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

SB2103sam003 102ND GENERAL ASSEMBLY

Sen. Robert F. Martwick

Filed: 4/16/2021

 

 


 

 


 
10200SB2103sam003LRB102 12567 RPS 25367 a

1
AMENDMENT TO SENATE BILL 2103

2    AMENDMENT NO. ______. Amend Senate Bill 2103 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Pension Code is amended by
5changing Sections 15-202, 16-204, and 24-104 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

 

 

10200SB2103sam003- 2 -LRB102 12567 RPS 25367 a

1Section 457(e)(1)(A) of the Internal Revenue Code of 1986, as
2amended. Such eligible employers shall adopt the plan with an
3effective date no later than September 1, 2021. Participating
4employees may voluntarily elect to make elective deferrals to
5the eligible deferred compensation plan. Eligible employers
6may make optional employer contributions to the plan on behalf
7of participating employees, which contributions may be
8maintained, increased, reduced, or eliminated at the
9discretion of the employer from plan year to plan year. The
10defined contribution benefit shall be an optional benefit to
11any member who chooses to participate. The plan defined
12contribution benefit shall collect voluntary optional employee
13and optional employer contributions into an account for each
14participant and shall offer investment options to the
15participant. The plan benefit under this Section shall be
16operated in full compliance with any applicable State and
17federal laws, and the System shall utilize generally accepted
18practices in creating and maintaining the plan benefit for the
19best interest of the participants. The System may use funds
20from the employee and employer contributions to defray any and
21all costs of creating and maintaining the plan benefit. The
22System shall produce an annual report on the participation in
23the plan benefit and shall make the report public.
24    (b) The System shall automatically enroll in the eligible
25deferred compensation plan any employee of an eligible
26employer who first becomes a participating employee of the

 

 

10200SB2103sam003- 3 -LRB102 12567 RPS 25367 a

1System on or after July 1, 2022 under an eligible automatic
2contribution arrangement that is subject to Section 414(w) of
3the Internal Revenue Code of 1986, as amended, and the United
4States Department of Treasury regulations promulgated
5thereunder. An employee who is automatically enrolled under
6this subsection (b) shall have 3% of his or her compensation,
7as defined by the plan, for each pay period deferred on a
8pre-tax basis into his or her account, subject to any
9contribution limits applicable to the plan. The Board may
10increase the default percentage of compensation deferred under
11this subsection (b).
12    An employee shall have 30 days from the date on which the
13System provides the notice required under Section 414(w) of
14the Internal Revenue Code of 1986, as amended, to elect to not
15participate in the eligible deferred compensation plan or to
16elect to increase or reduce the initial amount of elective
17deferrals made to the plan. In the absence of such affirmative
18election, the employee shall be automatically enrolled in the
19plan on 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. An employee who has been automatically enrolled in the
23plan under this subsection (b) may elect, within 90 days of
24enrollment, to withdraw from the plan and receive a refund of
25amounts deferred, adjusted by applicable earnings and fees. An
26employee making such an election shall forfeit all employer

 

 

10200SB2103sam003- 4 -LRB102 12567 RPS 25367 a

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

 

 

10200SB2103sam003- 5 -LRB102 12567 RPS 25367 a

1administratively practicable thereafter, following the 30th
2day from the date on which the System provides the required
3notice.
4    (d) The System may provide that the default percentage for
5any employee automatically enrolled in the eligible deferred
6compensation plan under subsection (b) or (c) be increased by
7a specified percentage each plan year after the plan year in
8which the employee is automatically enrolled in the plan. The
9amount of automatic annual increases in any plan year shall
10not exceed 1% of compensation as defined by the plan.
11    (e) The changes made to this Section by this amendatory
12Act of the 102nd General Assembly are corrections of existing
13law and are intended to be retroactive to the effective date of
14Public Act 100-769, notwithstanding Section 1-103.1 of this
15Code.
16(Source: P.A. 100-769, eff. 8-10-18.)
 
17    (40 ILCS 5/16-204)
18    Sec. 16-204. Optional defined contribution benefit. As
19soon as practicable after the effective date of this
20amendatory Act of the 100th General Assembly, the System shall
21offer a defined contribution benefit to active members of the
22System. The defined contribution benefit shall be an optional
23benefit to any member who chooses to participate. The defined
24contribution benefit shall collect optional employee and
25optional employer contributions into an account and shall

 

 

10200SB2103sam003- 6 -LRB102 12567 RPS 25367 a

1offer investment options to the participant. The benefit under
2this Section shall be operated in full compliance with any
3applicable State and federal laws, and the System shall
4utilize generally accepted practices in creating and
5maintaining the benefit for the best interest of the
6participants. The System may use funds from the employee and
7employer contributions to defray any and all costs of creating
8and maintaining the benefit. In addition, the System may use
9funds provided under Section 16-158 of this Code to defray any
10and all costs of creating and maintaining the benefit and then
11shall reimburse those costs from funds received from the
12employee and employer contributions under this Section. All
13employers must comply with the reporting and administrative
14functions established by the System and are required to
15implement the benefits established under this Section. The
16System shall produce an annual report on the participation in
17the benefit and shall make the report public.
18    As soon as is practicable on or after January 1, 2022, the
19System shall automatically enroll any employee who first
20becomes an active member or participant in the System. A
21member automatically enrolled under this Section shall have 3%
22of his or her pre-tax gross compensation for each compensation
23period deferred into his or her deferred compensation account,
24unless the member otherwise instructs the System on forms
25approved by the System. A member may elect, in a manner
26provided for by the System, to not participate in the defined

 

 

10200SB2103sam003- 7 -LRB102 12567 RPS 25367 a

1contribution benefit or to increase or reduce the amount of
2pre-tax gross compensation contributed, consistent with State
3or federal law. A member shall be automatically enrolled in
4the benefit beginning the first day of the pay period
5following the member's 30th day of employment. A member who
6has been automatically enrolled in the benefit may elect,
7within 90 days of enrollment, to withdraw from the benefit and
8receive a refund of amounts deferred, plus or minus any
9applicable earnings, investment fees, and administrative fees.
10Any refunded amount shall be included in the member's gross
11income for the taxable year in which the refund is issued.
12    On or after January 1, 2023, the System may elect to
13increase the automatic annual contributions under this
14Section. The increase in the rate of contribution, however,
15shall not exceed 2% of a member's pre-tax gross compensation
16per year, and at no time shall any total contribution exceed
17any contribution limits established by State or federal law.
18(Source: P.A. 100-769, eff. 8-10-18.)
 
19    (40 ILCS 5/24-104)  (from Ch. 108 1/2, par. 24-104)
20    Sec. 24-104. The Illinois State Board of Investment
21created under Article 22A of this Act shall develop and
22establish a deferred compensation plan for employees of the
23State which shall be known as the State Employees Deferred
24Compensation Plan. The Plan shall provide for the Board to
25review proposed investment offerings and shall require that

 

 

10200SB2103sam003- 8 -LRB102 12567 RPS 25367 a

1only investments determined to be acceptable by the Board may
2be used for investing compensation deferred.
3    The Plan shall include appropriate provisions pertaining
4to its day to day operation providing for methods of electing
5to defer income, methods of changing the amount of income to be
6deferred, methods of selecting from among investment options
7available under the plan and such other provisions as may be
8appropriate.
9    The Plan shall provide for the preparation, and
10distribution from time to time to all eligible State
11employees, of pamphlets describing the Plan and outlining the
12options and opportunities available to State employees under
13the Plan. Such pamphlets, however, shall not be distributed to
14employees who are covered under Articles 7, 15, or 16 of this
15Code.
16    The Plan established under this Section shall not be
17implemented or amended until the Board is satisfied that
18compensation deferred under the Plan is not subject to income
19tax for the year in which it is earned and that the taxation of
20such compensation will be deferred until the time of its
21distribution to the employee.
22    The Board shall also review and oversee the administration
23of the Plan.
24(Source: P.A. 81-671.)
 
25    Section 90. The State Mandates Act is amended by adding

 

 

10200SB2103sam003- 9 -LRB102 12567 RPS 25367 a

1Section 8.45 as follows:
 
2    (30 ILCS 805/8.45 new)
3    Sec. 8.45. Exempt mandate. Notwithstanding Sections 6 and
48 of this Act, no reimbursement by the State is required for
5the implementation of any mandate created by this amendatory
6Act of the 102nd General Assembly.
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.".