Board Resolution 2020-05-10(c)

Meeting room

Topic: Earnings
Subtopic: Definition of Earnings for IMRF Participants
Date: 5/29/2020
Status: Active

WHEREAS, section 7-114 of the Illinois Pension Code provides that earnings as reported to the Illinois Municipal Retirement Fund for use in the calculation of IMRF benefits shall be an amount to be determined by the Board of Trustees equal to the total amount of money paid to an employee for personal services or official duties as an employee including compensation, fees, allowances and other emoluments paid for official duties, and also the money value of any board, lodging, fuel, laundry, and other allowances provided to the employee in lieu of cash; and

WHEREAS, the Board of Trustees is required under section 7-114 of the Illinois Pension Code to specifically define earnings to be reported to the Illinois Municipal Retirement Fund; and

WHEREAS, the Board of Trustees has carefully studied the requirements for the definition of earnings for a defined benefit pension plan and has considered the needs of both plan members and participating units of government in defining earnings to be reported to the Illinois Municipal Retirement Fund.

NOW THEREFORE BE IT RESOLVED that the IMRF definition of earnings is as follows:

  1. IMRF earnings is equal to compensation for personal services paid during the employment relationship and through the first calendar month after termination of employment. Earnings are reported on a cash basis, meaning they are reported as of the date they are paid. (7-139(a)(2)). IMRF reportable earnings include, but are not limited to, the following:
    • Cash payments for personal services
    • Overtime pay (any compensation paid for hours worked in excess of a standard workday or workweek) for all members except SLEP Tier 2 participants
    • Cash outs for time accrued due to hours worked in excess of a standard workday or workweek (commonly called “comp time”) for all members except SLEP Tier 2 participants
    • Vacation pay
    • Sick pay
    • Longevity pay
    • Back salary awards received during the term of the employment relationship
    • Contract settlement payments (retroactive pay) received during the term of the employment relationship
    • Bonuses and awards
    • Retirement Incentives
    • Value of employer provided housing and meals (cash value to be determined by employer)
    • Value of personal use of employer provided automobile (cash value to be determined by employer)
    • Pay for personal leave and other paid leaves of absence during the term of the employment relationship
    • Supplements paid directly by the employer in addition to workers’ compensation
    • Workers’ compensation benefits, only when those the employer makes a payment to an employee after the date of the employee’s injury which is paid as a result of the employee being on workers’ compensation
    • Compensation deferred under Internal Revenue Code sections 401(k), 403(b), 414(h) and 457
    • Employer payment of member contributions to IMRF
    • Payments made to public safety employees under any salary continuation mandated by law
    • Salary paid to an elected official during the entire period official holds office, whether or not the official is able to perform the duties of the office
    • Lump sums paid on account of the death of a member (paid no later than the first calendar month after the month of death)
    • If an IMRF employer has determined that an employee would be entitled to differential compensation under ISERRA, IMRF reportable earnings includes an amount equal to an employee’s regular wages regardless of the amount of the differential pay. This definition of earnings also applies to employees who would have been eligible to receive differential pay if their military wages did not exceed their IMRF wages, under ISERRA (330 ILCS 61/1-15). Such wages shall be reported as if the employee were still working in their IMRF position, and service credit shall be granted accordingly.
    • Election judge or jury duty compensation paid by the employer
    • Employer payment of employee contribution for Social Security.
  2. Compensation excluded from the definition of IMRF earnings and not to be reported to IMRF is as follows:
    • Value of uniforms provided by employer or uniform allowances if uniforms are required by the employer
    • Insurance provided by the employer (this includes the value of life insurance provided in excess of $50,000)
    • Employer’s matching contribution for Social Security
      • Lump sums paid on account of the death of a member later than the first calendar month after the month of death
    • Workers’ compensation benefits, when the employer does not make any additional payments to the employee related to the employee’s workers’ compensation status
    • Reimbursement for business expenses
    • Reimbursement for tuition
    • Expense allowances
    • Physical examinations
    • Wellness incentives, including but not limited to health club memberships
    • In-kind gifts to employees
    • Interest free or below market rate loans
    • Forgiven loans
    • Insurance benefits paid by an insurance company, third party payor, from an insurance pool or employer’s self insurance plan
    • Awards or penalties, punitive damages, interest or attorneys’ fees in any litigation or arbitration
    • Additional compensation received by a supervisor of assessments, assessor, deputy assessor or member of a board of review pursuant to the Illinois Property Tax Code, 35 ILCS 200/4-10, 4-15, and 4-20.
    • Payments made on a basis other than as a regular salary to an employee engaged in an independently established trade or profession
      • Cash payments for personal services made after the first calendar month after termination of employment
    • Employer payment of employee early retirement incentive charges
    • Compensation paid under an Internal Revenue Code section 125 plan
    • Compensation directed into a premium conversion plan or flexible spending account
    • Compensation directed into a Retirement Health Savings Plan or similar arrangement
    • Taxable allowances
    • Cash payments made separately from salary and made in lieu of employer provided health insurance or cash payments made in association with or related to healthcare benefits
    • Employer-paid contributions to employee Health Savings Account (HSA), Post Employment Health Plans (PEHP), and Voluntary Employees Beneficiary Association (VEBA)
    • Election judge or jury duty wages if paid by an entity other than the employer, such as the election authority or the court

BE IT FURTHER RESOLVED that an IMRF participating unit of government may by resolution include as IMRF earnings the following:

BE IT FURTHER RESOLVED that this definition of earnings would take effect on May 29, 2020. Individual units of government may begin reporting to IMRF using this definition of earnings as of that date.