Bill Text: IL HB2740 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the General Assembly, State Employee, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. Requires the Board of each System to establish and maintain a voluntary defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. Provides that the contribution rate shall be established by the Board. Provides that the plan shall exist and serve in addition to other retirement, pension, and benefit plans established under the Code. Provides that any Tier 2 participant who first becomes a participant on or after establishment of the plan shall automatically be enrolled, unless he or she opts out within 60 days after first becoming a participant. Authorizes Tier 1 participants and Tier 2 participants who first became participants before the plan was established to enroll in the plan. Contains provisions concerning investment options, qualified plan status, and distribution requirements. Defines terms and repeals a definition added by Public Act 98-599, which has been held unconstitutional. Effective immediately.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2019-03-29 - Rule 19(a) / Re-referred to Rules Committee [HB2740 Detail]

Download: Illinois-2019-HB2740-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB2740 Introduced , by Rep. Thomas Morrison SYNOPSIS AS INTRODUCED:
See Index
Amends the General Assembly, State Employee, State Universities, Downstate Teachers, and Judges Articles of the Illinois Pension Code. Requires the Board of each System to establish and maintain a voluntary defined contribution plan to address the retirement preparedness gap for participants in a defined benefit plan who are not on track to maintain their standard of living in retirement. Provides that the contribution rate shall be established by the Board. Provides that the plan shall exist and serve in addition to other retirement, pension, and benefit plans established under the Code. Provides that any Tier 2 participant who first becomes a participant on or after establishment of the plan shall automatically be enrolled, unless he or she opts out within 60 days after first becoming a participant. Authorizes Tier 1 participants and Tier 2 participants who first became participants before the plan was established to enroll in the plan. Contains provisions concerning investment options, qualified plan status, and distribution requirements. Defines terms and repeals a definition added by Public Act 98-599, which has been held unconstitutional. Effective immediately.
LRB101 09219 RPS 54313 b
FISCAL NOTE ACT MAY APPLY PENSION IMPACT NOTE ACT MAY APPLY
A BILL FOR
HB2740 LRB101 09219 RPS 54313 b
AN ACT concerning public employee benefits.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Pension Code is amended by adding
Sections 2-105.3, 2-165.5, 14-103.42, 14-155.5, 15-200.5,
16-106.42, 16-205.5, 18-110.1, 18-110.2, and 18-121.5 as
follows:
(40 ILCS 5/2-105.3 new)
Sec. 2-105.3. Tier 1 participant; Tier 2 participant. "Tier
1 participant": A participant who first became a participant
before January 1, 2011.
"Tier 2 participant": A participant who first became a
participant on or after January 1, 2011.
(40 ILCS 5/2-165.5 new)
Sec. 2-165.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 101st General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed as
a qualified tax-deferred savings plan under the Internal

HB2740 - 2 - LRB101 09219 RPS 54313 b
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of the
plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 participants and Tier 2 participants
who first became participants before the defined contribution
plan was established shall have the opportunity to voluntarily
elect to enroll in the plan. Each Tier 2 participant who
becomes a participant on or after the establishment of the
defined contribution plan shall be automatically enrolled in
the plan at a contribution rate that is established by the
Board, unless he or she opts out within 60 days after the date
that he or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon re-enrollment in the plan and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.

HB2740 - 3 - LRB101 09219 RPS 54313 b
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/14-103.42 new)
Sec. 14-103.42. Tier 2 member. "Tier 2 member": A member of
this System who first becomes a member under this Article on or
after January 1, 2011 and who is not a Tier 1 member.
(40 ILCS 5/14-155.5 new)
Sec. 14-155.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 101st General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed as
a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit

HB2740 - 4 - LRB101 09219 RPS 54313 b
plans established under this Code. All assets and income of the
plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 members and Tier 2 members who first
became participants before the defined contribution plan was
established shall have the opportunity to voluntarily elect to
enroll in the plan. Each Tier 2 member who becomes a
participant on or after the establishment of the defined
contribution plan shall be automatically enrolled in the plan
at a contribution rate that is established by the Board, unless
he or she opts out within 60 days after the date that he or she
becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon re-enrollment in the plan and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their

HB2740 - 5 - LRB101 09219 RPS 54313 b
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/15-200.5 new)
Sec. 15-200.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 101st General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed as
a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of the
plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 participants and Tier 2 participants
who first became participants before the defined contribution
plan was established shall have the opportunity to voluntarily
elect to enroll in the plan. Each Tier 2 participant who

HB2740 - 6 - LRB101 09219 RPS 54313 b
becomes a participant on or after the establishment of the
defined contribution plan shall be automatically enrolled in
the plan at a contribution rate that is established by the
Board, unless he or she opts out within 60 days after the date
that he or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon re-enrollment in the plan and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.

HB2740 - 7 - LRB101 09219 RPS 54313 b
(40 ILCS 5/16-106.42 new)
Sec. 16-106.42. Tier 2 member. "Tier 2 member": A member of
the System who first becomes a member under this Article on or
after January 1, 2011 and who is not a Tier 1 member.
(40 ILCS 5/16-205.5 new)
Sec. 16-205.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 101st General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed as
a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of the
plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 members and Tier 2 members who first
became participants before the defined contribution plan was
established shall have the opportunity to voluntarily elect to
enroll in the plan. Each Tier 2 member who becomes a
participant on or after the establishment of the defined
contribution plan shall be automatically enrolled in the plan

HB2740 - 8 - LRB101 09219 RPS 54313 b
at a contribution rate that is established by the Board, unless
he or she opts out within 60 days after the date that he or she
becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon subsequent re-enrollment and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/18-110.1 new)

HB2740 - 9 - LRB101 09219 RPS 54313 b
Sec. 18-110.1. Tier 1 participant. "Tier 1 participant": A
participant who first became a participant of this System
before January 1, 2011.
(40 ILCS 5/18-110.2 new)
Sec. 18-110.2. Tier 2 participant. "Tier 2 participant": A
participant who first becomes a participant of this System on
or after January 1, 2011.
(40 ILCS 5/18-121.5 new)
Sec. 18-121.5. Defined contribution plan.
(a) Authority. No later than one year after the effective
date of this amendatory Act of the 101st General Assembly, the
Board shall establish and maintain a defined contribution plan
to address the retirement preparedness gap for participants in
a defined benefit plan who are not on track to maintain their
standard of living in retirement. The plan shall be designed as
a qualified tax-deferred savings plan under the Internal
Revenue Code of 1986, as amended. The plan shall exist and
serve in addition to other retirement, pension, and benefit
plans established under this Code. All assets and income of the
plan shall be held in trust for the exclusive benefit of
participants and their beneficiaries.
(b) Enrollment. Tier 1 participants and Tier 2 participants
who first became participants before the defined contribution
plan was established shall have the opportunity to voluntarily

HB2740 - 10 - LRB101 09219 RPS 54313 b
elect to enroll in the plan. Each Tier 2 participant who
becomes a participant on or after the establishment of the
defined contribution plan shall be automatically enrolled in
the plan at a contribution rate that is established by the
Board, unless he or she opts out within 60 days after the date
that he or she becomes a participant.
(c) Investments. The plan shall be designed to enable
participants to generate a stream of income to replace their
pre-retirement income in retirement. The Board shall establish
a default investment option in which employees are
automatically invested upon initial enrollment in the plan or
upon subsequent re-enrollment and absent direction by the
participant to the contrary. Such investment in a default
investment option shall be deemed to have been made by
participant direction so long as the Board has provided
reasonable notice and description of the default investment
option and the participant's right to select other investment
options.
(d) Distributions. The plan shall provide a variety of
options for distributions to participants and their
beneficiaries and shall meet the relevant requirements of the
Internal Revenue Code of 1986, as amended. The manner and
timing of benefit distributions shall meet the distribution
requirements of Section 401(a)(9) of the Internal Revenue Code
of 1986, as amended. Distributions upon the death of the
participant shall meet the requirements of Section 401(a)(37)

HB2740 - 11 - LRB101 09219 RPS 54313 b
of the Internal Revenue Code of 1986, as amended.
(40 ILCS 5/2-105.1 rep.)
Section 10. The Illinois Pension Code is amended by
repealing Section 2-105.1.
Section 99. Effective date. This Act takes effect upon
becoming law.
HB2740 - 12 - LRB101 09219 RPS 54313 b
INDEX
Statutes amended in order of appearance