parties, including the member's attorney, except in response to the member's written authorization to release such information, in response to a subpoena, or as provided in this Section 1650.1122.

 

(Source:  Amended at 32 Ill. Reg. 4073, effective February 28, 2008)

 

Section 1650.1123  Suspension and Expiration of a QILDRO

 

a)         If a member who is an annuitant of the System subject to a valid QILDRO re-enters active TRS membership, payments to the alternate payee will be suspended for the same period of time that the member’s retirement benefits are suspended.  Resumption of the alternate payee’s payments will be subject to the same limitations that apply to resumption of the member’s benefits. 

 

b)         A QILDRO expires:

 

1)         Upon the death of the alternate payee, in which case the right to receive the affected benefit or refund will revert to the member or the member's designated beneficiaries.

 

2)         Upon the death of the member and payment of all amounts subject to the QILDRO.

 

3)         When the member takes a refund that terminates membership in the System, even if the member’s refund is paid to an alternate payee.  A QILDRO that expires because the member took a refund is not revived by the member’s subsequent return to membership in the System.

 

4)         In accordance with the provisions of a valid court order terminating the QILDRO.

 

5)         After payment of all amounts provided in the QILDRO.

 

6)         Upon receipt of a valid QILDRO applicable to the same member and same alternate payee as provided in subsection (c).

 

c)         Only one valid QILDRO may be in effect at any given time for the same member and same alternate payee. If the System has a valid QILDRO on file and subsequently receives another valid QILDRO applicable to the same member and same alternate payee, the subsequently received valid QILDRO shall supersede and replace the immediately preceding valid QILDRO, and the immediately preceding valid QILDRO shall be deemed expired.  A QILDRO that expires due to receipt of a subsequent valid QILDRO is not automatically revived by a court order vacating or terminating the subsequent QILDRO. Any subsequent QILDRO must be submitted to the System as provided in Section 1650.1114.

 

(Source:  Amended at 47 Ill. Reg. 9473, effective June 22, 2023)

 

Section 1650.1124  Income Tax Reporting

 

For tax reporting of income received pursuant to a QILDRO, if the alternate payee is the annuitant's spouse or former spouse, the System will report income to the recipient and the nontaxable portion of the member's benefit will be allocated pro rata between the annuitant and the alternate payee.  However, if the alternate payee is the annuitant's child or other dependent, the System will report income received by the child or other dependent to the annuitant, and the nontaxable portion of the member's benefit will be allocated to the annuitant.

 

(Source:  Amended at 39 Ill. Reg. 5259, effective March 20, 2015)

 

Section 1650.1125  Lump-Sum Death Benefit Allocation to Alternate Payee

 

The alternate payee share of any lump-sum death benefit will be satisfied as follows:

 

a)         First, from any refund of accumulated or excess contributions, prior to any distribution to the designated beneficiaries.

 

b)         Second, from any survivor benefit payable as a lump sum, prior to any distribution to the designated beneficiaries, subject to the following:

 

1)         All eligible dependent beneficiaries will first elect whether to receive the survivor benefit in monthly payments or in a lump-sum payment.

 

2)         If monthly payments are elected, no amount is payable to the alternate payee from those monthly survivor benefit payments.

 

3)         If any portion of the survivor benefit is payable as a lump sum, the balance of any alternate payee share not paid from the refund of accumulated or excess contributions will be paid from the lump-sum survivor benefit, prior to any distribution to the designated beneficiaries.

 

c)         If the refund of accumulated or excess contributions and the lump-sum survivor benefit are insufficient to satisfy the alternate payee share, no further amount is payable to the alternate payee.

 

d)         The aggregate amount distributed to the alternate payee from any refund of accumulated or excess contributions and any lump-sum survivor benefit shall not exceed the alternate payee share.

 

e)         All benefit overpayments will be deducted from any refund of accumulated or excess contributions and any lump-sum survivor benefit prior to paying the alternate payee share.

 

(Source:  Added at 32 Ill. Reg. 4073, effective February 28, 2008)

SUBPART N: PAYROLL DEDUCTION PROGRAM

 

Section 1650.1200  Payroll Deduction Program Guidelines (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 718, effective January 11, 2017)

 

Section 1650.1201  Employer Responsibility Under the Payroll Deduction Program (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 718, effective January 11, 2017)

 

Section 1650.1202  Payroll Deduction Agreements – Suspensions and Terminations (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 718, effective January 11, 2017)

 

Section 1650.1203  Payroll Deduction Program – Full-Time Employment Defined (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 718, effective January 11, 2017)

 

Section 1650.1204  Payroll Deduction Program – Disability Defined (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 718, effective January 11, 2017)

 

Section 1650.1205  Employer Payment of Member's Optional Service, Refund and/or Upgrade Contribution Balance (Repealed)

 

(Source:  Repealed at 41 Ill. Reg. 718, effective January 11, 2017)

SUBPART O: RETIREMENT BENEFITS

 

Section 1650.2900  Excess Benefit Arrangement

 

a)         Adoption and Nature of the Arrangement.

 

1)         The Arrangement.  The Teachers' Retirement System of the State of Illinois, pursuant to the authority granted to it by 40 ILCS 5/1-116, hereby adopts the Teachers' Retirement System Excess Benefit Arrangement, effective January 1, 1997.

 

2)         Nature of the Arrangement.  This Arrangement is a portion of a governmental plan (as that term is defined in section 414(d) of the Internal Revenue Code of 1986, as amended, and Section 3(32) of the Employee Retirement Income Security Act of 1974, as amended), and is administered as a qualified governmental excess benefit arrangement pursuant to the provisions of Code section 415(m) (26 USC 415(m)).

 

b)         Definitions.  Each word or phrase defined in this subsection (b) shall have the following meaning whenever such word or phrase is capitalized and used herein, unless a different meaning is clearly required by the context of the Arrangement.  The definition of any term in the singular may also include the plural.

 

1)         "Annuitant" shall mean a person described in 40 ILCS 5/16-111.1.

 

2)         "Arrangement" shall mean the Teachers' Retirement System Excess Benefit Arrangement, as from time to time amended or restated.

 

3)         "Code" shall mean the Internal Revenue Code of 1986, as amended.

 

4)         "Disability Retirement Annuity" shall mean the annuity payable to an Annuitant pursuant to 40 ILCS 5/16-149.2.

 

5)         "Excess Benefit" shall mean the monthly equivalent of the difference between the Unrestricted Benefit and the Maximum Benefit.

 

6)         "Maximum Benefit" shall mean the monthly equivalent of the maximum benefit permitted by Code section 415 to be paid an Annuitant or beneficiary under the Retirement Plan during any limitation year of the Retirement Plan.

 

7)         "Member" shall mean a person who is a Member as that term is defined in 40 ILCS 5/16-107.

 

8)         "Retirement Annuity" shall mean an annuity payable to an Annuitant pursuant to 40 ILCS 5/16-132 through 16-136.4.

 

9)         "Retirement Plan" shall mean the retirement plan administered by the Teachers' Retirement System pursuant to 40 ILCS 5/Art. 16.

 

10)       "Survivor Benefit Annuity" shall mean an annuity payable from the Retirement Plan to a beneficiary or beneficiaries of a Member or Annuitant as a result of the death of the Member or Annuitant pursuant to 40 ILCS 5/16-141 through 16-143.2.

 

11)       "System" shall mean the Teachers' Retirement System of the State of Illinois.

 

12)       "Unrestricted Benefit" shall mean the maximum monthly Retirement Annuity, Disability Retirement Annuity, or Survivor Benefit Annuity benefit payable under Article 16 of the Illinois Pension Code [40 ILCS 5/Art. 16], whichever is applicable, determined without regard to the limitation of the Code imposed under Code section 415.

 

c)         Excess Benefits.

 

1)         An Annuitant who is receiving a Retirement Annuity as provided under the Retirement Plan shall be entitled to receive an Excess Benefit for any month in which the Annuitant receives a Retirement Annuity benefit payment.

 

2)         An Annuitant who is receiving a Disability Retirement Annuity as provided under the Retirement Plan shall be entitled to receive an Excess Benefit for any month in which the Annuitant receives a Disability Retirement Annuity benefit payment.

 

3)         Upon the death of a Member or Annuitant whose beneficiary or beneficiaries are eligible for an annuity under the Retirement Plan, the Member's or Annuitant's beneficiary or beneficiaries who are receiving a Survivor Benefit Annuity shall be entitled to receive an Excess Benefit for any month in which the beneficiary or beneficiaries are receiving a Survivor Benefit Annuity.

 

4)         Benefit Payment:  A benefit payable under this subsection (c) shall be paid at such time or times and in such form to the Annuitant or his or her beneficiary as the benefit under the Retirement Plan would be paid.  The Annuitant shall have the right to receive as a portion of his or her first payment hereunder an amount equal to the sum of the Excess Benefits otherwise payable to him or her since January 1, 1995, had this arrangement been in effect as of January 1, 1995.

 

d)         Administration of the Arrangement.

 

1)         Administrator:  The Arrangement shall be administered by the System, which shall have the authority to interpret the Arrangement and issue such regulations as it deems appropriate.  The System shall have the duty and responsibility to maintain records, making the requisite calculations and disbursing the payments under the Arrangement through the Comptroller of the State of Illinois.  The System's interpretations, determinations, regulations, and calculations shall be final and binding on all persons and parties concerned.

 

2)         Amendment and Termination:  The System may amend or terminate the Arrangement at any time, provided, however, that no such amendment or termination shall adversely affect a benefit to which a Member or an Annuitant or his or her beneficiary is entitled under subsection (c) prior to the date of such amendment or termination unless the Member or Annuitant becomes entitled to an amount equal to such benefit under another arrangement, plan or practice adopted by the System.

 

3)         Payments:  The System will pay all benefits arising under the Arrangement and all costs, charges, and expenses relating to the Arrangement through appropriations received from the State of Illinois, except those costs normally borne by other agencies or offices of the State of Illinois.

 

4)         Non-assignability of Benefits:  The benefits payable under this Section or the right to receive future benefits under the Arrangement may not be anticipated, alienated, pledged, encumbered, or subjected to any charge or legal process.

 

5)         Status of Arrangement:  Nothing contained in this Section shall be construed as providing for assets to be held in trust or escrow or any other form of asset segregation for the Annuitant or for any other person or persons to whom benefits are to be paid pursuant to the terms of the Arrangement, the Annuitant's only interest under this Section being the right to receive the benefits set forth in this Section.  To the extent the Annuitant or any other person acquires a right to receive benefits under the Arrangement, such right shall be no greater than the right of any unsecured, general creditor of the State of Illinois.

 

6)         Applicable Law:  All questions pertaining to the construction, validity, and effect of the Arrangement shall be determined in accordance with the laws of the United States and, to the extent not pre-empted by such laws, by the laws of the State of Illinois.

 

7)         Forfeiture Provisions:  All rights to any benefits payable under the Arrangement, including the payment of any unpaid benefit installments, shall be immediately forfeited if the Member's or Annuitant's right to receive an annuity benefit under the Retirement Plan is terminated in accordance with 40 ILCS 5/16-199.

 

(Source:  Amended at 26 Ill. Reg. 11476, effective July 11, 2002)

SUBPART P: COMPETITIVE SELECTION PROCEDURES FOR INVESTMENT SERVICES

 

Section 1650.3000  Summary and Purpose

 

This Subpart P implements the provisions of Public Act 96-6 to ensure investment transparency and objective consideration of potential investment managers and consultants, as authorized by the Illinois Pension Code [40 ILCS 5/1-113.14]. Procurement of all investment services by the Teachers' Retirement System of the State of Illinois is conducted in accordance with the competitive selection procedures set forth in this Subpart.

 

(Source:  Added at 34 Ill. Reg. 7787, effective May 21, 2010)

 

Section 1650.3005  Definitions

 

a)         The definitions in Articles 1 and 16 of the Illinois Pension Code [40 ILCS 5/Arts. 1 and 16] apply to this Subpart.

 

b)         The definition of "investment services" in the Illinois Pension Code [40 ILCS 5/1‑113.14(a)] applies to this Subpart.

 

c)         "System" means the Teachers' Retirement System of the State of Illinois.

 

d)         "Consultant" means the independent investment consulting firm or firms contractually engaged by the System to provide general or specialty investment consulting services for the prudent administration of the System's investment portfolio.

 

e)         "Board" means the Board of Trustees of the Teachers' Retirement System of the State of Illinois.

 

f)         "Investment Committee" means the investment committee of the Board of Trustees of the Teachers' Retirement System of the State of Illinois.

 

g)         "Manager Database" means an industry database of institutional quality registered investment management firms utilized by the consultant as described in this Subpart.

 

h)         "Oversight Committee" refers to the applicable internal staff governance committee, including, but not limited to, the following:

 

1)         Public Markets Oversight Committee (PMOC)

 

2)         Private Capital Oversight Committee (PCOC)

 

3)         Real Asset Oversight Committee (RAOC)

 

4)         Diversifying Strategies Oversight Committee (DSOC)

 

5)         Real Estate Oversight Committee (REOC)

 

6)         TRS Staff Investment Committee (TRSIC)

 

 

i)          "Staff" means the professional investment staff of the Teachers' Retirement System responsible for the applicable asset class.

 

(Source:  Amended at 39 Ill. Reg. 14989, effective October 30, 2015)

 

Section 1650.3010  Public Markets Manager Database

 

a)         The consultant makes use of an industry database (Manager Database) containing institutional quality firms that are registered investment managers.  No fee is required to participate in the Manager Database. 

 

b)         The Manager Database serves as the primary pool from which the System identifies candidates for public market investment manager searches. 

 

c)         To be considered in a public market search, all interested investment managers not currently in the Manager Database should ensure that all required information has been submitted to the Manager Database prior to the screening dates specified in the candidate profiles described in Sections 1650.3017, 1650.3020 and 1650.3025.  Should a search be conducted for which a developed database does not exist or is incomplete, investment managers may also submit or be requested to submit a written Request for Information (RFI).

 

d)         The consultant's contact information is available on the TRS website  (https://www.trsil.org).

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3015  Emerging Investment Managers

 

a)         The System's Emerging Manager Program is broadly available across all asset classes.  The program is open to any firm meeting the definition of "emerging investment manager" as defined in Section 1-109.1(4) of the Illinois Pension Code and to any other younger, growing investment firms with smaller asset bases and developing track records.  Any firm interested in participating in the Emerging Manager Program may submit the appropriate questionnaire provided on the TRS website (https://www.trsil.org).  All responses are reviewed by staff and included in the System's emerging manager database.

 

b)         Staff screens the System's database for emerging manager candidates across all asset classes and actively pursues other potential candidates not included within the database through industry participation and other networking channels.

 

c)         Based on review of the database and submitted questionnaires, staff meets to identify managers that appear to have the highest probability of success over the next three to five years and the potential for graduation from the Emerging Manager Program into the main portfolio.

 

d)         Staff and the consultant conduct in-person interviews of managers at the System's offices or an alternate location agreed upon by the System and the manager.

 

e)         Following favorable results of the in-person interviews, staff identifies finalist firms for on-site due diligence at the candidate firm's offices.  On-site visits and finalist recommendations must be approved by the applicable Oversight Committee.

 

f)         After on-site due diligence is completed, staff initiates fee and contract negotiations with the finalist firms.  All contracts and related documentation relative to hiring an investment manager, including any open items relating to fee or contract terms, must be disclosed and negotiated in final form prior to final commitment.

 

g)         Any finalist firm that successfully passes staff due diligence review (including approval of the applicable Oversight Committee) and fee and contract negotiations is eligible for final commitment from staff and may be invited to present to the Investment Committee.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3017  Candidate Profile for Investment Manager Searches

 

a)         The candidate profile described in this Subpart P is a customized written document prepared by staff that specifically defines the detailed requirements of a given investment manager search and the investment manager qualifications and characteristics that are sought in the particular search.

 

b)         To ensure accessibility to the public, whenever an investment manager search is initiated, the candidate profile document is posted to the TRS website. To ensure global transparency, all investment manager searches are available on the Illinois Procurement Policy Board website via a link to the TRS website.

 

c)         The candidate profile document delineates all relevant information and metrics particular to the given search. The information and metrics are specific to each manager search, and customized based on the necessary qualifications for the search. Evaluation criteria and minimum qualifications will generally be comprised of the following:

 

1)         Manager style;

 

2)         Manager type;

 

3)         Minority investment manager inclusion;

 

4)         Amount to be allocated;

 

5)         Investment vehicles;

 

6)         Process for identification of candidates;

 

7)         Process for selection of semi-finalist candidates;

 

8)         Process for selection of finalists;

 

9)         Minimum asset requirement;

 

10)         Minimum professional investment experience;

 

11)         Stability of professional staff;

 

12)         Geographic location;

 

13)         Involvement with other business;

 

14)         Financial well-being of firm;

 

15)         Long range plan;

 

16)         Investment style;

 

17)         Investment research;

 

18)         Minimum performance record;

 

19)         Performance preferred attributes;

 

20)         Performance comparisons;

 

21)         Client communications and rapport;

 

22)         Fees;

 

23)         Compliance with Illinois State law and divestment restrictions; and

 

24)         Manager guidelines and investment management agreement.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3020  Public Market Searches

 

a)         The Board authorizes the System's asset allocation targets and asset class structure by recorded vote in a business meeting of the Board conducted in accordance with the Open Meetings Act [5 ILCS 120].  Staff may initiate searches as necessary to implement the System's asset allocation and/or manager structure.

 

b)         At each meeting of the Investment Committee, staff will notify the Board of search activity, including the outcome of all completed searches. 

 

c)         With the initiation of a search, staff, working with the consultant, prepares a written candidate profile that lists specific requirements for each search, as described in Section 1650.3017.  The candidate profile identifies specific quantitative and qualitative factors, such as:

 

1)         Minimum assets under management;

 

2)         Minimum track record;

 

3)         Risks relative to benchmarks;

 

4)         Return relative to benchmarks over various time periods;

 

5)         Size and tenure of professional staff;

 

6)         Investment strategy and process; and

 

7)         Organizational stability and strength.

 

d)         The candidate profile is posted on the TRS website to allow all interested candidates to review the search criteria and understand how to participate in the search.

 

e)         The candidate profile identifies a specific screening period during which the consultant will screen the Manager Database or other candidate information to identify all managers meeting the criteria of the candidate profile. 

 

f)         During the screening period identified in the candidate profile, staff and the consultant identify all candidates in the Manager Database that meet the quantitative criteria specified in the candidate profile.

 

g)         Staff and the consultant review the candidate list to eliminate any managers that fail to meet qualitative screens.  All emerging managers, as defined in Section 1‑109.1(4) of the Illinois Pension Code, that meet the minimum criteria of the search will be identified and the most promising emerging manager candidates will be included in the selection process described in this Section.

 

h)         Staff and the consultant further refine the candidate list to identify semi-finalist firms that, based on criteria in the candidate profile, appear to have the highest probability of success over the next three to five years.  In the event more information is necessary to narrow the semi-finalist list, a standardized Request for Information (RFI) may be issued to the pool of eligible semi-finalists to facilitate further in-depth analysis by staff and the consultant.  Semi-finalists in this case are selected from the RFI submissions.

 

i)          Staff conducts in-person interviews of semi-finalist firms at the System's offices or an alternate location agreed upon by the System and the firm. Semi-finalist candidates must be approved by the applicable Oversight Committee.

 

j)          Following favorable results of the in-person interviews, staff identifies finalist firms for formal due diligence meetings, typically at the candidate firm's offices.  Due diligence meetings and finalist recommendations must be approved by the applicable Oversight Committee.

 

k)         Following favorable due diligence review and successful contract and fee negotiations, a finalist candidate is, or candidates are, presented to the applicable Oversight Committee for final approval.

 

l)          Documentation to the applicable Oversight Committee will include a timeline of the search process, a summary of that process, and confirmation that the search was conducted in accordance with TRS policy.

 

m)        With approval of the applicable Oversight Committee, staff is authorized to implement the recommendation.

 

n)         At the next scheduled meeting of the Investment Committee following the commitment, staff will provide the Committee a report of commitment activity.

 

o)         If any eligible managers, as defined in Section 1-109.1(4) of the Illinois Pension Code, meet the minimum criteria of the search, the most qualified emerging candidate will be invited to present as a finalist to the Investment Committee at its next scheduled meeting.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3025  Small and Mid Cap Equity Searches

 

a)         The Board has authorized and directed staff to continuously monitor the investment manager universe for attractive small and mid cap public equity candidates.  Staff and the consultant formally screen the full manager universe on a semi-annual basis following the end of each fiscal and calendar year.

 

b)         Following the semi-annual screening of the small cap and/or mid-cap equity database, the search process continues in a manner consistent with the public search process in Section 1650.3020.

 

(Source:  Amended at 36 Ill. Reg. 7688, effective May 4, 2012)

 

Section 1650.3030  Private Market and Commingled Fund Searches

 

a)         Funds and managers are opportunistically reviewed as they are available in the market based on the System's tactical plans and quality of the fund's or manager's team, process and strategy. 

 

b)         Each year, staff, working with the consultants, prepare tactical plans for private market investments to the Investment Committee.  The annual tactical plans establish allocation targets for opportunistic investments within the private equity, real estate, and diversifying strategies asset classes for the upcoming year.  Tactical plans also establish investment guidance for segments of the System's real assets and income asset classes.

 

c)         Summaries of the System's annual tactical plans are posted on the TRS website (https://www.trsil.org) following Board approval.  Investment focus for the fiscal year is specified in the annual tactical plan summaries for all interested funds and managers to review.

 

d)         Funds and managers interested in participating in the System's alternative investment program and meeting the investment focus specified in the annual tactical plans may identify themselves to the System or its consultants via email, as instructed on the TRS website.

 

e)         Over the course of the tactical plan period, staff reviews all information received from funds and managers that best position the System's investment portfolio for its intended strategic allocation targets.

 

f)         Staff eliminates any investment opportunities that fail to meet the System's qualitative requirements and/or do not fit into a strategic allocation defined in the annual tactical plans.

 

g)         Any fund or manager meeting the criteria set forth in the annual tactical plan and deemed to be a complementary fit to the portfolio may be invited to interview with staff in person or via conference call.

 

h)         Following favorable interview results and staff research into the fund offering or manager, the fund or manager may be asked to complete the System's standardized comprehensive due diligence questionnaire.

 

i)          Following continued favorable review, staff proceeds with formal due diligence meetings, typically at the candidate firm's offices.  Any recommendation for due diligence meetings must be approved by the applicable staff Oversight Committee.

 

j)          After due diligence is completed, staff initiates fee and contract negotiations with the finalist firm.  All contracts and related documentation relative to hiring a fund or manager, including any open items relating to fee or contract terms, must  be disclosed and negotiated in final form prior to final commitment. 

 

k)         Any finalist firm that successfully passes due diligence review and fee and contract negotiations is presented to the applicable Oversight Committee.  With applicable Oversight Committee approval, staff is authorized to implement the recommendation.

 

l)          At the next scheduled meeting of the Investment Committee following the commitment, staff will provide the Committee a report of commitment activity.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3032  Co-Investment Opportunities

 

a)         The System's alternative investment relations will often present opportunities for co-investment alongside fund investments. When these investments are complementary to the portfolio, it is advantageous to the System to participate in these opportunities as they provide return enhancement at lower fee structures.

 

b)         Co-investment opportunities are typically presented to TRS staff from existing alternative investment managers.  Staff conducts their own separate due diligence on each co-investment opportunity.

 

(Source:  Added at 36 Ill. Reg. 7688, effective May 4, 2012)

 

Section 1650.3035  Private Market Real Estate Separate Account Searches

 

a)         Each year, staff, working with the consultants, prepares an annual tactical plan for the management and allocation of the System's real estate portfolio.  The tactical plan establishes investment guidelines, including the allocation to TRS's separate account advisors.  The Board approves the annual tactical plan by recorded vote in a business meeting of the Board conducted in accordance with the Open Meetings Act [5 ILCS 120].

 

b)         Staff may initiate searches as necessary to implement the System's real estate tactical plan and/or fill vacancies within the manager structure.

 

c)         Following authorization by the applicable Oversight Committee, staff, working with the consultant, prepares a standardized RFI that lists specific requirements for the search.  The RFI identifies specific quantitative and qualitative factors, such as:

 

1)         Minimum assets under management;

 

2)         Minimum track record;

 

3)         Risks relative to benchmarks;

 

4)         Return relative to benchmarks over various time periods;

 

5)         Size and tenure of professional staff;

 

6)         Investment strategy and process; and

 

7)         Organizational stability and strength.

 

d)         The RFI is posted on the TRS website (https://www.trsil.org) to allow all interested candidates to review the search criteria and understand how to participate in the search.

 

e)         The RFI identifies a specific timeline for interested candidates to submit their responses to the RFI. 

 

f)         Following the RFI deadline, staff and the consultant identify and rank all candidates' submissions that meet the quantitative criteria specified in the RFI.

 

g)         Staff and the consultant review the candidate list to eliminate any managers that fail to meet qualitative screens.  All emerging managers, as defined in Section 1‑109.1(4) of the Illinois Pension Code, that meet the minimum criteria of the search will be identified and the most promising emerging manager candidates will be included in the selection process described in this Section.

 

h)         Staff and the consultant further refine the candidate list to identify semi-finalist firms that, based on criteria in the RFI, appear to have the highest probability of success over the next three to five years. 

 

i)          Staff conducts in-person interviews of semi-finalist firms at the System's offices or an alternate location agreed upon by the System and the firm. Semi-finalist candidates must be approved by the applicable Oversight Committee.

 

j)          Following favorable results of the in-person interviews, staff identifies finalist firms for formal due diligence meetings, typically at the candidate firm's offices.  Due diligence meetings and finalist recommendations must be approved by the applicable Oversight Committee.

 

k)         Any finalist firm that successfully passes due diligence review and fee and contract negotiations is presented to the Oversight Committee for consideration.

 

l)          At the next scheduled meeting of the Investment Committee following the commitment, staff will provide the Committee a report of commitment activity.

 

m)        If any eligible emerging managers, as defined in Section 1-109.1(4) of the Illinois Pension Code, meet the minimum criteria of the search, the most qualified emerging manager candidate will be invited to present as a finalist to the Investment Committee.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3040  Consultant Searches

 

a)         In accordance with Section 1-113.14(d) of the Illinois Pension Code, investment consultants may serve for a maximum five-year term.  Any incumbent consultant is eligible to submit a proposal for the new engagement.

 

b)         Staff may initiate a search to provide general or specialty investment consulting services to the System through a formal Request for Proposal (RFP) process.

           

c)         Following initiation of a search, staff prepares an RFP containing the following information:

 

1)         The type of services required;

 

2)         An estimate of when and for how long the services will be required;

 

3)         The contract to be used;

 

4)         The date and time by which proposals must be submitted; and

 

5)         A statement of the information the proposal must contain.

 

d)         The RFP is posted on the TRS website (https://www.trsil.org) to allow any interested candidate to review the search criteria.  The RFP notice posted on the TRS website summarizes the services sought, tells how and where to submit proposals, specifies the deadline for submitting proposals, and tells when and where proposals will be publicly opened and how to obtain paper copies of the RFP.

 

e)         Proposals submitted in response to an RFP must comply with all requirements set forth in the RFP and submitted within the time frame specified in the RFP.  Proposals are date and time stamped upon receipt.  Proposals that arrive late for any reason will not be considered.

 

f)         Proposals are publicly opened at the date and time specified on the TRS website.  Staff reviews all proposals timely received to ensure all required information is included.  Proposal information is publicly available following execution of a contract with the successful firm.

 

g)         Staff identifies and ranks all proposals meeting all minimum qualifications specified in the RFP to identify semi-finalist firms.

 

h)         Staff conducts in-person interviews of semi-finalist firms at the System's offices or alternate location agreed upon by the System and the firm.

 

i)          Following favorable results of the in-person interviews, staff identifies finalist firms for formal due diligence meetings, typically at the candidate firms' offices.

 

j)          After due diligence is completed, staff initiates fee and contract negotiations with finalist firms.  All contracts and related documentation relative to hiring a consultant must be negotiated in final form prior to Investment Committee consideration.  Contracts for consultant services may not exceed five years in duration.

 

k)         Any finalist firm that successfully passes due diligence review and fee and contract negotiations is presented to the Investment Committee for consideration.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

 

Section 1650.3045  Evaluation by Investment Committee

 

a)         The Investment Committee ensures that the decision and process to hire a particular investment manager or consultant, or to approve a specific investment, is well-reasoned, thoroughly considered and prudent. 

 

b)         The Investment Committee may review written supporting documentation to assure the greatest possible disclosure of all relevant issues; that the search process, investment sourcing and related due diligence was fair; and that the screening process was consistently applied.

 

c)         Upon approval by the Investment Committee, any recommendation to hire a particular investment manager or consultant, or to approve a specific investment, is submitted to the Board for decision.

 

(Source:  Amended at 42 Ill. Reg. 13666, effective June 29, 2018)

SUBPART Q: PLAN QUALIFICATION

 

Section 1650.3100  Summary and Purpose

 

a)         This Subpart Q is intended to implement compliance requirements imposed on the Teachers' Retirement System of the State of Illinois (System) by the United States Internal Revenue Service (IRS). On April 13, 2011, the System received a favorable determination letter reflecting the view of the IRS that the System complies in form with the applicable requirements for qualification under the Internal Revenue Code of 1986, as amended (26 USC).  In connection with the determination letter application, the System submitted to the IRS proposed amendments to the provisions of Article 16 of the Illinois Pension Code [40 ILCS 5/16]. The IRS approved those proposed amendments by issuing a compliance statement, and adoption of the proposed amendments is necessary for continued reliance on the IRS compliance statement and  favorable determination letter. While the System worked diligently to seek legislative enactment, the proposed amendments to Article 16 of the Illinois Pension Code have not yet been enacted by action of the Illinois General Assembly and signature by the Illinois Governor.

 

b)         The System therefore requested, and the IRS has issued, a revised compliance statement approving adoption of the proposed amendments to be made to the Illinois Administrative Code, rather than to the Illinois Pension Code.  To ensure the continued qualification of the retirement plan administered by the System and continued reliance on the IRS compliance statement and favorable determination letter, the purpose of this Subpart Q is to promulgate the required amendments to the System regarding the plan qualification requirements.

 

(Source:  Added at 35 Ill. Reg. 19541, effective November 18, 2011)

 

Section 1650.3105  Exclusive Benefit Rule

 

Prior to the satisfaction of all liabilities to members or their beneficiaries, no part of the corpus or income of the System shall be used for, or diverted to, purposes other than for the exclusive benefit of the System's members, annuitants and beneficiaries.

 

(Source:  Added at 35 Ill. Reg. 19541, effective November 18, 2011)

 

Section 1650.3110  USERRA (Uniformed Services Employment and Reemployment Rights Act (38 USC 4301-4335)) Compliance

 

The provisions of 40 ILCS 5/1-118 (veterans' rights) shall be effective with respect to the System beginning December 12, 1994.

 

(Source:  Added at 35 Ill. Reg. 19541, effective November 18, 2011)

 

Section 1650.3115  Required Minimum Distributions

 

The provisions of 40 ILCS 5/1-116.1 (required distributions) shall be effective with respect to the System beginning January 1, 1987.

 

(Source:  Added at 35 Ill. Reg. 19541, effective November 18, 2011)

 

Section 1650.3120  Federal Contribution and Benefit Limitations

 

The System shall comply with the applicable contribution and benefit limitations imposed by section 415 of the Internal Revenue Code. This Section is effective for years beginning January 1, 1976 through January 14, 1991 (the effective date of 40 ILCS 5/1-116).

 

(Source:  Added at 35 Ill. Reg. 19541, effective November 18, 2011)

 

Section 1650.3125  Mortality Tables and Interest Rates

 

The mortality tables and interest rates adopted by the Board of Trustees of the System from time to time in accordance with 40 ILCS 5/16-122 shall apply to 40 ILCS 5/16 as though such provisions were fully set forth in 40 ILCS 5/16. This Section applies beginning July 1, 1984.

 

(Source:  Added at 35 Ill. Reg. 19541, effective November 18, 2011)

SUBPART R: TIER II MEMBERS AND ANNUITANTS

 

Section 1650.3200  Definitions

 

For purposes of this Subpart R, "Tier II" means the provisions of Section 1-160 of the Illinois Pension Code that apply to certain members and annuitants of the Teachers' Retirement System of the State of Illinois (the "System") as defined therein.

 

(Source:  Added at 40 Ill. Reg. 14099, effective September 28, 2016)

 

Section 1650.3220  Automatic Increase in Tier II Disability Benefits

 

a)         A Tier II member or annuitant receiving a disability benefit under the provisions of Section 16-149, 16-149.1 or 16-149.2 of the Code shall receive a 7% increase in the member's or annuitant's initial disability benefit on the January 1 following the fourth anniversary of the granting of the disability benefit.

 

b)         On each January 1 following the 7% increase, the member's or annuitant's Tier II disability benefit shall be increased by 3% or one-half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12-month period ending with the September preceding each November 1, whichever is less, of the initial disability benefit.

 

c)         If the annual unadjusted percentage change in the consumer price index-u preceding November 1 is zero or there is a decrease, the Tier II member's or annuitant's disability benefit shall not be increased.

 

d)         For persons receiving a disability retirement annuity under Section 16-149.2 of the Code, any prior annual increases shall cease as soon as the person is eligible to receive the annual increase provided in Section 1-160(e) of the Code.

 

(Source:  Added at 40 Ill. Reg. 14099, effective September 28, 2016)

 

Section 1650.3221  Tier II Disability Retirement Annuity Final Average Salary

 

Final average salary for the purpose of determining a Tier II disability retirement annuity under Section 16-149.2 of the Illinois Pension Code shall be:

 

a)         For a Tier II member with less than 8 years of creditable service, the average salary during the member's entire period of creditable service.

 

b)         For a Tier II member with 8 or more years of creditable service, the average salary for the highest 8 consecutive years within the last 10 years of creditable service as determined under Section 1-160(b) of the Code.

 

(Source:  Added at 40 Ill. Reg. 14099, effective September 28, 2016)

 

Section 1650.3222  Tier II Disability Retirement Annuity Calculation

 

a)         The Tier II disability retirement annuity shall be equal to the larger of:

 

1)         35% of the most recent annual contract salary rate or, for part-time and substitute members, the most recent annualized salary rate; or

 

2)         If the disability commences prior to the member's attainment of age 62, the amount computed in accordance with Section 16-133 of the Code, provided the amount computed under Section 16-133(a)(B) shall be reduced by ˝ of 1% for each month that the member is less than age 62; or

 

3)         If the disability commences after the member's attainment of age 62, and the member is not receiving a retirement annuity under Section 16-133 of the Code, the amount computed in accordance with Section 16-133.

 

b)         The Tier II disability retirement annuity shall be reduced by ˝ of 1% for each month that the member is less than age 67 at the time the retirement annuity begins. However, this reduction shall not apply if the member retires on account of disability under Section 16-149.2 of the Code with at least 10 years of creditable service.

 

(Source:  Added at 40 Ill. Reg. 14099, effective September 28, 2016)

 

Section 1650.3230  Contributions for Tier II Members with Reciprocal Earnings

 

The annual Tier II salary limitations set forth in Section 1-160(b-5) of the Illinois Pension Code shall be applied by the System without regard to whether a member has earnings in a reciprocal system as defined in Article 20 of the Code in that plan year.

 

(Source:  Added at 40 Ill. Reg. 14099, effective September 28, 2016)

SUBPART S: BUYOUT PROGRAMS

 

Section 1650.3300  General Provisions

 

The following terms, phrases, and requirements shall apply to the System's administration of the buyout programs established under Sections 16-190.5 and 16-190.6 of the Code.

 

a)         Definitions

 

"Accelerated Annual Increase Buyout" or "AAI Buyout" means the accelerated pension benefit payment for a reduction in annual retirement annuity and survivor's annuity increases provided in Section 16-190.6 of the Code.

 

"Accelerated Pension Benefit Buyout" or "APB" means the accelerated pension benefit payment in lieu of any pension benefit provided for in Section 16-190.5 of the Code.

 

"Article 16" means Article 16 of the Pension Code (Teachers' Retirement System of the State of Illinois).

 

"Buyout Payment" means an accelerated pension benefit payment issued under Section 16-190.5 or 16-190.6 of the Code.

 

"Buyout Programs" means the provisions of Section 16-190.5 allowing for member election of an accelerated pension benefit payment in lieu of any pension benefit, and the provisions of Section 16-190.6 allowing for member election of an accelerated pension payment for a reduction in annual retirement annuity and survivor's annuity increases.

 

"Code" means the Pension Code  [40 ILCS 5].

 

"Effective Date of the Election" means the date the System receives the member's election to receive a buyout payment in the form prescribed by the System.

 

"Election Window" means a period of time of not less than 90 days designated by start and end dates determined by the System during which an eligible member may elect the buyout.

 

"Factor" refers to actuarial assumptions, as determined by the System's actuaries pursuant to Section 16-176 of the Code, specifically developed to calculate buyout payments in accordance with Sections 16-190.5 and 16-190.6.

 

"Terminated", as used in Section 16-190.5, means an inactive member who has separated from service with a TRS-covered employer for at least four consecutive months, as provided in Section 16-151 of the Code.

 

"Valid Election" means the System has received the member's buyout application form prescribed by the System, proof of birth if not already on file with the System, and the alternate payee's written consent if required by Section 1650.3330.

 

b)         Assumptions, Information and Payments

 

1)         For purposes of calculating buyout payments and administering the buyout programs in a reasonable and efficient manner within the constraints imposed by the Code, the System will apply uniform assumptions as determined by the System for all eligible members using the TRS rate of return for discounting future benefit streams and the member's actual age, but irrespective of individual demographic characteristics such as marital status, gender, dependents, etc.

 

2)         The System will use its best efforts to provide accurate and sufficient information to allow an eligible member to make an informed decision whether to elect either of the buyout programs.  The member is solely responsible for his or her decision and is encouraged to seek personal financial, legal or other professional advice as necessary and appropriate given individual circumstances.  In no event will the System bear any liability for the member's buyout decision.

 

3)         All buyout payments will be funded from the State Pension Obligation Acceleration Bond Fund (see Sections 16-190.5(f) and 16-190.6(d-5) of the Code).  The System will administer buyout payments as long as bond proceeds are available (see Section 7.7 of the General Obligation Bond Act [30 ILCS 330]).  To protect the System's tax-qualified status as contemplated in Sections 16-190.5(h) and 16-190.6(f), under no circumstances, including unavailability or depletion of bond proceeds, will trust assets of the System be used for any buyout payment.

 

4)         If bond proceeds from the State Pension Obligation Acceleration Bond Fund are depleted or otherwise unavailable to fund buyout payments, the buyout election will be cancelled and any benefits or refunds due the member or member's designated beneficiaries will be calculated according to Articles 1 and 16 of the Code that would apply in the absence of the buyout election.

 

c)         Rollover Distributions

 

1)         All buyout payments will be issued in accordance with Section 1650.470.

 

2)         Notwithstanding the language contained in Sections 16-190.5(e) and 16-190.6(d) of the Code, in order for the System to maintain its tax-qualified status as contemplated in Sections 16-190.5(h) and 16-190.6(f), the member may elect to have a portion of the buyout payment paid to an eligible retirement plan in a direct rollover and to have the remainder paid as a direct distribution to the member.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.3310  Accelerated Annual Increase Buyout Program

 

a)         In accordance with Section 16-190.6(b) of the Code, to be eligible for the AAI buyout, a member's retirement date for TRS benefit purposes and the effective date of the AAI buyout election must both occur within the effective dates of the buyout program.

 

b)         The System will notify each eligible member, when applying for a retirement benefit, of the AAI buyout.  It is the member's responsibility to comply with all instructions and requirements to achieve a valid election.

 

c)         A member's election of the AAI buyout becomes irrevocable when the member becomes an annuitant as defined in Section 1650.221.

 

d)         The AAI buyout payment will be calculated as follows: 

 

1)         Calculate the member's monthly retirement benefit under the applicable provisions of Article 16.  If the member has elected a reversionary annuity under Section 16-136, calculate the monthly benefit after the reversionary reduction.

 

2)         Multiply the result by the 70% of Difference in Monthly Benefit Factor.

 

e)         Under Section 16-138(2) of the Code, the amount payable upon the death of the annuitant will be reduced by the amount of any buyout payment issued to the annuitant.

 

f)         The annual increases for a reversionary annuity under Section 16-136 for beneficiaries of a member who received an AAI buyout payment will be calculated pursuant to Section 16-190.6(b-6).  If the reversionary beneficiary pre-deceases the annuitant, the buyout payment will not be adjusted.

 

g)         A member currently receiving, or who has ever received, a disability retirement annuity under Section 16-149.2 of the Code is not eligible to elect the AAI buyout.

 

h)         If the System determines after issuance that an AAI buyout payment was more than should have been paid by an amount greater than $100, the System shall assert a claim for the overpayment in accordance with Section 1650.595 against future benefits to be paid the annuitant or his or her beneficiaries. 

 

i)          If the System determines after issuance that an AAI buyout payment was less than should have been paid by an amount greater than $100, the System shall request additional funds from the State Pension Obligation Acceleration Bond Fund to process an additional buyout payment for the difference.  To protect the System's tax-qualified status (see Section 16-190.6(f)), under no circumstances, including unavailability or depletion of bond proceeds, will trust assets of the System be used for any additional buyout payment.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.3320  Accelerated Pension Benefit Buyout Program

 

a)         Each year of the APB program, the System will notify all known eligible terminated members about the buyout and instructions for electing the APB buyout and the dates of the applicable election window, unless the member was notified in a prior year.  The System will notify that member if the termination refund payable under Section 16-151 of the Code exceeds the amount of the APB buyout payment calculated by the System in accordance with this Section.  It is the member's responsibility to comply with all TRS instructions and requirements to achieve a valid election.  A member may not revoke the election after the close of the applicable election window.

 

1)         During each year of the program, eligible members receiving an offer will be notified of the window to elect the buyout.  An otherwise eligible member who fails to elect the APB during that year's election window must contact the System to be included in any subsequent year's election window.

 

2)         If the actual amount of APB buyout payment is less than the amount of the offer by a factor of 10% or more, the member may withdraw the election before the applicable election window closes and revert to the provisions of Article 16 that would apply in the absence of the APB buyout election.

 

b)         The APB buyout payment will be calculated as follows:

 

1)         Calculate the member's monthly retirement benefit under the applicable provisions of Article 16 at the member's retirement age as determined by the System, based on the member's service credit, age at separation, and current age as of June 30 of the same calendar year as the start date of  the applicable election window.  If the member is eligible for an actuarial benefit under Section 16-133(a)(A), the retirement benefit will be calculated as of the member's retirement age as determined by the System, or as of June 30 of the same calendar year as the start date of the applicable election window, whichever is later.

 

2)         Multiply the result by the applicable 60% of Monthly Benefit Factor.

 

c)         A member's APB election will be canceled prior to issuance of the buyout payment and any benefits or refunds due the member or the member's designated beneficiaries will be calculated according to the provisions of Article 16 that would apply in the absence of the buyout election, when any of the following events occur:

 

1)         The member has not complied with all requirements to constitute a valid election by the expiration of the APB program.

 

2)         The member dies after electing the APB but prior to the issue date of the buyout payment.

 

3)         A Required Minimum Distribution (RMD) is payable to the member in accordance with federal law.

 

4)         The System determines the member is ineligible to participate in the buyout program.

 

5)         The member withdrew the election as provided in this Section.

 

d)         The calculation of the APB buyout payment becomes final as of the payment issue date and will not be adjusted for any reason.

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)

 

Section 1650.3330  QILDRO Administration with Buyout Programs

 

a)         The System will administer Qualified Illinois Domestic Relations Orders (QILDROs) issued in accordance with Section 1-119 of the Code as follows with respect to the buyout programs.  The definitions and other provisions of Subpart M are applicable unless otherwise provided in this Subpart S.

 

b)         A member's buyout election is a prohibited election requiring the alternate payee's written consent, in accordance with Section 1-119(j)(1), if the alternate payee would be entitled to receive a share of the buyout payment under the most recent valid QILDRO on file with the System as of the effective date of the election as defined in Section1650.3300(a).  If the alternate payee does not provide the written consent by the expiration of the applicable buyout program, the buyout election will be cancelled and any benefits or refunds due the member or the member's designated beneficiaries will be calculated according to the provisions of Article 16 that would apply in the absence of the buyout election, and the QILDRO will be administered as if the member did not elect the buyout.

 

c)         AAI Buyouts

 

1)         If an alternate payee is eligible to share in the member's AAI buyout payment under this Section, the alternate payee's share will be determined from the "partial member's refund" (see Section 1-119 of the Code, Subpart M of this Part, and Section VI (Partial Refund) of the QILDRO and corresponding provision of any Calculation Order (Section (3)(c) or Section (4)(C)) on file with the System on the date payment is vouchered (see Section 1650.1116(f)).

 

2)         If QILDRO Section III (Monthly Retirement Benefit) is blank, the member's AAI buyout election may proceed without alternate payee consent, and the alternate payee will not share in the buyout payment.

 

3)         If QILDRO Section III (Monthly Retirement Benefit) is completed but Section IV (Post-Retirement Increases) does not allocate a share to the alternate payee, the member's AAI buyout election may proceed without alternate payee consent, and the alternate payee will not share in the buyout payment.

 

4)         If QILDRO Section III (Monthly Retirement Benefit) is completed and QILDRO Section IV (Post-Retirement Increases) allocates a share to the alternate payee, alternate payee consent to the member's AAI buyout election is required.

 

5)         If QILDRO Section III (Monthly Retirement Benefit) is completed and Section IV (Post-Retirement Increases) allocates a share to the alternate payee and the alternate payee has consented to the member's AAI buyout election, the alternate payee is entitled to share in the AAI buyout payment in the amount indicated in Section VI (Partial Refund).

 

d)         APB Buyouts

 

1)         If an alternate payee is eligible to share in the member's APB buyout payment as provided in this Section, the alternate payee's share will be determined from the "refund upon termination" or "termination refund" (see Section 1-119, Subpart M of this Part, and Section V (Termination Refund) of the QILDRO and corresponding provision of any Calculation Order (Section (3)(b) or Section (4)(B)) on file with the System on the date payment is vouchered (see Section 1650.1116(f)).

 

2)         If QILDRO Section III (Monthly Retirement Benefit) is blank, the member's APB buyout election may proceed without alternate payee consent, and the alternate payee will not share in the buyout payment.

 

3)         If QILDRO Section III (Monthly Retirement Benefit) is completed, alternate payee consent to the member's APB buyout election is required.

 

4)         If QILDRO Section III (Monthly Retirement Benefit) is completed and the alternate payee has consented to the member's APB buyout election, the alternate payee is entitled to share in the APB buyout payment in the amount indicated in Section V (Termination Refund).

 

(Source:  Amended at 44 Ill. Reg. 7905, effective April 24, 2020)