Current through Register Vol. 48, No. 38, September 20, 2024
a) Purpose. This Section is intended to
implement qualification requirements under IRC section 401(a) as applicable to
governmental plans within the meaning of IRC section 414(d). The System is
intended to be a qualified governmental plan under the meaning of those IRC
provisions.
b) Exclusive Benefit
Rule and Nonreversion of Trust Assets. Prior to the satisfaction of all
liabilities to participants or their beneficiaries, no part of the corpus or
income of the System shall be used for, or diverted to, purposes other than for
the exclusive benefit of the System's participants or their beneficiaries. No
part of the System's assets may revert to the State of Illinois or any employer
except in the case of a good faith mistake of fact as permitted by IRS Revenue
Ruling 91-4, 1991-1 C.B. 57.
c)
Nonforfeitability. Upon termination of the System or upon complete
discontinuance of contributions to the System, the rights of each participant
to benefits accrued to the date of the termination or discontinuance are
nonforfeitable.
d) USERRA. The
provisions of Code Section 1-118 (concerning veterans' rights) shall be
effective with respect to the System beginning December 12, 1994.
e) Required Minimum Distributions. The
provisions of Code Section 1-116.1 (concerning minimum required distributions)
shall be effective with respect to the System beginning January 1, 1987. The
System shall pay all benefits in accordance with a reasonable good faith
interpretation of the requirements of IRC section 401(a)(9).
f) Federal Contribution and Benefit
Limitations. Pursuant to Code Section 1-116, the System shall comply with the
applicable contribution and benefit limitations imposed by IRC section 415 for
limitation years beginning on or after January 1, 1976.
g) Mortality Tables and Interest Rates. The
mortality tables and interest rates adopted by the Board of Trustees of the
System from time to time in accordance with Code Sections 15-124 and 15-125
shall apply to the System as though those provisions were fully set forth in
Article 15 of the Code. This subsection (g) applies beginning July 1,
1963.
h) Direct Transfer of
Eligible Rollover Distributions. For distributions made on or after January 1,
1993, the System shall implement Code Section 1-106(b) (concerning direct
rollovers) in accordance with IRC section 401(a)(31), as follows:
1) If a distributee becomes entitled to an
eligible rollover distribution, the distributee may elect to have the
distribution, or any portion of the distribution, paid directly to an eligible
retirement plan specified by the distributee.
2) The election made pursuant to this Section
shall be in accordance with the terms and conditions established by the
Board.
3) Upon exercise of the
election by a distributee pursuant to this subsection (h), the distribution
from the System of the amount designated by the distributee shall be made in
the form of a direct transfer to the specified eligible retirement
plan.
4) For purpose of this
subsection (h), "distributee" means a member, a surviving spouse, or a former
spouse under a domestic relations order that is treated as a qualified domestic
relations order to the extent provided in IRC section 414(p)(11). For plan
years beginning on or after January 1, 2010, a distributee further includes a
nonspouse beneficiary who is a designated beneficiary as defined by IRC section
401(a)(9)(E). However, a nonspouse beneficiary may only make a direct rollover
to an individual retirement account or individual retirement annuity
established for the purpose of receiving the distribution, and the account or
annuity shall be treated as an "inherited" individual retirement account or
annuity.
5) Eligible Rollover
Distribution
A) For purposes of this
subsection (h), "eligible rollover distribution" means a distribution from the
retirement fund that constitutes an eligible rollover distribution within the
meaning of IRC section 401(a)(31)(D), i.e., any distribution of all or any
portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include:
i) any distribution that is one of a series
of substantially equal periodic payments (not less frequently than annually)
made:
* for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary; or
* for a specified period of 10 years or
more;
ii) any distribution
to the extent the distribution is required under IRC section
401(a)(9);
iii) the portion of any
distribution that is not includible in gross income; or
iv) any distribution that is reasonably
expected to total less than $200 during the year.
B) Effective January 1, 2002, a portion of a
distribution shall not fail to be an eligible distribution merely because a
portion consists of after-tax contributions that are not includible in gross
income. However, that portion may be transferred only:
i) to an individual retirement account or
annuity described in IRC section 408(a) or (b) or to a qualified defined
contribution plan described in IRC section 401(a) that agrees to separately
account for amounts so transferred (and earnings on those amounts), including
separately accounting for the portion of the distribution that is includible in
gross income and the portion of the distribution that is not so
includible;
ii) on or after January
1, 2007, to a qualified defined benefit plan described in IRC section 401(a) or
to an annuity contract described in IRC section 403(b) that agrees to
separately account for amounts transferred (and earnings on those amounts),
including separately accounting for the portion of the distribution that is
includible in gross income and the portion of the distribution that is not
includible; or
iii) on or after
January 1, 2008, to a Roth IRA described in IRC section 408A.
6) For purposes of this
subsection (h), "eligible retirement plan" means a plan that constitutes an
eligible retirement plan within the meaning of IRC section 401(a)(31)(E), the
terms of which permit the acceptance of rollover distribution and is limited to
the following:
A) an individual retirement
account described in IRC section 408(a);
B) an individual retirement annuity described
in IRC section 408(b);
C) an
annuity plan described in IRC section 403(a);
D) a qualified trust described in IRC section
401(a);
E) effective January 1,
2002, an annuity contract described in IRC section 403(b);
F) effective January 1, 2002, an eligible
deferred compensation plan described in IRC section 457(b) that is maintained
by an eligible employer described in IRC section 457(e)(1)(A) that agrees to
separately account for amounts transferred into that plan from the
System;
G) effective January 1,
2008, a Roth IRA described in IRC section 408A; and
H) effective December 19, 2015, a SIMPLE IRA
described in IRC section 408(p)(1), provided that the rollover contribution is
made after the 2-year period described in IRC section 72(t)(6).
i) Qualified Illinois
Domestic Relations Orders. If benefits are payable pursuant to a QILDRO that
satisfies the requirements of "domestic relations order" as defined in IRC
section 414(p), then the applicable requirements of IRC section 414(p) shall be
followed by the System.
