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.
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 member’s 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 member’s 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 member’s beneficiary(ies) receives them as a death benefit.
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.
See \"participating member.\"
A statistician who estimates future funding needs based on rates of mortality, disability, turnover, ages at retirement, rate of investment income, and salary trends.
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 23-year period in 2020. Participating instrumentalities (employers without taxing authority) amortize their unfunded liabilities over a five-year period.
A person receiving an IMRF pension or surviving spouse pension.
See \"pension.\"
The employee designated by the employer (unit of government) to administer IMRF locally. State law provides that in townships, the Township Supervisor is the authorized agent.
The individual(s) or organization(s) a member chooses to receive his or her IMRF death benefits.
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.
Concurrent service is earned in one of three ways: (1) 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. (2) 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 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. (3) 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. (A revised ECO plan member must hold the same elected county position in the same county for a minimum of eight years to qualify for the Revised ECO retirement formula.)
An IRA account which holds a rollover from a qualified pension plan (like IMRF) and to which other money has not been added.
Also known as a qualified 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.
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.
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.
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 allows IMRF to electronically deposit a pension payment or total and permanent disability benefit into the member's bank or other financial institution.
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.
Not to be confused with the IMRF ERI. Under the early retirement discount, if a member retires under the Regular plan 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.
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 participated in the revised ECO program. The ECO plan was closed to new participants as of August 8, 2011.
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.
A unit of government that joins IMRF.
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.
The IMRF Early Retirement Incentive. At the employer's option, a member can purchase up to five years of service credit. 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).
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.
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 (up to the wage cap) 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. However, 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 45 months of the 48 consecutive months. Under the Regular Tier 2 and SLEP Tier 2 plans: 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. However, 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. In 2020, the Tier 2 wage cap is $115,928.92. 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: Under the original ECO 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 plan: Under the revised ECO plan, 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.
The Regular formula to calculate a pension is 1-2/3% of a member’s final rate of earnings for each of the first 15 years of service credit, plus 2% of a member’s final rate of earnings for each year of service credit in excess of 15 years. The total pension at retirement cannot exceed 75% of the member’s final rate of earnings. The SLEP formula to calculate a SLEP pension for members who terminate SLEP participation on or after July 1, 2004, is a flat 2.5% of the member’s final rate of earnings for each year of SLEP service credit. For SLEP members who terminated SLEP participation before July 1, 2004, the SLEP formula is 50% of the member’s final rate of earnings for the first 20 years of SLEP service credit, plus 2% of the final rate of earnings for each year of service over 20 and under 30 years, plus one percent of final rate of earnings for each year of service over 30 years. The total pension at retirement cannot exceed 75% of the member’s final rate of earnings. The original ECO formula is 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%. A 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. The revised ECO formula is the 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 to qualify for the ECO retirement formula.
See \"Final Rate of Earnings.\"
The hourly standard (either 600 or 1,000 hours a year) determines whether or not a position qualifies for IMRF participation. Your Field Representative will know your employer's hourly standard.
Individual Retirement Account. A tax-deferred retirement account for an individual that permits individuals to set aside up to $2,000 per year, with earnings tax-deferred until withdrawals begin at age 59 1/2 or later (or earlier, with a 10% penalty).
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.
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.
Each year IMRF mails to all members a Member Statement of Account. This statement provides an annual report of a member's salary, member contributions, service credit earned, and an estimate of IMRF benefit payments.
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 plan.\"
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 of absence 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.
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, and Out-of-state service credit authorization. Requires approval of Authorized Agent: Application for retroactive service credit, Omitted service credit verification, General Assembly application for service, and Certification of Sheriff’s Law Enforcement service. Requires application by member only: Application for reinstatement of service (repay a refund), Military leave provided under Federal law, and Conversion of up to 120 months of Regular plan service to SLEP.
Also known as an annuity. An IMRF pension is paid as long as the member lives.
See \"creditable service.\"
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.
Also known as covered 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.
Reciprocity allows service credit earned with IMRF and one or more of 12 other Illinois public pension funds to be considered together to determine eligibility for and the amount of retirement benefits. Reciprocal service cannot be used in the calculation of a SLEP pension
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. A small group of IMRF members work in positions that qualify for a different IMRF plan: the SLEP, ECO, or SLEP ECO plan.
If a member takes a separation refund, he or she may be able to repay (with interest) IMRF and reinstate those years of service credit.
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 member's death.
A new 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.
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 applies to IMRF.
A member can receive a separation refund-a return of all his/her member contributions without interest-under certain conditions. If a member takes a refund, the member forfeits all of the service credit he/she earned.
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: (1) works in a qualified position and makes a member contribution. (2) worked in a qualified position prior to his or her employer joining IMRF. (3) receives an IMRF disability benefit. (4) is on an IMRF Benefit Protection Leave (limited to 12 months). (5) purchases a month of past service credit. A member cannot earn more than one month of service credit for any given calendar month.
The Service Fraction illustrates the years and months of service credit charged to the employer’s account. Although whole months appear on a member’s statement,the exact amount of months (e.g., 2.498 for 2 years 6 months) is stored in our computer system. When a member retires, the employer’s account is charged for the exact number of months, including a “fraction” of a month if a member has concurrent service.
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.
Sheriffs who work for a county that has adopted the Elected County Official Plan and who elect to participate in ECO, participate in the SLEP ECO Plan. (ECO was closed on 8/8/2011.)
SLEP members contribute 7.5% of salary: 3.75% for a Regular IMRF pension, 0.75% percent for a surviving spouse pension, and 3% for the additional SLEP retirement benefit. Before June 1, 2006, SLEP members contributed an additional 2%, and before July 1, 1988, SLEP members contributed an additional 1%.
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 1-800-772-1213.
Under a Special Needs (reversionary) 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 member's death.
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 \"optional plan.\"
All IMRF members are required, by law, to contribute toward a surviving spouse pension. If a member retires and he or she does not have an eligible spouse (married to the member for at least one year before he or she terminated IMRF participation), the member's surviving spouse contributions will be refunded, with interest. A member receiving a lump sum refund of surviving spouse contributions may choose to annuitize the refund, that is, receive the refund as an additional monthly pension.
Another benefit paid for life to a qualifying spouse of certain deceased members. See Section 5.30.
An employee who works as teacher aide may have a position title such as classroom aide, reading aide, teacher assistant, special services assistant/technician, program assistant or library assistant. An employee is considered performing teacher aide duties if the employee will ,for example, provide instructional support in the classroom for the teacher, tutor, supervise students in the cafeteria, playground, hallways or other areas of the school,or on busses or field trips, work with Special Education students, work as a language assistant, or supervise children in pre-K settings
Temporary disability benefits are paid if a member is unable to perform the duties of any position which might reasonably be assigned by his or her current IMRF employer. They are paid for a period of time equal to one-half of the member's IMRF service credit, but not more than 30 months.
Total and permanent disability benefits are paid after temporary disability benefits have expired. To qualify, the member must be totally and permanently disabled and unable to engage in any substantial gainful employment.
IMRF's Tax-deferred Payroll Deduction Program whereby a member purchases past service credit through tax-deferred payroll deduction.
Teachers' Retirement System. See https://trs.illinois.gov.
Vesting establishes a member’s right to a guaranteed future monthly retirement benefit. A member is vested for a Tier 1 Regular 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. Also see “Reciprocal Act.\"
IMRF members have the option of making after-tax voluntary additional contributions to provide a supplemental retirement benefit in addition to the usual IMRF retirement pension. These after-tax voluntary additional contributions are limited to 10% of IMRF reportable earnings and are not matched by the employer. The additional retirement benefit is based solely upon the accumulated voluntary contributions plus interest. The rate of interest paid is currently 7.25%. Interest is credited to each account at the end of the year. Interest is based upon the opening balance at the beginning of the year.
Under Tier 2, a member’s wages are capped at $115,928.92 (in 2020). Your employer does not report any wages above the cap, and you do not pay any contributions on wages above the cap. The wage cap is also applied when IMRF calculates your benefits. The wage cap increases each year by the lesser of 3% or one-half of the increase in the Consumer Price Index (urban) for the preceding September.