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September 2008 (e-Ver. 3.1)

Summary of Key Changes:

• Two new FMLA eligibilities are added for military families
• Clarified the 600 and 1000 hourly standard
• Employers with Internet access are required to participate in online enrollments by August 1, 2009.
• Employers with Internet access are required to submit terminations online by August 1, 2008.
• Employer Access now allows online enrollment (as preference to Form 6.10).
• Section rewritten to improve clarity
• Various changes made throughout the Section 7, Employer Contributions.
• Clarified the 10% tax on pensions of members under 59 ½ with more detail
• Elected official does not have to resign to receive disability payments of "paid on per diem" basis
• Revised W-2 used in Appendix exhibits
• Disability benefits terminate when member resigns
• Trial work period ends when member resigns
• Removed references to govONE Solutions and replaced with their new name First Data Government Solutions
• Removed the reference to employers receiving spreadsheets on diskette.
• Removed all references to diskette media. They are no longer used.

Detailed changes:

3.65 A. 1. 600 Hour Standard clarified

First paragraph, second sentence changed to: It is the expected annual hourly requirements that determine if the employee should be enrolled in IMRF.

3.65 A. 2. 1000 Hour Standard clarified

Third paragraph, third sentence changed to: It is the expected annual hourly requirements that determine if the employee should be enrolled in IMRF.

3.96 L Tax-Sheltered Annuities

Last sentence deleted for clarity. Contributions to these plans reduce an employee’s salary even though, for tax purposes, the Internal Revenue Code may call them “employer contributions.”

4.0 through 4.60

IMRF is no longer taking employer files or reports by diskette media. Therefore, all references to diskettes have been removed including various paragraphs from 4.0 through 4.60.

5.10 C. Application for Separation Refund

Second bullet: (Effective August 1, 2008, employers with Internet access are required to submit member terminations via Online Termination in Employer Access. Employers without Internet access may continue to use paper Form 6.41).

5.10 D. Payment of Separation Refund

Second sentence: (Effective August 1, 2008, employers with Internet access are required to submit member terminations via Online Termination in Employer Access. Employers without Internet access may continue to use paper Form 6.41).

5.20 D. 1. b. How to Apply for an IMRF Pension

Second sentence: Effective August 1, 2008, employers with Internet access are required to submit terminations via Online Termination in Employer Access. Employers without Internet access may continue to use paper Form 6.41.

5.20 E. 1. Effective Date And Initial Payment

Tenth paragraph: The first pension payment usually is made two to three weeks after IMRF receives Form 5.20, “Application for Retirement Annuity,” from the member and notice of termination of participation (Online Termination or paper Form 6.41) from the employer A unit of government that joins IMRF.

5.20 F. 1. When the position qualifies for IMRF coverage

Third paragraph Note, second and third sentence: It is important to submit a notice of enrollment for a retired member who returns to work in a position that qualifies for IMRF. Effective August 1, 2009, employers with Internet access are required to submit a member’s participation via Online Enrollment in Employer Access. Employers without Internet access may continue to use a paper Form 6.10.

1. Additional 10% tax for members under age 59-1/2 who continue working for their IMRF employer.
Member contributions to IMRF are tax-deferred as retirement savings. Tax-deferred retirement savings are subject to a 10% early withdrawal tax when taken out of the retirement plan before the recipient is age 59 ½. This early withdrawal tax is in addition to the taxpayer’s marginal tax rate.

There are several exceptions to the 10% early withdrawal tax. One of those exceptions is for lifetime monthly annuity payments, beginning not earlier than age 55 (age 50 for public safety employees). To be eligible for this exception, the taxpayer must have totally separated from service with the employer sponsoring the retirement savings plan.

5.30 C. 1. Application for Death Benefits

Point number two: (Effective August 1, 2008, employers with Internet access are required to submit member terminations via Online Termination in Employer Access. Employers without Internet access may continue to use paper Form 6.41)

5.40 A. 1. b. Disability eligibility for elected officials.

If the elected official is paid on a per diem basis (paid based upon actual attendance at meetings), he or she does not need to resign the office to receive disability benefits, so long as the official does not attend any meetings and, therefore, does not receive any compensation.

6.10 A. and 6.30 Employee enrollments and terminations

Throughout sections 6.10 A. and 6.30 the following wording has been added: Employers with Internet access are required to submit terminations online by August 1, 2008, and to participate in online enrollments by August 1, 2009.

6.40 1. A. g. Online spreadsheets to estimate member and employer costs.

To download these Excel spreadsheets, visit www.imrf.org/legislation/PA_95-0486.htm. Employers without web access can contact IMRF and receive a copy of the spreadsheets. You will need Microsoft Excel installed on your computer to use these spreadsheets.

6.40 7. a. Family Medical Leave Act

The Family Medical Leave Act (FMLA) requires certain public employers to give eligible employees time off to care for:
4. A relative injured on active military duty, or
5. A qualifying emergency related to a family member's call-up to active military duty.

7. 20 A. Entry Age Normal Funding

Paragraphs one and two are changed:
The method used by IMRF to calculate employer retirement rates is called Entry Age Normal funding. This method is also used by IMRF employers to report pension liabilities in accordance with the Governmental Accounting Standards Board Statement Number 50 (GASB 50).
Under this method, the cost of each individual’s pension is allocated on a level percent of payroll between the time employment starts (entry age) and the assumed retirement date. The goal is to spread the cost over the career of the member as a level percentage of payroll.

7. 20 B. Amortization Periods change to 23 years in 2009

Paragraph 2: For most employers, the unfunded liability is amortized over a 23-year period in 2009.

7. 20 C. 1. 3. and 4. Prior Service, Past Service Adjustments, and Changes in Actuarial Assumptions

Prior service is a common reason for employers who have joined IMRF in the last 40 years. Prior service is service credit granted to employees for employment prior to the date the employer joined IMRF. For example: assume an employer joined IMRF in 1990. When it joined, it had employees already working. These employees were given pension credits (at no additional cost to them) for the period of employment prior to 1990. The employer did not make any additional contributions at that time for this service. The cost was added to the unfunded liability.
 
Past Service Adjustments, the last line was deleted. Effective June 1, 2006, the SLEP formula changed to a flat 2.5% for each year of service with a maximum pension of 80% of the final rate of earnings.
 
Changes in Actuarial Assumptions, last sentence added: These changes can result in additional costs that have not yet been funded, thus adding to the unfunded liability.

7.20 D. Amortization of Overfunded Liability

Second paragraph 4th and 5th sentence rewritten. Third paragraph rewritten.
Once the overfunded amounts are used up, the employer rate will increase to the (at a minimum) normal cost rate, death, disability, and supplemental rate plus amortization of any unfunded amounts (For example, the normal cost rate for the Regular Plan is 7.42% in 2008 and 2009).
Employers with more than 400 active members were offered an individual rating of their normal cost. This option allowed a select group of employers to have an individual calculation of their normal cost based on their employee's demographics which may reduce their normal cost rate.
 
Under the table heading Amortization Period for 2009, it now reads Option of 23 years.

7.21 A. Death Benefit Reserve Account

First paragraph, third sentence edited: The average death benefit contribution rate for 2009 is 0.17% of participating payroll for the Regular and SLEP plans and 0.16% for the ECO plan.

7.21 B. Disability Benefit Reserve Account

First paragraph, third sentence edited: The disability benefit contribution rate for 2009 is 0.16% of participating payroll.

7.21 C. Supplemental Benefit

Third sentence, date changed to 2009.

7.21 D. Normal Retirement Contributions

Second paragraph, second sentence date and percentage change: For 2009, the normal cost is 7.42% for Regular employers, 11.63% for SLEP employers, and 17.08% for ECO employers.
 
Third paragraph, deletions and edits: Employers with more than 400 active members were offered an individual rating option for their normal cost. This option allowed a select group of employers to have an individual calculation of their normal cost based on their employees' demographics which may reduce their normal cost rate.
 
Fourth paragraph is all new: Except for several large employers who have opted to have their normal cost calculated on an individual basis, the normal cost is calculated for IMRF as a whole. Thus, most IMRF employers have the same normal cost.

7. 21. F. Minimum Contribution

Second sentence edited: For most employers, the 2009 minimum contribution is based on an six-year period at 18.009% of the unfunded liability.
 
Changes in numbers in the calculation as follows:
Multiplied by the 8-year amortization factor   .18009
Required minimum contribution   $ 23,350
Minimum Monthly Contribution   $1,946

7. 22 How Costs are Reflected to Employers

First paragraph: year was changed to 2009.
Changes in numbers in the calculation as follows:
Multiplied by the 23-year amortization factor   .06087
Required annual contribution   7,892
Unfunded amortization   8.40%
 
2009 Total Rate Regular Plan
Unfunded amortization   8.40%   7,895.66
Death benefit rate   0.17%   159.79
Disability rate   0.16%   150.39
Supplemental rate   0.62%   582.78
Total Rate   16.77%   $15,763.13

7.35 3. Summary of Employer Contributions

Third sentence changes date and year: For 2009 rates, the remaining amortization period for taxing bodies was 23 years and generally five years for non-taxing bodies.

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January 2008 (e-Ver. 3.0)

Summary of Key Changes:

• Tax-Deferred Payroll Deduction program discontinued
• Taxable expense allowances may be reported as IMRF earnings if governing body passes the appropriate resolution
• Employees do not pay interest when purchasing omitted service
• Roth IRA rollover allowed
• IMRF no longer mails paper forms to employers that have Internet access
• Added information regarding three ways a member can apply for Social Security disability benefits
• Consolidated forms for dissolved or consolidated units of government
• Members who return to work under a grievance arbitration award/settlement agreement or a court ordered award/settlement agreement do not have to wait two years to repay a refund
• Updated Social Security wage base for 2008

• TPDP: Program discontinued due to recent IRS rulings,
• IMRF no longer mails paper forms to employers that have Internet access.
• Forms 1.70, 71, 72, 73, merged into two forms,
• New: Form 6.74, To Include Taxable Expense Allowances as IMRF Earnings

1.70 A School District(s) annexation, dissolution

Form 1.71 obsolete. Whether it is an annexation (one or more school districts completely dissolves into an already existing school district or a consolidation (two or more school districts completely dissolve and merge to form a completely new school districts), Form 1.70 is used

2.80 IMRF Forms

IMRF no longer mails paper forms to employers that have Internet access.

3.96 F. Non-Cash Earnings (Wages-In Kind)

3. Uniforms and Clothing Allowances

5. Automobile Use

Amounts paid to members to buy uniforms and for the business use of a personal car are excluded from IMRF earnings, unless the employer acts to allow reporting of taxable expense allowances by passing the appropriate resolution, IMRF Form 6.74

Expense allowances are not included as IMRF earnings, and therefore not reportable to IMRF. However, an employer may elect to include taxable expense allowances in IMRF reportable earnings. The governing body must adopt a resolution to include taxable expense allowances as IMRF earnings by adopting a resolution (Form 6.74, Exhibit 6XX).

Non-taxable expense reimbursements are not included as earnings and are not to be reported to IMRF. This is true even if an employer elects to make taxable expense allowances reportable.

4.35 IMRF Tax-Deferred Payroll Deduction Program

Due to recent IRS rulings, the Tax-deferred Payroll Deduction Program (TPDP) will be discontinued.