Member Contributions Paid by the Employer

Normally, IMRF member contributions are deducted from a member’s salary before taxes are deducted. For example,

If the employer pays the member’s contributions

Some employers pay all or a part of all of the member’s IMRF contribution. In that case, those “employer paid member contributions” are considered a salary increase—or a raise—to the member. This raise is considered income for all payroll tax purposes, i.e. IMRF and Social Security.

If an employer chooses to pay all or part of the member contribution, the employer cannot use funds from the IMRF tax levy. This limitation is stated in the Illinois Pension Code [40 ILCS 5/7-171(h), 173.2(b)].

Cafeteria Plan contributions

Cafeteria plans may be established under Section 125 of the Internal Revenue Code. Most options under a cafeteria plan are not reportable as IMRF earnings. To include compensation paid under an Internal Revenue Code Section 125 Plan (including premium conversion plans or flexible spending plans) as IMRF earnings, the employer’s governing
body would pass a resolution, IMRF Form 6.72.

The following examples illustrate how to calculate IMRF contributions and taxable earnings:

• if the governing body did pass the resolution to include cafeteria plan contributions as IMRF earnings (column 2)
  

  and

• if the governing body did not pass the resolution to include cafeteria plan contributions as IMRF earnings (column 3).

Calculations

To determine a member's IMRF earnings if the employer pays all of the member's IMRF contribution, you divide the base salary (the member's salary before the employer-paid contributions are added to it) by a factor:

The example below assumes the member participates in the Regular IMRF plan.

Questions?

Call an IMRF Member Service Representative at 1-800-ASK-IMRF (1-800-275-4673)