(40 ILCS 5/11-170.1) (from Ch. 108 1/2, par. 11-170.1)
Sec. 11-170.1. Pickup of employee contributions.
(a) The employer may pick up the employee contributions required by Sections 11-156, 11-170, 11-174 and 11-175.1 for salary earned after December 31, 1981. If employee contributions are not picked up, the amount that would have been picked up under this amendatory Act of 1980 shall continue to be deducted from salary. If contributions are picked up they shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code; however, the employer shall continue to withhold Federal and state income taxes based upon these contributions until the Internal Revenue Service or the Federal courts rule that pursuant to Section 414(h) of the United States Internal Revenue Code, these contributions shall not be included as gross income of the employee until such time as they are distributed or made available. The employer shall pay these employee contributions from the same source of funds which is used in paying salary to the employee. The employer may pick up these contributions by a reduction in the cash salary of the employee or by an offset against a future salary increase or by a combination of a reduction in salary and offset against a future salary increase. If employee contributions are picked up they shall be treated for all purposes of this Article 11, including Section 11-169, in the same manner and to the same extent as employee contributions made prior to the date picked up.
(b) Subject to the requirements of federal law and the rules of the Board, the Fund may allow the employee to elect to have the employer pick up the optional contributions that the employee has elected to pay to the Fund, and the contributions so picked up shall be treated as employer contributions for the purpose of determining federal tax treatment. The employer shall pick up the contributions by a reduction in the cash salary of the employee and shall pay contributions from the same source of funds that is used to pay earnings of the employee. The election to have the contributions picked up is irrevocable, and the optional contributions may not thereafter be prepaid, by direct payment or otherwise.
If the provision authorizing the optional contribution requires payment by a stated date (rather than the date of withdrawal or retirement), the requirement will be deemed to have been satisfied if (i) on or before the stated date the employee executes a valid irrevocable election to have the contributions picked up under this subsection, and (ii) the picked-up contributions are in fact paid to the Fund as provided in the election.
If employee contributions are picked up under this subsection, they shall be treated for all purposes of this Article 11, including Section 11-169, in the same manner and to the same extent as optional employee contributions made prior to the date picked up.
(Source: P.A. 93-654, eff. 1-16-04.)
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Last modified: February 18, 2015