4.24 B. Contributions

For monthly reporting of member wages and IMRF contribution, show the amounts of member contributions Members who participate in the Regular Plan contribute 4.50% of salary toward a future IMRF pension: 3.75% for the member and 0.75% for a surviving spouse pension. Members who participate in the SLEP plan contribute 7.50% of salary (on and after June 1, 2006) toward a future SLEP pension: 6.75% for the member and 0.75% 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. Members in the ECO plan contribute 7.50 of salary toward a future ECO pension: 6.75% for the member and 0.75% for a surviving spouse pension. withheld for each member. These amounts should be computed using the IMRF member contribution rate times the member’s gross wages.

• The member contribution rate for Regular members is 4.50% of wages. (Tier 2 is subject to the wage cap)

• The member contribution rate for SLEP IMRF’s Sheriff’s Law Enforcement Personnel plan is available to county sheriffs, deputy sheriffs, forest preserve rangers and airport police and certain police chiefs. IMRF’s Sheriff’s Law Enforcement Personnel plan was revised by P.A. 94-712, which resulted in the creation of two “tiers” as follows: SL01 SLEP Tier 1, members who terminated SLEP participation before July 1, 2004, and SL02 SLEP Tier 2. The contribution rate was increased to 7.50% effective on and after June 1, 2006. P.A. 94-712 also increased the SLEP formula to a flat 2.5%. The new formula applies to SLEP members who were actively participating on or after July 1, 2004. members is 7.50% of wages. (Tier 2 is subject to the wage cap, also overtime earnings are not included)

• The contribution rate for ECO 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 program. members is 7.50% of wages. (Tier 2 is subject to the wage cap)

Tier 2 Wage Cap

For 2023, Tier 2 member wages do not include compensation in excess of $123,489.18.

You will not withhold IMRF contributions, but you will continue to report earnings only for any wages that exceed this amount. IMRF will not accept contributions over this amount for Tier 2 members.

If you have a Tier 2 member who has reached the wage cap:

• When you validate your monthly wage report, you will receive a message that the member has reached the wage cap.

• IMRF will accept full wages and contributions for the member during the month he or she reaches the wage cap. (If this amount puts the member’s contributions over the wage cap, IMRF will automatically adjust any over-contributions by year end.)

• In subsequent months, continue to report the member in your wage report. You will continue to report the member’s wages, but you will not withhold or report IMRF member or employer contributions for the duration of the calendar year. This will ensure that the member receives service credit for all months he or she is working for an IMRF employer. Note: Employer Access wage reporting will not accept contributions for a member who has reached the wage cap beyond the month that he or she reaches the cap.

Cap Resets in January

Each January, all wage caps are reset and you must resume withholding and reporting IMRF member contributions for all members. (The wage cap period is based on the calendar year, regardless of your employer’s fiscal year.)

Cap Adjusted Annually

The 2023 wage cap amount of $123,489.18 will be increased annually by the lesser of 3% or one-half of the increase in the Consumer Price Index (urban) for the preceding September. IMRF will inform employers of the new wage cap amount by December 2023.

Wage Cap - Excess Contributions

If an excess of contributions are deducted and reported for a Tier 2 member, IMRF will create an adjustment to correct the excess contributions and send the funds back to the employer in a credit advice. You should use the credit advice to return the funds to the member and to correct the member’s payroll record. This is critical and must be done in a timely manner to ensure that the W-2 is correct at the end of the year.

In most cases, the credit advice will include a return of member contributions only.  When you report member earning through Employer Access, the amount of the calculated employer contributions will not include contributions on amounts above the Tier 2 limit.

When processing the credit advice, you should complete the following steps:

1.  Give the returned member contributions to the member:

a. Process a reversal of the IMRF deduction in the payroll system.  This will make all necessary corrections for the member and for the W-2 that is issued at the end of the year

b. If a different process is used to return the member contributions to the member, you will need to increase the member’s taxable wages in the payroll system to ensure correct W-2 processing at the end of the year.

NOTE:  Corrections should not change the Social Security or Medicare wages since the adjustment amount is already included in amounts previously reported. Only the taxable wages reported in box 1 (wages, tips, other compensation) on IRS Form W-2 should be changed. The change will increase the taxable wages by the amount of the credit advice.

2. Reduce a future deposit to IMRF. This will have the effect of the employer receiving the returned member contributions from IMRF.

Example

You reported $150,000.00 in wages and reported and deducted $6,750.00 in member contributions (4.5% times $150,000.00)

The 2022 annual Tier 2 wage limit was $123,489.18. 

IMRF processes a credit advice for $1,192.99  (4.5% on the $26,510.82 of wages over the Tier 2 limit).

You would change your payroll system to adjust the taxable wages as follows:

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