Section 2920.70  Retirement Pay Considered Disqualifying Income

a)         The entire amount of payments made to an individual constituting retirement pay under Section 2920.65 shall be considered disqualifying income if:

1)         These payments are from any individual or organization or its successor, for which individual or organization or its successor the individual performed services during his base period or which is chargeable, pursuant to Section 1502.1 of the Act, including those organizations which have elected to make payments in lieu of paying contributions, for any benefit payments made to the individual, and which has paid all of the cost of the individual's retirement pay; or,

2)         These payments are from a trust, annuity or insurance fund or under an annuity or insurance contract to or under which any individual or organization or its successor, for which individual or organization or its successor the individual performed services during his base period or which is chargeable, pursuant to Section 1502.1 of the Act, including those organizations which have elected to make payments in lieu of paying contributions, for any benefit payments made to the individual, and pays or has paid all of the premiums or contributions.

b)         One-half of payments made to an individual constituting retirement pay under Section 2920.65 shall be considered disqualifying income if the individual or organization or its successor has paid some, but not all, of the cost of the individual's retirement pay.

1)         Example 1:  Payments from independent pension plans established and funded entirely by the individual such as individual retirement accounts (IRA) or Keough plans are not disqualifying within the meaning of this Section because the employer pays no part of the cost of the IRA or Keough plan.

2)         Example 2:  The individual contributes to a retirement plan at a fixed rate of 25%.  The employing unit contributes the remaining 75%.  Since part of the total contributions to the plan is provided by the employer, 50% of each retirement payment is disqualifying income.

3)         Example 3:  The individual and the employing unit make variable contributions to a retirement plan.  However, upon maturity of the plan, the individual has contributed 40% of all of the contributions and the employing unit has contributed the remaining 60%.  Since part of the total contributions to the retirement plan is provided by the employer, 50% of each retirement payment is disqualifying income.

4)         Example 4:  The individual belongs to a retirement plan maintained and operated by the union.  The employer contributes 60% of the cost of maintaining and operating the plan, the union contributes 5%, and the individual contributes the remaining 35%.  Since part of the total contributions to the retirement payment is provided by the employer, 50% of each retirement payment is disqualifying income.

5)         Example 5:  The individual retires from Company A in 1981 when he reaches the age of 65.  At this time, he does not continue to work, and he will be entitled to full social security benefits available to an individual of his age.  However, he is later employed by Company B and collects no more social security benefits until he reaches the age of 70, when he is allowed to continue to work and also to collect his full social security.  If the individual is laid off by Company B, one-half of his social security benefits will be disqualifying income if his wages from Company B are subject to social security contributions, even though the additional contributions do not increase his social security benefits.

c)         Notwithstanding subsections (a) and (b), lump sum payments made on account of retirement which the individual had no option to receive on a periodic basis or those lump sum payments which the individual had an option to receive on a periodic basis but of which the employer fails to notify the Director as required under Section 2920.75(d) shall be considered disqualifying income under this Section with respect to the week in which they are paid.

(Source:  Amended at 18 Ill. Reg. 4166, effective March 3, 1994)