Bill Text: IL SB1645 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Deferred Compensation Article of the Illinois Pension Code. Provides that "eligible sponsoring entity" means a school district organized under the Chicago School District Article of the School Code; the City of Chicago as the sponsoring entity for the City of Chicago Deferred Compensation Plan; or Cook County as the sponsoring entity for the Cook County Deferred Compensation Plan. Authorizes an eligible sponsoring entity to automatically enroll employees in its deferred compensation program. Provides that the eligible sponsoring entity shall continue to be subject to specified fiduciary duty provisions under the General Provisions Article of the Illinois Pension Code. Provides that an employee who is automatically enrolled in the deferred compensation program shall contribute 3% of his or her pretax gross compensation for each compensation period into his or her account. Removes language providing that the provisions authorizing local government deferred compensation plans does not limit the power or authority of any unit of local government, school district, or any institution supported in whole or in part by public funds to establish and administer any other deferred compensation plans that may be authorized by law and deemed appropriate by the officials of such subdivisions or institutions. Contains provisions concerning fiduciary duties; availability of multiple plans or programs; elections not to participate; refunds; and increases to the default contribution rate. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2023-03-31 - Rule 3-9(a) / Re-referred to Assignments [SB1645 Detail]

Download: Illinois-2023-SB1645-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB1645 Introduced 2/8/2023, by Sen. Robert F. Martwick SYNOPSIS AS INTRODUCED:
40 ILCS 5/24-107 from Ch. 108 1/2, par. 24-107
Amends the Deferred Compensation Article of the Illinois Pension Code. Provides that "eligible sponsoring entity" means a school district organized under the Chicago School District Article of the School Code; the City of Chicago as the sponsoring entity for the City of Chicago Deferred Compensation Plan; or Cook County as the sponsoring entity for the Cook County Deferred Compensation Plan. Authorizes an eligible sponsoring entity to automatically enroll employees in its deferred compensation program. Provides that the eligible sponsoring entity shall continue to be subject to specified fiduciary duty provisions under the General Provisions Article of the Illinois Pension Code. Provides that an employee who is automatically enrolled in the deferred compensation program shall contribute 3% of his or her pretax gross compensation for each compensation period into his or her account. Removes language providing that the provisions authorizing local government deferred compensation plans does not limit the power or authority of any unit of local government, school district, or any institution supported in whole or in part by public funds to establish and administer any other deferred compensation plans that may be authorized by law and deemed appropriate by the officials of such subdivisions or institutions. Contains provisions concerning fiduciary duties; availability of multiple plans or programs; elections not to participate; refunds; and increases to the default contribution rate. Effective immediately.
LRB103 27812 RPS 54190 b
A BILL FOR
SB1645 LRB103 27812 RPS 54190 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
changing Section 24-107 as follows:
(40 ILCS 5/24-107) (from Ch. 108 1/2, par. 24-107)
Sec. 24-107. Local government plans.
(a) Any unit of local government or school district may
establish for its employees a deferred compensation program.
Participation shall be by written agreement between each
employee and the legislative authority of the unit of local
government or school district providing for the deferral of
such compensation and the subsequent investment and
administration of such funds.
(b) Any unit of local government may establish an
employer-funded money purchase retirement plan for those of
its full time employees who are not eligible to participate in
any pension fund or retirement system established under
Articles 2 through 18 of this Code. Contributions to the plan
shall be made by the unit of local government only from general
purpose funds not derived from real property taxes imposed by
the unit, at a rate to be determined from time to time by the
unit of local government. However, the rate of employer

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contribution shall be (i) the same for all employees
participating in the plan, and (ii) not more than 10% of the
employee's salary.
Any benefits accruing to the participants in a retirement
plan established under this subsection shall be protected from
impairment in accordance with Article XIII, Section 5 of the
Illinois Constitution. However, the unit of local government
establishing such a plan may terminate it at any time, unless
it has otherwise contractually agreed with its participating
employees.
(c) The agency or department designated by the unit of
local government or school district to establish and
administer a plan or program authorized under subsection (a)
or (b) of this Section may invest the assets of the plan in
investments deemed appropriate by the agency or department,
including, but not limited to, life insurance or annuity
contracts, and share or share certificate accounts of State or
federal credit unions, the accounts of which are insured as
required by the Illinois Credit Union Act or the Federal
Credit Union Act, whichever is applicable. The payment of
employer contributions to a retirement plan established under
subsection (b), and investment and payment to a participant of
deferred compensation and income or gain thereon, if any,
shall not be construed to be prohibited uses of the general
assets of the unit of local government or school district.
(d) In this subsection, "eligible sponsoring entity"

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means:
(1) a school district organized under Article 34 of
the School Code;
(2) the City of Chicago as the sponsoring entity for
the City of Chicago Deferred Compensation Plan; or
(3) Cook County as the sponsoring entity for the Cook
County Deferred Compensation Plan.
An eligible sponsoring entity is authorized to
automatically enroll all active employees into its deferred
compensation program. An eligible sponsoring entity shall
continue to be subject to the fiduciary duty provisions in
Article 1 of this Code. If multiple employer entities
participate in a program sponsored by a distinct eligible
sponsoring entity, the participating employers shall not have
any liability for an employee's decision to participate in or
opt out of the deferred compensation program or for the
investment decisions of the eligible sponsoring entity or of
any enrollee. A participating employer shall not be a
fiduciary or considered to be a fiduciary over the program,
nor shall a participating employer bear responsibility or
liability for the administration, investment decisions,
investment performance, investment returns, or design of the
program. An eligible sponsoring entity shall begin
automatically enrolling all new employees who begin employment
on or after the effective date of this amendatory Act of the
103rd General Assembly. All employees automatically enrolled

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into the program shall have the right to elect to not
participate, pursuant to the procedures specified in this
subsection. If an eligible sponsoring entity makes multiple
plans or programs available to employees, automatic enrollment
authority shall be available for only one plan or program. If
multiple plans or programs are available, a plan under Section
457(b) of the Internal Revenue Code of 1986, as amended, shall
be the plan into which the eligible sponsoring entity shall
automatically enroll employees into. If multiple plans or
programs are available and a plan under Section 457(b) of the
Internal Revenue Code of 1986, as amended, is not available,
the eligible sponsoring entity shall publicly deliberate and
decide upon which plan or program shall be used for automatic
enrollment.
An employee automatically enrolled under this subsection
shall contribute 3% of his or her pretax gross compensation
for each compensation period into his or her deferred
compensation account, unless the member otherwise instructs
the eligible sponsoring entity. The eligible sponsoring entity
shall create forms that allow employees to elect to not
participate in the program. These forms must also allow the
employee to change the amount of pretax gross compensation
deferred each month, but compensation deferrals must comply
with State and federal contribution restrictions. The eligible
sponsoring entity shall provide such forms to all employees
automatically enrolled into the program. An employee may

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submit these forms to elect to not participate in the deferred
compensation program or to alter contribution amounts at any
time.
An employee shall have 30 days from the date on which the
eligible sponsoring entity provides the notice required under
Section 414(w) of the Internal Revenue Code of 1986, as
amended, to elect to not participate in the eligible deferred
compensation program or to elect to increase or reduce the
initial amount of elective deferrals made to the program. In
the absence of such affirmative election, the employee shall
be automatically enrolled in the program on the first day of
the calendar month, or as soon as administratively practicable
thereafter, following the 30th day from the date on which the
eligible sponsoring entity provides the required notice.
An employee who has been automatically enrolled in the
deferred compensation program may elect, within 90 days of
enrollment, to be withdrawn from the program and receive a
refund of amounts deferred, plus or minus any applicable
earnings, investment fees, and administrative fees. Any refund
amount shall be included in the member's gross income for the
taxable year in which the refund is issued.
On or after January 1, 2024, the eligible sponsoring
entity may elect to increase the automatic annual
contributions under this Section. The increase in the rate of
contribution, however, shall not exceed 1% of an employee's
pretax gross compensation per year, and at no time shall any

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total contribution exceed any contribution limits established
by State or federal law.
This Section does not limit the power or authority of any
unit of local government, school district or any institution
supported in whole or in part by public funds to establish and
administer any other deferred compensation plans that may be
authorized by law and deemed appropriate by the officials of
such subdivisions or institutions.
(Source: P.A. 87-794.)
Section 99. Effective date. This Act takes effect upon
becoming law.