6.60 M. For Employer Pick-Up (Payment) of Member Contributions Required for Purchase of Extra Service Under the IMRF ERI

If a unit of government adopts the IMRF Early Retirement Incentive (ERI), the unit may also choose to pay the member cost for the ERI.

However, that payment will be taxable to the member An employee who works in a position not excluded from IMRF coverage and whose position meets the annual hourly standard for IMRF coverage. For the purposes of an Authorized Agent submitting a petition or casting a ballot in an executive trustee election, an active member also includes an employee receiving an IMRF pension and working in position that does not qualify for IMRF participation or one that provides the employee the option of participating in IMRF, e.g., elected office. unless the governing body passes a resolution (IMRF Form 6.85, "Resolution - For Employer Pick Up 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.") specifically stating that the contributions are being made in lieu of the member’s contributions and that the member is prohibited from receiving any part of those contributions. Employers who do pass the resolution must pick up member contributions for all employees retiring under that ERI window.

IMRF is not suggesting that an employer pay the member’s ERI costs. This information is provided in the event such action is considered.

• If the employer does not pass the ”pick-up” resolution, the employer payment of the member’s ERI contributions will be taxable income to the member in the year it is paid and must be included on the member’s W-2.
• If the employer does pass the "pick-up" resolution, the payment will not be taxable when paid.

However, in either case, the payment is not considered IMRF earnings or Social Security wages.

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 Commissioner of Social Security 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. IMRF employers remit 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 1-800-772-12 PLEASE NOTE: Employer cost savings, which would result from adopting the ERI, will be reduced significantly if an employer pays the member cost.

Download and Print Form 6.85

View Exhibit 6RR

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