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IMRF Glossary of Terms

Alphabetical Index

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

A

403(b) plan
A retirement plan that functions like a defined contribution plan and is similar to a 401(k) plan, but is offered by non-profit organizations, such as universities and some charitable organizations, rather than corporations. If you work for a school district or a public hospital, you may be familiar with an Internal Revenue Code Section 403(b) tax-deferred annuity.

414(h)
Under Section 414(h) of the Internal Revenue Code, members make their contributions to IMRF on a tax-deferred basis. The member does not pay either federal or Illinois income tax on the money used to pay the contributions. A memberís contributions will be subject to federal income tax, but not to Illinois income tax, when he or she receives them as a refund or as a pension or when the memberís beneficiary(ies) receives them as a death benefit.

This tax treatment is provided under the 414(h) tax deferral plan effective July 1, 1984, for all IMRF employers and adopted earlier by some employers.

If a member made contributions before his or her employer adopted a 414(h) plan, those contributions were taxed at the time the member made them. They are not taxable when the member receives them as a refund or pension or when the memberís beneficiary(ies) receives them as a death benefit.

457 plan
A tax-exempt deferred compensation program that functions like a defined contribution plan and is made available to employees of state and federal governments and agencies. If you work for an IMRF employer other than a school district or public hospital, you may be familiar with a 457 deferred compensation plan.

Active member
See "participating member."

Actuary
A statistician who estimates future funding needs based on rates of mortality, disability, turnover, ages at retirement, rate of investment income, and salary trends.

Alternative Investments
Alternative investments include private equity, hedge funds, agriculture, and timberland. As of December 31, 2011, alternatives made up about 4% of the total fund, including about 2% in private equity, 1.5% in hedge funds, and .50% in agriculture and timberland.

Amortization period
One of the pieces of information an actuary uses to calculate an IMRF employer contribution rate. Generally, each IMRF employer (unit of government) has an unfunded liability due to “prior service” of employees when the employer joined IMRF and due to benefit increases. (Prior service refers to the years and months an employee worked for a unit of government before that unit joined IMRF—assuming the position the employee held qualified for IMRF).

The unfunded liability is the estimated cost of retirement benefits earned to date that have not been funded. That is to say, the employer has no assets with IMRF to pay those benefits. A portion of the unfunded liability must be paid each year; the portion is determined by the employer’s structure.

For most employers, the unfunded liability is amortized over a 30-year closed period reducing to 15 years, and then rolling at 15 years.  Participating instrumentalities (employers without taxing authority) amortize their unfunded liabilities over a 10-year open period. structure.

Annuitant
A person receiving an IMRF pension or surviving spouse pension.

Annuity
See pension.

Authorized Agent
The employee designated by the employer (unit of government) to administer IMRF locally. Authorized Agents submit information to IMRF via the web through Employer Access.

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B

Beneficiaries
The individual(s) or organization(s) a member chooses to receive his or her IMRF death benefits. A member’s default beneficiary is his or her estate. Members can view and change their beneficiaries by signing in to their Member Access account. You can also refer to IMRF Form 6.11, "Designation of Beneficiary," for details.

Retired members members complete a new designation of beneficiary form after they retire, IMRF Form 6.11A. Retired members can also view and change their beneficiaries by signing into their Member Access account.

Beneficiary Annuity
A death benefit payment option; a lifetime annuity purchased with the lump sum death benefit similar to an annuity purchased from an insurance company. The monthly amount payable is based upon the beneficiary's age.

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C

Civil Union
Under Illinois law the same rights of marriage apply to parties of a civil union. Therefore, the partner of a member who enters into a civil union will have the same rights as a spouse of a married member. A civil union partner will be eligible to receive an IMRF Surviving Spouse pension if the partner meets the eligibility requirements.

Concurrent Service
Concurrent service is earned in one of three ways:
    • A member is reported under the same IMRF plan by two or more employers.
      The member will earn only one total month of service credit for each month worked, regardless of the number of positions held, and the member’s wages are combined for the calculation of benefits. If the concurrent service occurs during the member’s “final rate of earnings” (FRE) period, it can increase the amount of his or her pension. Based upon the total earnings reported, the service credit for the concurrent month(s) is “allocated” between/among employers.

    • A member is reported under different IMRF plans by one or more employers.
      The member earns one month of service credit, but the salaries are not combined. The member’s wages are recorded separately under each plan for the calculation of benefits.  However, if a member is reported concurrently under the Regular Plan and SLEP plan and vests for a SLEP pension, each concurrent month will be treated as a month in two plans. When the member’s pension is calculated, the calculation will apply the Regular plan formula to those months with Regular wages and the SLEP formula to those months with SLEP wages.   

    • A member is reported under two or more revised Elected County Official positions.
      The member will earn one month of service credit for each Revised ECO position he or she holds. In addition, the member’s wages are recorded separately under each position for the calculation of benefits.
Conduit IRA
An IRA account which holds a rollover from a qualified pension plan (like IMRF) and to which other money has not been added.

Covered position
See "qualified position."

Creditable service
Also known as service credit, service or pension credits. The total time as an IMRF member. Service is credited monthly while a member is working, when on an IMRF authorized leave of absence, or receiving disability benefits.

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D

Defined Benefit Plan
Also known as a "Traditional Pension Plan." Defined Benefit Plans (like IMRF) pay a monthly pension based upon the member’s salary and length of service. As its name implies, an IMRF member’s retirement benefits are “defined” in advance so he or she knows what the member will receive when the member retires. The benefit is determined by a formula calculation that includes a member’s age, years of service credit, and salary history . The pension continues to improve monthly because it is tied to the member’s length of service. The benefit is guaranteed, and is paid for as long as the member lives.

Defined Contribution Plan
Under a defined contribution plan, the future retirement benefit is based upon how much the participant contributed and the earnings made on those contributions. Employees of a school district or hospital may be familiar with a Section 403(b) tax-deferred annuity. Employees of other IMRF employers may be familiar with a 457 deferred compensation plan. These plans function like defined contribution plans. However, in a pure defined contribution plan, the employer also makes contributions.

Direct Deposit
Direct Deposit allows IMRF to electronically deposit a pension payment or total and permanent disability benefit into the member's bank or other financial institution. Direct Deposit is a safer, faster, and more secure way of receiving benefit payments. Retiring members will receive their pension payments via Direct Deposit. You can change your Direct Deposit information by signing into your Member Access account.

Disability benefits
While receiving IMRF temporary or total and permanent disability benefits, a member earns service credit and has the same death benefit protection as if he or she were working. You must apply for IMRF disability benefits. Read more.

Divorce
The dissolution of a marriage or civil union.

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E

Early Retirement Discount
(Not to be confused with the IMRF Early Retirement Incentive.) The early retirement discount reduces a Regular plan member’s pension if he or she retires before the full retirement age.

Regular Plan Tier 1:
Full retirement age 60
If a member retires between the age of 55 and 60 with less than 35 years of service credit, the pension is discounted (reduced) one-quarter percent for each month the member is less than age 60 or for each month the member has less than 35 years of service, whichever discount is smaller. If a member retires at age 55 with at least 35 years of service credit, there is no reduction.

Regular Plan Tier 2:
Full retirement age 67
If a member retires between the ages of 62 and 67 with less than 35 years of service credit, the pension is discounted (reduced) one-half percent for each month the member is less than age 67 or for each month the member has less than 35 years of service, whichever discount is smaller. If a member retires at age 62 with at least 35 years of service credit, there is no reduction.

SLEP Plan Tier 2:
Full retirement age 55
If a member retires between the ages of 50 and 55, the pension is discounted (reduced) one-half percent for each month the member is less than age 55.

ECO

The IMRF Elected County Official Plan. IMRF’s Elected County Official Plan provides for an alternative benefit plan for elected county officials. For an elected county official to participate in this plan, his or her county must first adopt the program. The original ECO plan was revised on January 26, 2000. County officials joining ECO on or after that date participate in the revised ECO plan. On January 1, 2011, a second tier of benefits is added to the revised ECO plan.

ECO Plan Tier 2:
Full retirement age 67
If a member retires between the age of 62 and 67 with less than 35 years of service credit, the pension is discounted (reduced) one-half percent for each month the member is less than age 67 or for each month the member has less than 35 years of service, whichever discount is smaller. If a member retires at age 62 with at least 35 years of service credit, there is no reduction.

The ECO Plan is closed to new members as of August 8, 2011.

If a county has not adopted the ECO plan, it no longer has the option to do so. Elected County Officials currently participating in ECO remain in the plan. Elected County Officials currently participating in ECO remain in the plan.

However, if after August 8, 2011, an ECO member is elected to a different office:

  • In the same county, he or she can participate in ECO.
  • In a different county, he or she is not eligible for ECO in that new county.

Members participating in the Original ECO plan are not affected by this provision, as long as they have not revoked their ECO participation.

Effective Date of Retirement
The date a member is first eligible to receive pension benefits. IMRF pensions start as of the first day of the month after participation terminates. The effective date, not the date of you receive your first payment, is important when determining how you should report your IMRF pension payments for federal income tax purposes.


Eligible Spouse
If you and your spouse were married or in a civil union for one year or more when you stopped participating in IMRF, your spouse may eligible for an IMRF surviving spouse pension after you pass away.

ERI
The IMRF Early Retirement Incentive. At the employer’s option, a member can purchase up to five years of service credit. For each period of service credit purchased, the member’s age is increased accordingly.

Under the Regular Plan Tier 1:
The member must be at least age 50 and have at least 20 years of service credit (can include Reciprocal service).

Under the Regular Plan Tier 2:
The member must be at least age 57 and have at least 20 years of service credit (can include Reciprocal service).

EFTS
Electronic Funds Transfer System. Employers submit payments to IMRF electronically over the telephone or via the web with our EFT System. Another type of EFTS is “Direct Deposit,” where IMRF directly deposits a member’s benefit payments into the member’s checking or savings account. See Direct Deposit.

Employer
A unit of government that joins IMRF.

Employer Access
The secure Employer Access area of IMRFís website is designed to provide IMRF employers with information specific to their employer and membersí accounts. Also, employers can now enroll new members, submit IMRF Form 6.41 (termination form), Monthly Wage Reports, and Form 3.20 (wage adjustment) through this secure website.

There are three types of Employer Access accounts:
    • Authorized Agent (AA) account: Administers all accounts and has access to all Employer Access functions. The AA account is ultimately responsible for setting up and maintaining all other accounts.

    • Security Administrator account: Set up by the AA, has access to all the functions of an AA account. This type of account is a good choice when the Authorized Agent at your employer would prefer someone else to handle the day-to-day administration of IMRF and Employer Access. There can be only one Security Administrator account for each employer.

    • Web Assistant account: Set up and maintained by either the AA or Security Administrator. The ability to use Employer Access functions is limited by security permissions set up by the AA or Security Administrator. Individuals named as Web Assistants should have their own Web Assistant account.
Employer contributions
The employer IMRF contribution rate is computed separately for each employer every year. Employer contributions pay a portion of the cost of retirement pensions, surviving spouse pensions, death benefit coverage, and disability benefits.

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F

Field Representatives
IMRF field representatives work with employers and members and assist them with IMRF related questions. IMRF Field Representatives also conduct employee workshops, Authorized Agent Certification Programs, and other informational presentations.

Final rate of earnings
A member’s Final Rate of Earnings (FRE) is the salary used to calculate the amount of retirement benefits.
  • Under the Regular Tier 1 and SLEP Tier 1 plans:
    A member’s highest total earnings during any 48 consecutive months within the member’s last 10 years of IMRF service divided by 48. Usually, this is the average of the last 48 months of service. The earnings considered for each of the last three months cannot be more than 25% greater than the highest earnings in any of the first 45 months of the 48 consecutive months.

  • Under the Regular Tier 2 plan:
    A member’s highest total earnings up to the wage cap during any 96 consecutive months within the member’s last 10 years of IMRF service divided by 96. Usually, this is the average of the last 96 months of service. The earnings considered for each of the last three months cannot be more than 25 percent greater than the highest earnings in any of the first 93 months of the 96 consecutive months.

    Regular Tier 2 FRE cap: $109,971.43 in 2013. This amount automatically increases annually by the lesser of 3% or by one-half of the increase in the Consumer Price Index (urban) for the preceding year.

  • Under the SLEP Tier 2 plan:
    A member’s highest total earnings up to the wage cap during any 96 consecutive months within the member’s last 10 years of IMRF service divided by 96. Usually, this is the average of the last 96 months of service. The earnings considered for each of the last three months cannot be more than 25 percent greater than the highest earnings in any of the first 93 months of the 96 consecutive months.


    SLEP Tier 2 FRE cap: $109,971.43 in 2013. This amount automatically increases annually by the lesser of 3% or by one-half of the increase in the Consumer Price Index (urban) for the preceding 12 months as of September. Overtime earnings for SLEP members are excluded from reportable earnings and are not included in the SLEP FRE.

  • Under the original Elected County Official plan:
    A member’s FRE is the annualized salary payable on the last day of participation in the ECO plan divided by 12. The ECO monthly FRE does not include any lump sum payments for vacation, sick leave, overtime, personal leave, etc. The ECO monthly FRE does include the annual stipend. However, the stipend is ”annualized,” e.g., an annual stipend of $2,500 increases the monthly FRE by $208.33.


  • Under the revised Elected County Official Tier 1plan:
    A member’s FRE is the average of the highest consecutive 48 months of ECO service in the last 10 years held in a specific office with the same county. A separate ECO FRE is calculated for each elected county position held in the same county.
Formula
Regular Tier 1 and Tier 2 formula: 1-2/3% of a member’s FRE for each of the first 15 years of service credit, plus 2 percent of a member’s FRE for each year of service credit in excess of 15 years. The total pension at retirement cannot exceed 75 percent of the member’s FRE.

SLEP Tier 1 formula:
Member terminated SLEP on or after July 1, 2004:
Flat 2.5% of the member’s FRE for each year of SLEP service credit. The total pension at retirement cannot exceed 80% of the member’s FRE.

Member terminated SLEP participation before July 1, 2004:
50 percent of the member’s FRE for the first 20 years of SLEP service credit, plus 2 percent of the FRE for each year of service over 20 and under 30 years, plus one percent of FRE for each year of service over 30 years. The total pension at retirement cannot exceed 75 percent of the member’s FRE.

SLEP Tier 2 formula: Flat 2.5% of the member’s FRE for each year of SLEP service credit. The total pension at retirement cannot exceed 75% of the member’s FRE.

Original ECO formula: 3% of ECO monthly final rate of earnings for each of the first 8 years of ECO service credit, plus 4% of ECO monthly final rate of earnings for each of the next 4 years of ECO service credit, plus 5% of ECO monthly final rate of earnings for each year of ECO service credit in excess of 12 years. An Original ECO member does not need eight years of ECO service to qualify for the ECO formula. The ECO formula is applied to the ECO service regardless of the amount of that service. For example, if a member has one month of ECO service, the ECO formula will be applied to that one month and the Regular or SLEP formulas applied to the remaining service.

Revised ECO Tier 1 formula: same as original ECO: 3% of ECO monthly final rate of earnings for each of the first 8 years of ECO service credit, plus 4% of ECO monthly final rate of earnings for each of the next 4 years of ECO service credit, plus 5% of ECO monthly final rate of earnings for each year of ECO service credit in excess of 12 years to a maximum of 80%. However, a revised ECO plan member must hold the same elected county position in the same county for a minimum of eight years in the same elected county office with the same county to qualify for the ECO retirement formula.

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G

No terms

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H

Hourly standard
The hourly standard (either 600 or 1,000 hours a year) determines whether or not a position qualifies for IMRF participation. You are required to participate in IMRF if you work in an IMRF qualified position.
 
Your Authorized Agent will know your employer's hourly standard. Employers can log into Employer Access to view their hourly standard.

"Full time" and "part time" do not mean anything in relation to the hourly standard. If the hours a member works in a year are expected to meet or exceed the employer's chosen hourly standard (either 600 or 1,000 hours a year), the member must participate in IMRF, regardless of full time or part time designation.

A position is considered for participation in IMRF based on its
expected hourly requirement. The actual hours an individual works may be more or less than the hours the position is expected to work.

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I

Inactive member
An inactive IMRF member is someone who once participated in and contributed to IMRF and still has funds on deposit (i.e. has not taken a refund of their IMRF contributions). Inactive members can be vested (eligible for a pension) or could be working for a reciprocal system that they can combine with their existing IMRF service, among other scenarios.

IRA
Individual Retirement Account. A tax-deferred retirement account for an individual that permits individuals to set aside up to $4,000 per year, with earnings tax-deferred until withdrawals begin at age 59-1/2 or later (or earlier, with an additional 10% tax).

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J

No Terms

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K

No Terms

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L

Level option
See "Optional Pension Payout."

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M

Member contributions
Regular Tier 1 and Tier 2 plans contribute 4.50 percent of salary toward a future IMRF pension: 3.75 percent for the member and 0.75 percent for a surviving spouse pension. Tier 2 members do not contribute on wages above the wage cap.

SLEP members contribute 7.50 percent of salary (up to the wage cap for Tier 2) on and after June 1, 2006, toward a future SLEP pension: 6.75 percent for the member and 0.75 percent for a surviving spouse pension. Before June 1, 2006, SLEP members contributed 6.50 percent of salary; 5.75 percent for the member and 0.75 percent for a surviving spouse pension. SLEP Tier 2 plan members do not contribute on overtime wages.

Members in any ECO plan contribute 7.50 of salary toward a future ECO pension: 6.75 percent for the member and 0.75 percent for a surviving spouse pension Members who participate in Regular IMRF contribute 4.5% of salary toward a future IMRF pension: 3.75% for the member and 0.75% for a surviving spouse pension.

Member Statement of Account
Each year IMRF mails to all members a Member Statement of Account. This statement provides a month-by-month report of a member's salary, member contributions, service credit earned, and an estimate of IMRF benefit payments. Members can view their Member Statement of Account by signing into their Member Access account and selecting the "Documents" Tab.

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N

No Terms

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O

Optional Pension Payout
Members retiring from IMRF’s Regular Tier 1 plan, and SLEP Tier 1 and Tier 2 plans: If a member retires before age 62, he or she can choose IMRF’s optional plan. The member would receive a larger pension until age 62 and a reduced pension thereafter. See ”standard pension payout.”

Members retiring from IMRF’s Regular Tier 2 plan:
The optional payment payout is not available. A member must be at least age 62 to retire under IMRF’s Regular Tier 2 plan.

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P

Participating member
Also known as active member. A member currently working in an IMRF qualified position and making contributions to IMRF. A member on an IMRF authorized leave or receiving IMRF disability benefits is also considered a participating member.

For the purposes of an Authorized Agent submitting a petition or casting a ballot in an executive trustee election, a “member of IMRF” includes an employee who either is currently working in an IMRF-covered position and making contributions to IMRF or is receiving an IMRF pension.

Past Service
A member can receive past service credit for service performed and earnings paid for a period prior to January 1 of the current year (January 1 through December 31).
Past service falls into three categories of authorization:
  • Requires Governing Body approval or prior resolution on file:
    • Military leave provided by Illinois Pension Code
    • Retroactive service for Elected Officials
    • Application for prior service
    • IMRF Benefit Protection Leave
    • Out of state service credit authorization

  • Requires approval of Authorized Agent
    • Application for retroactive service
    • Omitted Service credit verification
    • General Assembly application for service
    • Certificate of Sheriff's Law Enforcement service

  • Requires application by member only
    • Application for reinstatement of service
    • Military leave provided under Federal law (military leave interrupted IMRF participation and returned to same employer)
    • Conversion of up to 120 months of Regular plan service to SLEP
Pension
Also known as an annuity. An IMRF pension is paid as long as the member lives.
  • Under the Regular Tier 1 Plan
    • A member must have at least eight years of service credit and be age 55.
    • The pension is increased by 3 percent of the original amount each year.

  • Under the Regular Tier 2 Plan
    • A member must have at least 10 years of service credit and be age 62.
    • The pension is increased by the lower of 3% or one-half of the increase in the Consumer Price Index for the preceding 12 months as of September. The increase is based on the original pension amount. The annual increase is payable when the member reaches age 67 or receives 12 months of pension payments, whichever occurs later. If the CPI decreases or is zero, no increase is paid.

  • Under the SLEP Tier 1 Plan
    • A member must have at least 20 years of SLEP service credit and be age 50.
    • The pension is increased by 3 percent of the original amount each year.

  • Under the SLEP Tier 2 Plan
    • A member must have at least 10 years of SLEP service credit and be age 55.
    • The pension is increased by the lower of 3% or one-half of the increase in the Consumer Price Index for the preceding 12 months as of September. The increase is based on the original pension amount. The annual increase is payable when the member reaches age 60 or receives 12 months of pension payments, whichever occurs later. If the CPI decreases or is zero, no increase is paid.

  • Under the Revised ECO Tier 1 Plan
    • A member must have at least eight years in the same elected county office with the same county and be age 55. The pension is increased by 3 percent of the original amount each year.
Pension credits
Also known as service credit or "creditable service." The total time as an IMRF member. Service is credited monthly while a member is working, on an IMRF authorized leave of absence, or receiving disability benefits.

Pension Protection Act of 2006
On August 17, 2006, the Pension Protection Act (PPA) of 2006 became law. Several provisions affect IMRF members:
    • Members eligible to upgrade existing service can pay for the upgrade using rollovers from 457 and 403(b) deferred compensation plans and from traditional IRA accounts;
    • Former public safety employees are not subject to the additional 10% tax on member contribution refunds if the member was age 50 or older when the member stopped working for his or her IMRF employer;
    • A retired or disabled public safety employee can elect to take a tax deduction of up to $3000 for health insurance or long term care insurance premiums deducted from IMRF benefit payments;
    • A beneficiary who is not the memberís spouse can avoid federal income tax withholding on a lump sum death benefit by rolling over the taxable portion into a traditional IRA;
    • A member or memberís beneficiary will be allowed to roll over the taxable portion of a refund or lump sum death benefit into a Roth IRA.
Public safety employee
Public safety employees include individuals involved in crime and juvenile delinquency control or reduction, or enforcement of the criminal laws (including juvenile delinquency), including, but not limited to police, corrections, probation, parole, truant officers, and judicial officers; professional firefighters; officially recognized or designated public employee members of a rescue squad or ambulance crew; officially recognized or designated members of a legally organized volunteer fire department; officially recognized or designated chaplains of volunteer fire departments, fire departments, and police departments.

Previously taxed contributions
If a member made contributions to IMRF before 1984, those contributions are previously taxed. That is, the money used to pay those contributions has already been subject to federal income tax—the member paid taxes on the money used to make them.

A portion of a member’s retirement benefit (and in some cases, a survivor’s benefit) is a return of the member’s own contributions. If those contributions are “previously taxed,” then that portion of the benefit payment is not subject to federal income tax. See also "tax deferred contributions."

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Q

Qualified position
Also known as a covered or participating position. An IMRF qualified position is one which will equal or exceed an employer's annual hourly standard. An employee is required to participate in IMRF if he or she works in an IMRF qualified position.

Qualifying spouse
To receive a surviving spouse pension, the surviving spouse must have been married to or in a civil union with the IMRF member for at least one year prior to the member’s last date of participation in IMRF (or in a reciprocal system, if appropriate), and the member must have a valid beneficiary form on file with IMRF naming the spouse as the only primary beneficiary. To view or change your beneficiaries, sign into your Member Access account.

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R

Reciprocal Act/System
Under the Reciprocal Act, service under IMRF and 12 other Illinois public pension funds may be considered together to determine eligibility for and the amount of retirement benefits. Read more about the Reciprocal Act and IMRF.

Regular Plan
Employees who work in positions that qualify for IMRF must participate in IMRF under the Regular plan. Two exceptions exist: participation in IMRF is optional for elected officials and city hospital employees.

Members who participated in IMRF before January 1, 2011, participate in the Regular Tier 1 plan. Any future IMRF participation will be under Tier 1, even if the member changes employers or takes a refund and returns to participation.

Members who first join IMRF on or after January 1, 2011, participate in the Regular Tier 2 plan. EXCEPTIONS: Members enrolled in IMRF on or after January 1, 2011, will participate in Tier 1 if the member:
    • Previously participated in IMRF or in a reciprocal retirement system (except the Judges or General Assembly retirement systems) even if the member took a refund of his or her contributions and has not yet repaid the refund, or
    • Purchases omitted service credit that creates a participation date prior to January 1, 2011.

A small group of IMRF members work in positions that qualify for a different IMRF plan: the SLEP, ECO, or SLEP ECO plan.

Reinstatement
If a member has taken a refund of his or her IMRF contributions, he or she has forfeited all the earned service credit. Once certain conditions are met, a member may be able to repay (with interest) IMRF and reinstate those years of service credit.

Reversionary (Special Needs) Annuity
Under a reversionary (Special Needs) annuity, a member chooses to receive a lower pension payment so his or her IMRF pension payments can revert (become payable) to some other individual upon the memberís death.

Roth IRA
A type of IRA (Individual Retirement Account), established in the Taxpayer Relief Act of 1997, which allows taxpayers, subject to certain income limits, to save for retirement while allowing the savings to grow tax-free. Taxes are paid on contributions, but withdrawals, subject to certain rules, are not taxed at all.

Retiree Death Benefit
Also known as the lump sum death benefit. A $3,000 benefit, funded by IMRF employers, usually payable upon the death of a retired member (not a surviving spouse).

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S

Seasonal employees
Seasonal employees of school districts and special education cooperatives automatically receive 12 months of service credit if they are employed for the entire year. Seasonal employees of other IMRF employers can receive 12 months of service credit if they are employed the entire year and the employer submits the appropriate information to IMRF.

Separation refund
A member can receive a separation refund--a return of all his/her member contributions (without interest) only if the member is no longer working for an IMRF employer. If a member takes a refund, the member forfeits all of the service credit earned. A refund may be reinstated (with interest) if the member meets certain requirements.

Service Credit
Service credit is a member's total time under IMRF, stated in years and fractions. Service is credited monthly while a member is working, receiving IMRF disability benefits or while he or she is on IMRF's Benefit Protection Leave. A member earns one month of service credit for each month he or she:
  • Works in a qualified position and make a member contribution.
  • Worked in a qualified position prior to his or her employer joining IMRF.
  • Receives an IMRF disability benefit.
  • Is on an IMRF Benefit Protection Leave (limited to 12 months).
  • Purchases a month of past service credit.

A member cannot earn more than one month of service credit for any given calendar month. Read more about Service Credit.

SLEP
IMRF's Sheriff's Law Enforcement Personnel program. This plan is available to county sheriffs, deputy sheriffs, forest preserve rangers and airport police and certain police chiefs.

SLEP ECO
Sheriffs who work for a county that has adopted the Elected County Official Plan and who elect to participate in ECO, participate as SLEP ECO. If a county sheriff is enrolled in SLEP on or after January 1, 2011, and he or she elects to participate in SLEP ECO, the sheriff will participate in Revised ECO Tier 2.

Social Security
With the exception of a small number of people, IMRF members participate in Social Security in addition to IMRF. Since you contributed to both plans, you are entitled to full retirement benefits from each. Your IMRF retirement benefits will never be reduced because you receive Social Security.

Social Security coverage for IMRF members is required, except for a limited number of firefighters and police officers, by an agreement between the State of Illinois and the Secretary of Health and Human Services under Section 218 of the Social Security Act.

IMRF members pay Social Security taxes on wages up to the wage base, and IMRF employers pay an equal amount. Your employer remits these taxes to the Internal Revenue Service.

Applications for benefits and questions about Social Security should be directed to the local Social Security district office or representative or call 1-800-772-1213.

Special Needs Annuity
See "Reversionary Annuity."

Spouse
An IMRF memberís wife, husband, or civil union partner.

Standard Pension Payout
Also known as a straight life plan. Under straight life plan, a member receives the same pension amount every month after he or she retires for the rest of his or her life, regardless of how long he or she lives. See Ēoptional pension payout

Surviving Spouse Contributions
All IMRF members are required, by law, to contribute toward a surviving spouse pension. If when you retire you do not have an eligible spouse (married to or in a civil union with you for at least one year before you stopped participating in IMRF and named as your only primary beneficiary), your surviving spouse contributions will be refunded, with interest.

Surviving Spouse Pension
A member’s default beneficiary is his or her estate. A member’s spouse will be eligible for a surviving spouse pension only if:

  • The member was married or in a civil union for at least one year before he or she terminated IMRF participation and
  • The member submitted a Designation of Beneficiary form naming the spouse as the only primary beneficiary.

Under Regular and SLEP Tier 1 Plans:
A surviving spouse’s monthly pension is one-half of the member’s monthly pension. On January 1, the surviving spouse pension is increased by 3% of the original amount. If the member died before June 1, 2006, the surviving spouse pension is actuarially reduced if the spouse is more than five years younger than the member.

Under Regular Tier 2 Plan :
A surviving spouse’s monthly pension is 66-2/3% of the member’s monthly pension. On January 1, the surviving spouse pension is increased by the lower of 3% or one-half of the increase in the Consumer Price Index for the 12 months as of September. The increase is based on the original pension amount. If the CPI decreases or is zero, no increase is paid.

Under SLEP Tier 2 Plan :
A surviving spouse’s monthly pension is 66-2/3% of the member’s monthly pension. On January 1, the surviving spouse pension is increased by the lower of 3% or one-half of the increase in the Consumer Price Index for the 12 months as of September. The increase is based on the original pension amount. If the CPI decreases or is zero, no increase is paid. Annual increases in a surviving spouse pension begin the January following the year the spouse reaches 60.

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T

Tax Deferred Contributions
If a member made contributions to IMRF in 1984 or later, the money used to pay those contributions has not been subject to federal income tax. The contributions were deducted from the member’s pay checks without being taxed. Therefore, the member has not been taxed on the money used to make those contributions.

A portion of a member’s retirement benefit (and in some cases, a survivor’s benefit) is a return of the member’s own member contributions. If those contributions are “tax deferred,” then that portion of the benefit payment is subject to federal income tax.

Tier
“Tier” specifies the type of benefits for which a member may be eligible. Tier status is determined by a member’s first date of participation. To find out what tier you participate under, sign into your Member Access account.
Tier 1: Members enrolled in IMRF before January 1, 2011. If a Tier 1 member:
  • Stops participating in IMRF and is again enrolled in IMRF, the member will participate in Tier 1.
  • Changes IMRF employers, the member will participate in Tier 1.
  • Terminates participation, takes a refund of his or her contributions and is later enrolled in IMRF, the member will participate in Tier 1.

Tier 2: Members first enrolled in IMRF on or after January 1, 2011. EXCEPTIONS: Members enrolled in IMRF on or after January 1, 2011, will participate in Tier 1 if the member:

  • Previously participated in IMRF or in a reciprocal retirement system (except the Judges or General Assembly retirement systems), even if the member took a refund of his or her contributions and has not yet repaid the refund, or
  • Purchases omitted service credit that creates a participation date prior to January 1, 2011.

Public Act 96-1495 created a second tier for IMRF SLEP. A member’s participation date determines his or her tier.

Tier 1: Members first enrolled in SLEP before January 1, 2011:

  • If a member ever participated in SLEP with any employer before January 1, 2011, that member always participates in Tier 1 even if that member terminated participation and took a refund of contributions.

Tier 2: Members first enrolled in SLEP on or after January 1, 2011:

  • A member will participate in SLEP Tier 2 even if that member participated in Regular IMRF Tier 1 or Tier 1 with a reciprocal retirement system. Some SLEP members will be participants in both Regular plan Tier 1 and SLEP plan Tier 2
TRS
Teachersí Retirement System.

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U

No Terms

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V

Voluntary Additional Contributions
A member may contribute up to an additional 10% of his or her earnings (or up to the wage cap for Tier 2) to the Voluntary Additional Contribution (VAC) program. At retirement, the member can take the VAC as a lump sum or as an additional monthly pension.

VAC are after taxóthey are not tax-deferred like usual IMRF member contributions. Some members may be better served by contributing a portion of their salary on a pre-tax (tax-deferred) basis to their employerís deferred compensation plan, e.g., 457 or 403(b). Read more.


Vesting
Vesting establishes a member’s right to a guaranteed future monthly retirement benefit.

  • A member is vested for a Regular Tier 1 plan pension when he or she earns eight years of any type of service credit.
  • A member is vested for a Regular Tier 2 plan pension when he or she earns 10 years of any type of service credit.
  • A member is are vested for a SLEP pension when he or she earns 20 or more years of SLEP service.

Members can meet this vesting requirement through service with a Reciprocal retirement system. See "Reciprocal Act."

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W

Wage Cap
Under Tier 2, a memberís wages are capped at $109,971.43 in 2013. The employer does not report any wages above the cap, and the member does not pay any contributions on wages above the cap. The wage cap is also applied when IMRF calculates memberís benefits. The wage cap could automatically increase each year by the lesser of 3% or one-half of the increase in the Consumer Price Index (urban) (CPI-U) for the preceding 12 months as of September. If the CPI-U decreases or is zero, no increase is paid.

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X

No Terms

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Y

No Terms

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Z

No Terms

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IMRF Online provides a brief summary of IMRF benefits and the adminstration of those benefits. IMRF members' and employers' rights and obligations are governed by Article 7 of the Illinois Pension Code. Statements in these publications are general, and the Illinois state law governing IMRF is complex and specific. If a conflict arises between information in these publications and the law, all decisions are based on the law.

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Page Last Updated by JC on 08.19.13