Illinois General Assembly - Full Text of SB2103
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Full Text of SB2103  102nd General Assembly

SB2103eng 102ND GENERAL ASSEMBLY

  
  
  

 


 
SB2103 EngrossedLRB102 12567 RPS 17905 b

1    AN ACT concerning public employee benefits.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Pension Code is amended by
5changing Sections 15-202, 16-204, and 24-102 as follows:
 
6    (40 ILCS 5/15-202)
7    Sec. 15-202. Optional deferred compensation plan defined
8contribution benefit.
9    (a) As soon as practicable after August 10, 2018 (the
10effective date of Public Act 100-769) this amendatory Act of
11the 100th General Assembly, the System shall offer a deferred
12compensation plan that is eligible under Section 457(b) of the
13Internal Revenue Code of 1986, as amended, defined
14contribution benefit to participating employees active members
15of the System employed by employers described in Section
1615-106 of this Code that qualify as eligible employers under
17Section 457(e)(1)(A) of the Internal Revenue Code of 1986, as
18amended. Such eligible employers shall adopt the plan with an
19effective date no later than September 1, 2021. Participating
20employees may voluntarily elect to make elective deferrals to
21the eligible deferred compensation plan. Eligible employers
22may make optional employer contributions to the plan on behalf
23of participating employees, which contributions may be

 

 

SB2103 Engrossed- 2 -LRB102 12567 RPS 17905 b

1maintained, increased, reduced, or eliminated at the
2discretion of the employer from plan year to plan year. The
3defined contribution benefit shall be an optional benefit to
4any member who chooses to participate. The plan defined
5contribution benefit shall collect voluntary optional employee
6and optional employer contributions into an account for each
7participant and shall offer investment options to the
8participant. The plan benefit under this Section shall be
9operated in full compliance with any applicable State and
10federal laws, and the System shall utilize generally accepted
11practices in creating and maintaining the plan benefit for the
12best interest of the participants. The System may use funds
13from the employee and employer contributions to defray any and
14all costs of creating and maintaining the plan benefit. The
15System shall produce an annual report on the participation in
16the plan benefit and shall make the report public.
17    (b) The System shall automatically enroll in the eligible
18deferred compensation plan any employee of an eligible
19employer who first becomes a participating employee of the
20System on or after July 1, 2023 under an eligible automatic
21contribution arrangement that is subject to Section 414(w) of
22the Internal Revenue Code of 1986, as amended, and the United
23States Department of Treasury regulations promulgated
24thereunder. An employee who is automatically enrolled under
25this subsection (b) shall have 3% of his or her compensation,
26as defined by the plan, for each pay period deferred on a

 

 

SB2103 Engrossed- 3 -LRB102 12567 RPS 17905 b

1pre-tax basis into his or her account, subject to any
2contribution limits applicable to the plan. The Board may
3increase the default percentage of compensation deferred under
4this subsection (b).
5    An employee shall have 30 days from the date on which the
6System provides the notice required under Section 414(w) of
7the Internal Revenue Code of 1986, as amended, to elect to not
8participate in the eligible deferred compensation plan or to
9elect to increase or reduce the initial amount of elective
10deferrals made to the plan. In the absence of such affirmative
11election, the employee shall be automatically enrolled in the
12plan on the first day of the calendar month, or as soon as
13administratively practicable thereafter, following the 30th
14day from the date on which the System provides the required
15notice. An employee who has been automatically enrolled in the
16plan under this subsection (b) may elect, within 90 days of
17enrollment, to withdraw from the plan and receive a refund of
18amounts deferred, adjusted by applicable earnings and fees. An
19employee making such an election shall forfeit all employer
20matching contributions, if any, made with respect to such
21refunded elective deferrals and such forfeited amounts shall
22be used to defray plan expenses. Any refunded elective
23deferrals shall be included in the employee's gross income for
24the taxable year in which the refund is issued.
25    (c) The System may provide for one or more automatic
26contribution arrangements, which shall comply with all

 

 

SB2103 Engrossed- 4 -LRB102 12567 RPS 17905 b

1applicable Internal Revenue Service rules and regulations, in
2conjunction with or in lieu of the eligible automatic
3contribution arrangement under subsection (b), for
4participating employees of eligible employers whose annual
5earnings are limited by application of subsection (b) of
6Section 15-111 of this Code. The amount of elective deferrals
7made for the employee each pay period under an automatic
8contribution arrangement shall equal the default percentage
9specified by resolution of the Board multiplied by the
10employee's compensation as defined by the plan, subject to any
11contribution limits applicable to the plan, and shall be made
12on a pre-tax basis. An employee subject to this subsection (c)
13shall have 30 days from the date on which the System provides
14written notice to the employee to elect to not participate in
15the eligible deferred compensation plan or to elect to
16increase or reduce the amount of initial elective deferrals
17made to the plan. In the absence of such affirmative election,
18the employee shall be automatically enrolled in the plan
19beginning the first day of the calendar month, or as soon as
20administratively practicable thereafter, following the 30th
21day from the date on which the System provides the required
22notice.
23    (d) The System may provide that the default percentage for
24any employee automatically enrolled in the eligible deferred
25compensation plan under subsection (b) or (c) be increased by
26a specified percentage each plan year after the plan year in

 

 

SB2103 Engrossed- 5 -LRB102 12567 RPS 17905 b

1which the employee is automatically enrolled in the plan. The
2amount of automatic annual increases in any plan year shall
3not exceed 1% of compensation as defined by the plan.
4    (e) The changes made to this Section by this amendatory
5Act of the 102nd General Assembly are corrections of existing
6law and are intended to be retroactive to the effective date of
7Public Act 100-769, notwithstanding Section 1-103.1 of this
8Code.
9(Source: P.A. 100-769, eff. 8-10-18.)
 
10    (40 ILCS 5/16-204)
11    Sec. 16-204. Optional defined contribution benefit. As
12soon as practicable after the effective date of this
13amendatory Act of the 100th General Assembly, the System shall
14offer a defined contribution benefit to active members of the
15System. The defined contribution benefit shall be an optional
16benefit to any member who chooses to participate. The defined
17contribution benefit shall collect optional employee and
18optional employer contributions into an account and shall
19offer investment options to the participant. The benefit under
20this Section shall be operated in full compliance with any
21applicable State and federal laws, and the System shall
22utilize generally accepted practices in creating and
23maintaining the benefit for the best interest of the
24participants. The System may use funds from the employee and
25employer contributions to defray any and all costs of creating

 

 

SB2103 Engrossed- 6 -LRB102 12567 RPS 17905 b

1and maintaining the benefit. In addition, the System may use
2funds provided under Section 16-158 of this Code to defray any
3and all costs of creating and maintaining the benefit and then
4shall reimburse those costs from funds received from the
5employee and employer contributions under this Section. All
6employers must comply with the reporting and administrative
7functions established by the System and are required to
8implement the benefits established under this Section. The
9System shall produce an annual report on the participation in
10the benefit and shall make the report public.
11    As soon as is practicable on or after January 1, 2022, the
12System shall automatically enroll any employee who first
13becomes an active member or participant in the System. A
14member automatically enrolled under this Section shall have 3%
15of his or her pre-tax gross compensation for each compensation
16period deferred into his or her deferred compensation account,
17unless the member otherwise instructs the System on forms
18approved by the System. A member may elect, in a manner
19provided for by the System, to not participate in the defined
20contribution benefit or to increase or reduce the amount of
21pre-tax gross compensation contributed, consistent with State
22or federal law. A member shall be automatically enrolled in
23the benefit beginning the first day of the pay period
24following the member's 30th day of employment. A member who
25has been automatically enrolled in the benefit may elect,
26within 90 days of enrollment, to withdraw from the benefit and

 

 

SB2103 Engrossed- 7 -LRB102 12567 RPS 17905 b

1receive a refund of amounts deferred, plus or minus any
2applicable earnings, investment fees, and administrative fees.
3Any refunded amount shall be included in the member's gross
4income for the taxable year in which the refund is issued.
5    On or after January 1, 2023, the System may elect to
6increase the automatic annual contributions under this
7Section. The increase in the rate of contribution, however,
8shall not exceed 2% of a member's pre-tax gross compensation
9per year, and at no time shall any total contribution exceed
10any contribution limits established by State or federal law.
11(Source: P.A. 100-769, eff. 8-10-18.)
 
12    (40 ILCS 5/24-102)  (from Ch. 108 1/2, par. 24-102)
13    Sec. 24-102. As used in this Article, "employee" means any
14person, including a person elected, appointed or under
15contract, receiving compensation from the State or a unit of
16local government or school district for personal services
17rendered, including salaried persons. However, "employee", for
18the purposes of the State Employees Deferred Compensation Plan
19established under Section 24-104, does not include a person
20employed by an employer under Section 15-106 who first becomes
21a participant of the retirement system under Article 15 on or
22after July 1, 2023 unless the person has made an election to
23defer compensation into the State Employees Deferred
24Compensation Plan under a written agreement and the deferral
25election is in effect as of June 30, 2023. A health care

 

 

SB2103 Engrossed- 8 -LRB102 12567 RPS 17905 b

1provider who elects to participate in the State Employees
2Deferred Compensation Plan established under Section 24-104 of
3this Code shall, for purposes of that participation, be deemed
4an "employee" as defined in this Section.
5    As used in this Article, "health care provider" means a
6dentist, physician, optometrist, pharmacist, or podiatric
7physician that participates and receives compensation as a
8provider under the Illinois Public Aid Code, the Children's
9Health Insurance Act, or the Covering ALL KIDS Health
10Insurance Act.
11    As used in this Article, "compensation" includes
12compensation received in a lump sum for accumulated unused
13vacation, personal leave or sick leave, with the exception of
14health care providers. "Compensation" with respect to health
15care providers is defined under the Illinois Public Aid Code,
16the Children's Health Insurance Act, or the Covering ALL KIDS
17Health Insurance Act.
18    Where applicable, in no event shall the total of the
19amount of deferred compensation of an employee set aside in
20relation to a particular year under the Illinois State
21Employees Deferred Compensation Plan and the employee's
22nondeferred compensation for that year exceed the total annual
23salary or compensation under the existing salary schedule or
24classification plan applicable to such employee in such year;
25except that any compensation received in a lump sum for
26accumulated unused vacation, personal leave or sick leave

 

 

SB2103 Engrossed- 9 -LRB102 12567 RPS 17905 b

1shall not be included in the calculation of such totals.
2(Source: P.A. 98-214, eff. 8-9-13.)
 
3    Section 90. The State Mandates Act is amended by adding
4Section 8.45 as follows:
 
5    (30 ILCS 805/8.45 new)
6    Sec. 8.45. Exempt mandate. Notwithstanding Sections 6 and
78 of this Act, no reimbursement by the State is required for
8the implementation of any mandate created by this amendatory
9Act of the 102nd General Assembly.
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.