TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.30 DEFINITIONS
Section 4445.30 Definitions
"Annual Benefit" means a
benefit payable annually in the form of a straight life annuity (with no
ancillary benefits) without regard to the benefit attributable to after-tax
employee contributions (except pursuant to IRC section 415(n)) and to rollover
contributions (as defined in IRC section 415(b)(2)(A)).
"Benefit Attributable"
means a benefit determined in accordance with Treasury Regulations (see 26 CFR
1.415(b)(2)(A)).
"Department"
means the Illinois Department of Insurance.
"HEART Act" means the federal
Heroes Earnings Assistance and Relief Tax Act of 2008 (Public Law 103-353).
"Internal
Revenue Code" or "IRC" means 26 USC.
"Member" means
participant in a firefighter pension fund under Article 4 of the Illinois
Pension Code [40 ILCS 5].
"Nonqualified Service
Credit" means permissive service credit other than that allowed with
respect to:
service (including parental,
medical, sabbatical and similar leave) as an employee of the Government of the
United States, any state or political subdivision of the United States, or any
agency or instrumentality of any of the foregoing (other than military service
or service for credit that was obtained as a result of a repayment described in
IRC section 415(k)(3));
service (including parental,
medical, sabbatical and similar leave) as an employee (other than as an
employee described in the preceding paragraph) of an education organization
described in IRC section 170(b)(1)(A)(ii) that is a public, private or
sectarian school that provides elementary or secondary education (through grade
12), or a comparable level of education, as determined under the applicable law
of the jurisdiction in which the service was performed;
service as an employee of an
association of employees who are described in the first indented paragraph of
this definition; or
military service (other than
qualified military service under IRC section 414(u)) recognized by the plan.
"Non-spousal
Beneficiary" means minor children, disabled children or dependent parents
receiving survivor benefits.
"Pension Code" or
"Code" means the Illinois Pension Code [40 ILCS 5].
"Pension Fund" means any
public pension fund established under Article 4 of the Pension Code.
"Permissive
Service Credit" means service credit:
recognized by the plan for
purposes of calculating a member's benefit under the plan;
that the member has not received
under the plan; and
that the member may receive only
by making a voluntary additional contribution, in an amount determined under
the plan, that does not exceed the amount necessary to fund the benefit
attributable to the service credit.
"Public Pension
Division" means the Public Pension Division of the Illinois Department of
Insurance.
"Treasury
Regulation" means 26 CFR.
"USERRA" means the
federal Uniformed Services Employment and Reemployment Rights Act (38 USC 43)
(see Public Law 103-353).
(Source: Amended at 39 Ill. Reg.
4968, effective March 23, 2015)
SUBPART B: RULE ON ROLLOVERS
 | TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.40 GENERAL RULE
Section 4445.40 General Rule
Beginning January 1, 1993, pursuant to 40 ILCS 5/1-106(b), a
pension fund may, and to the extent required by federal law shall, at the
request of any person entitled to receive an eligible rollover distribution
from the pension fund, pay any portion of that eligible rollover distribution
directly to an eligible retirement plan designated in writing by the person.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.50 ELIGIBLE ROLLOVER DISTRIBUTION
Section 4445.50 Eligible Rollover Distribution
a) An
eligible rollover distribution is 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:
1) any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or the 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;
2) any
distribution to the extent that distribution is required under IRC section
401(a)(9);
3) the
portion of any distribution that is not includible in gross income; and
4) any
other distribution that is reasonably expected to total less than $200 during
the year.
b) Effective:
1) January
1, 2002, a portion of a distribution will not fail to be an eligible rollover
distribution merely because the portion consists of after-tax employee
contributions that are not includible in gross income. However, that portion
may be transferred only:
A) to an
individual retirement account or annuity described in IRC section 408(a) or
(b);
B) to a
qualified defined contribution plan described in IRC section 401(a); or
C) to a qualified
plan described in IRC section 403(a); or
2) on or after January 1,
2007:
A) to a
qualified defined benefit plan described in IRC section 401(a); or
B) to an
annuity contract described in IRC section 403(b).
c) The
provisions of subsection (b) apply only if the account, annuity or plan agrees
to separately account for amounts transferred (and earnings on that amount),
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.
d) Effective
January 1, 2002, the definition of eligible rollover distribution also includes
a distribution to a surviving spouse.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.60 ELIGIBLE RETIREMENT PLAN
Section 4445.60 Eligible Retirement Plan
An eligible retirement plan is any of the following that
accepts the distributee's eligible rollover distribution:
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, a plan eligible under IRC section 457(b) that is maintained by
a state, political subdivision of a state, or any agency or instrumentality of
a state or a political subdivision of a state that agrees to separately account
for amounts transferred into that plan from a plan under this Part; or
g) effective
January 1, 2009, to the extent required by federal law and permitted under a
retirement or pension system subject to this Part, a Roth IRA described in IRC
section 408A.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.70 DISTRIBUTEE
Section 4445.70 Distributee
A distributee includes an employee or former employee. It
also includes the employee's or former employee's surviving spouse. Effective
January 1, 2008, to the extent permitted under a pension plan subject to this Part,
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 roll over the distribution only to an individual retirement
account or individual retirement annuity established for the purpose of
receiving the distribution, and the account or annuity will be treated as an
"inherited" individual retirement account or annuity.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.80 DIRECT ROLLOVER
Section 4445.80 Direct Rollover
A direct rollover is a payment by the pension plan to the
eligible retirement plan specified by the distributee.
SUBPART C: RULE ON REQUIRED DISTRIBUTIONS
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.90 GENERAL RULE
Section 4445.90 General Rule
Notwithstanding any other provision to the contrary, and
pursuant to 40 ILCS 5/1-116.1, distributions from a pension fund shall conform
with a good faith interpretation of IRC section 401(a)(9) and the regulations
under that section (26 CFR 1.401(a)(9)) as applicable to a governmental plan
within the meaning of IRC section 414(d).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.100 MINIMUM REQUIRED DISTRIBUTIONS
Section 4445.100 Minimum Required Distributions
Effective on and after January 1, 2003, each pension fund
shall be subject to the following provisions:
a) Benefit
payments must begin by the required beginning date, which is the later of April
1 of the calendar year following the calendar year in which the plan member
reaches 70½ years of age or April 1 of the calendar year following the calendar
year in which the plan member terminates employment. If a plan member fails to
apply for retirement benefits by April 1 of the calendar year following the
calendar year in which he or she reaches 70½ years of age or April 1 of the
calendar year following the calendar year in which he or she terminates
employment, whichever is later, the plan will begin distributing the benefit as
required by this Section.
b) The
plan member's entire interest must be distributed over the plan member's life
or the lives of the plan member and a designated beneficiary or beneficiaries,
or over a period not extending beyond the life expectancy of the plan member or
of the plan member and a designated beneficiary. Death benefits must be
distributed in accordance with IRC section 401(a)(9), including the incidental
death benefit requirement in IRC section 401(a)(9)(G), and the regulations
implementing that Section.
c) The
life expectancy of a plan member, the plan member's spouse or the plan member's
beneficiary may not be recalculated after the initial determination for
purposes of determining benefits.
d) If a
plan member dies after the required distribution of benefits has begun, the
remaining portion of the plan member's interest must be distributed at least as
rapidly as under the method of distribution before the plan member's death and
no longer than the remaining period over which distributions commenced.
e) If a
plan member dies before required distribution of the plan member's benefits has
begun, the plan member's entire interest must be either:
1) distributed
(in accordance with federal regulations (26 CFR 1.401(a)(9))) over the life or
life expectancy of the designated beneficiary, with the distributions beginning
no later than December 31 of the calendar year immediately following the
calendar year of the plan member's death; or
2) distributed
by December 31 of the calendar year containing the fifth anniversary of the
plan member's death.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.110 INCIDENTAL BENEFIT RULE
Section 4445.110 Incidental Benefit Rule
a) The
amount of survivor benefits paid to a plan member's beneficiary may not exceed
the maximum determined under the incidental death benefit requirement of the
Internal Revenue Code.
b) The
death and disability benefits provided by a plan are limited by the incidental
benefit rule set forth in IRC section 401(a)(9)(G) and 26 CFR
1.401-1(b)(1)(i).
SUBPART D: RULE ON 415 LIMITATIONS
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.120 BASIC 415 LIMITATIONS
Section 4445.120 Basic 415 Limitations
Notwithstanding any other provisions to the contrary, and
pursuant to 40 ILCS 5/1-116, the member contributions made to, and retirement
benefits paid from, a pension fund shall be limited to such extent as may be
necessary to conform to the requirements of IRC section 415, for a qualified
pension plan.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.130 LIMITATION YEAR
Section 4445.130 Limitation Year
For purposes of this Part, pursuant to IRC section 415, the
limitation year for a Firefighters' Pension Fund is the calendar year.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.140 PARTICIPATION IN OTHER QUALIFIED PLANS: AGGREGATION OF LIMITS
Section 4445.140 Participation in Other Qualified
Plans: Aggregation of Limits
a) The
limit established by IRC section 415(b), with respect to any member who at any
time has been a member of any other defined benefit plan as defined in IRC
section 414(j), that was maintained by the member's same employer in the
pension fund shall apply as if the total benefits payable under all such
defined benefit plans in which the member has been a member were payable from
one plan.
b) The
limit established by IRC section 415(c), with respect to any member who at any
time has been a member of any other defined contribution plan, as defined in
IRC section 414(i), that was maintained by the member's same employer in the
pension fund shall apply as if the total annual additions under all such
defined contribution plans in which the member has been a member were payable
to one plan.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.150 BASIC 415(B) LIMITATION
Section 4445.150 Basic 415(b) Limitation
Before January 1, 1995, a member may not receive an annual
benefit that exceeds the limits specified in IRC section 415(b), subject to the
applicable adjustments in that section. On and after January 1, 1995, a member
may not receive an annual benefit that exceeds the dollar amount specified in
IRC section 415(b)(1)(A), subject to the applicable adjustments in IRC section
415(b), and subject to any additional limits that may be specified in this
Section. In no event shall a member's annual benefit payable in any limitation
year from a pension fund be greater than the limit applicable at the pension
benefit starting date, as increased in subsequent years pursuant to IRC section
415(d) and related Treasury Regulations (26 CFR 1.415(d)).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.160 DEFINITION OF ANNUAL BENEFIT
Section 4445.160 Definition of Annual Benefit
For purposes of IRC section 415(b), the "annual
benefit" means a benefit payable annually in the form of a straight life
annuity (with no ancillary benefits) without regard to the benefit attributable
to after-tax employee contributions (except pursuant to IRC section 415(n)) and
to rollover contributions (as defined in IRC section 415(b)(2)(A)). The
"benefit attributable" shall be determined in accordance with
Treasury Regulations (26 CFR 1.415(b)(2)(A)).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.170 ADJUSTMENTS TO BASIC 415(B) LIMITATION FOR FORM OF BENEFIT
Section 4445.170 Adjustments to Basic 415(b) Limitation
for Form of Benefit
a) If
the benefit under the pension fund is other than the form specified in Section
4445.160, then the benefit shall be adjusted so that it is the equivalent of
the annual benefit, using factors prescribed in Treasury Regulations (26 CFR
1.415(b)).
b) If
the form of benefit without regard to the automatic benefit increase feature is
not a straight life annuity or a qualified joint and survivor annuity, then
subsection (a) is applied by either reducing the IRC section 415(b) limit
applicable at the pension benefit starting date or adjusting the form of
benefit to an actuarially equivalent amount (determined using the assumptions
specified in 26 CFR 1.415(b)-1(c)(2)(ii)) that takes into account the
additional benefits under the form of benefit as follows:
1) For a
benefit paid in a form to which IRC section 417(e)(3) does not apply (a monthly
benefit), the actuarially equivalent straight life annuity benefit that is the
greater of (or the reduced 415(b) limit applicable at the annuity starting date
that is the "lesser of", when adjusted in accordance with the
following assumptions):
A) The
annual amount of the straight life annuity (if any) payable to the member under
the plan commencing at the same annuity starting date as the form of benefit to
the member; or
B) The
annual amount of the straight life annuity commencing at the same annuity
starting date that has the same actuarial present value as the form of benefit
payable to the member, computed using a 5% interest assumption (or the
applicable statutory interest assumption) and the applicable mortality tables
described in IRC section 417(e)(3)(B) (see Notice 2008-85, published by the
Internal Revenue Service on September 29, 2008); or
2) For a
benefit paid in a form to which IRC section 417(e)(3) applies (a lump sum
benefit), the actuarially equivalent straight life annuity benefit that is the
greatest of (or the reduced 415(b) limit applicable at the annuity starting
date that is the "least of", when adjusted in accordance with the
following assumptions):
A) The
annual amount of the straight life annuity commencing at the pension benefit
starting date that has the same actuarial present value as the particular form
of benefit payable, computed using the interest rate and mortality table, or
tabular factor, specified in the plan for actuarial experience;
B) The
annual amount of the straight life annuity commencing at the pension benefit
starting date that has the same actuarial present value as the particular form
of benefit payable, computed using a 5.5% interest assumption (or the
applicable statutory interest assumption) and the applicable mortality table
for the distribution under IRC section 417(e)(3)(B) (see IRS Notice 2008-85);
or
C) The
annual amount of the straight life annuity commencing at the pension benefit
starting date that has the same actuarial present value as the particular form
of benefit payable (computed using the applicable interest rate for the
distribution under 26 CFR 1.417(e)-1(d)(3) (the 30-year Treasury rate (prior to
January 1, 2007, using the rate in effect for the month prior to retirement
and, on and after January 1, 2007, using the rate then in effect for the first
day of the plan year, with a one-year stabilization period)) and the applicable
mortality rate for the distribution under IRC section 417(e)(3)(B) (see IRS
Notice 2008-85), divided by 1.05.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.180 BENEFITS NOT TAKEN INTO ACCOUNT FOR 415(B) LIMIT
Section 4445.180 Benefits Not Taken into Account for
415(b) Limit
For purposes of this Section, the following benefits shall
not be taken into account in applying these limits:
a) Any ancillary benefit
that is not directly related to retirement income benefits;
b) That
portion of any joint and survivor annuity that constitutes a qualified joint
and survivor annuity;
c) Any
other benefit not required under IRC section 415(b)(2) and related Treasury
Regulations (26 CFR 1.415(b)) to be taken into account for purposes of the
limitation of IRC section 415(b)(1).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.190 OTHER ADJUSTMENTS IN 415(B) LIMITATION
Section 4445.190 Other Adjustments in 415(b) Limitation
a) In
the event the member's retirement benefits become payable before age 62, the
limit prescribed by this Subpart shall be reduced in accordance with
regulations issued by the Secretary of the Treasury pursuant to the provisions
of IRC section 415(b), so that the limit (as so reduced) equals an annual
straight life benefit (when the retirement income benefit begins) equivalent to
a $160,000 (as adjusted) annual benefit beginning at age 62.
b) In
the event the member's benefit is based on at least 15 years of service as a
full-time employee of any fire department or on 15 years of military service,
the adjustments provided for in subsection (a) shall not apply.
c) The
reductions provided for in subsection (a) shall not be applicable to
pre-retirement disability benefits or pre-retirement death benefits.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.200 LESS THAN 10 YEARS OF SERVICE ADJUSTMENT FOR 415(B) LIMITATIONS
Section 4445.200 Less than 10 Years of Service
Adjustment for 415(b) Limitations
The maximum retirement benefits payable to any member who
has completed less than 10 years of service shall be the amount determined
under Section 4445.150 multiplied by a fraction, the numerator of which is the
number of the member's years of service and the denominator of which is 10.
The reduction provided by this Section cannot reduce the maximum benefit below
10%. The reduction provided by this Section shall not be applicable to
pre-retirement disability benefits or pre-retirement death benefits.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4440.210 $10,000 LIMIT
Section 4440.210 $10,000 Limit
Notwithstanding the foregoing, the retirement benefit
payable with respect to a member shall be deemed not to exceed the IRC section
415 limit if the benefits payable, with respect to the member under the plan
and under all other qualified defined benefit pension plans to which the
member's employer contributes, do not exceed $10,000 for the applicable
limitation year and for any prior limitation year, and the employer has not at
any time maintained a qualified defined contribution plan in which the member
participated.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.220 EFFECT OF COLA WITHOUT A LUMP SUM COMPONENT ON 415(B) TESTING
Section 4445.220 Effect of COLA without a Lump Sum
Component on 415(b) Testing
Effective on and after January 1, 2003, for purposes of
applying the IRC section 415(b) limit to a member with no lump sum benefit, the
following will apply:
a) a member's
applicable 415(b) limit will be applied to the member's annual benefit in the
member's first limitation year without regard to any automatic cost of living
adjustments;
b) to
the extent that the member's annual benefit equals or exceeds the limit, the
member will no longer be eligible for cost of living increases until the
benefit plus the accumulated increases are less than the 415(b) limit;
c) in
any subsequent limitation year, a member's annual benefit, including any
automatic cost of living increases, shall be tested under the then applicable
415(b) limit including any adjustment to the IRC section 415(b)(1)(A) dollar
limit under IRC section 415(d), and the related Treasury Regulations (26 CFR
1.415(b)).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.230 EFFECT OF COLA WITH A LUMP SUM COMPONENT ON 415(B) TESTING
Section 4445.230 Effect of COLA with a Lump Sum
Component on 415(b) Testing
On and after January 1, 2009, with respect to a member who
receives a portion of the member's annual benefit in a lump sum, a member's
applicable limit will be applied taking into consideration cost of living
increases as required by IRC section 415(b) and applicable Treasury Regulations
(26 CFR 1.415(b)).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.240 415(C) LIMIT
Section 4445.240 415(c) Limit
After-tax member contributions or other annual additions
with respect to a member may not exceed the lesser of $40,000 (as adjusted
pursuant to IRC section 415(d)) or 100% of the member's compensation.
a) Annual
additions are defined to mean the sum (for any year) of employer contributions
to a defined contribution plan, member contributions, and forfeitures credited
to a member's individual account. Member contributions are determined without
regard to rollover contributions and to picked-up employee contributions that
are paid to a defined benefit plan.
b) For
purposes of applying the 415(c) limits only and for no other purpose, the
definition of compensation, where applicable, will be compensation actually
paid or made available during a limitation year, except as noted in subsection
(c) and as permitted by 26 CFR 1.415(c)-2; however, member contributions picked
up under IRC section 414(h) shall not be treated as compensation.
c) Unless
another definition of compensation that is permitted by 26 CFR 1.415(c)-2 is
specified by the plan, compensation will be defined as wages within the meaning
of IRC section 3401(a) and all other payments of compensation to an employee by
an employer for which the employer is required to furnish the employee a
written statement under IRC sections 6041(d), 6051(a)(3) and 6052 and will be
determined without regard to any rules under IRC section 3401(a) that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in IRC section 3401(a)(2)).
1) However,
for limitation years beginning on and after January 1, 1998, compensation will
also include amounts that would otherwise be included in compensation but for
an election under IRC section 125(a), 402(e)(3), 402(h)(1)(B), 402(k), or
457(b). For limitation years beginning on and after January 1, 2001,
compensation will also include any elective amounts that are not includible in
the gross income of the employee by reason of IRC section 132(f)(4).
2) For
limitation years beginning on and after January 1, 2009, compensation for the
limitation year will also include compensation paid by the later of 2½ months
after an employee's severance from employment or the end of the limitation year
that includes the date of the employee's severance from employment if:
A) the
payment is regular compensation for services during the employee's regular
working hours, or compensation for services outside the employee's regular
working hours (such as overtime or shift differential), commissions, bonuses or
other similar payments, and, absent a severance from employment, the payments
would have been paid to the employee while the employee continued in employment
with the employer;
B) the
payment is for unused accrued bona fide sick, vacation or other leave that the
employee would have been able to use if employment had continued; or
C) payments
pursuant to a nonqualified unfunded deferred compensation plan, but only if the
payments would have been paid to the member at the same time if the member had
continued employment with the employer and only to the extent that the payment
is includible in the member's gross income.
3) Any
payments not described in subsection (c)(2) are not considered compensation if
paid after severance from employment, even if they are paid within 2½ months
following severance from employment, except for payments to the individual who
does not currently perform services for the employer by reason of qualified
military service (within the meaning of IRC section 414(u)(1)) to the extent
these payments do not exceed the amounts the individual would have received if
the individual had continued to perform services for the employer rather than
entering qualified military service.
4) An
employee who is in qualified military service (within the meaning of IRC
section 414(u)(1)) shall be treated as receiving compensation from the employer
during that period of qualified military service equal to:
A) the
compensation the employee would have received during that period if the
employee were not in qualified military service, determined based on the rate
of pay the employee would have received from the employer but for the absence
during the period of qualified military service; or
B) if the
compensation the employee would have received during that period was not
reasonably certain, the employee's average compensation from the employer
during the 12 month period immediately preceding the qualified military service
(or, if shorter, the period of employment immediately preceding the qualified
military service).
5) For
limitation years beginning on or after January 1, 2009, a member's compensation
for purposes of this Section shall not exceed the annual limit under IRC section
401(a)(17).
6) Back
pay, within the meaning of 26 CFR 1.415(c)-2(g)(8), shall be treated as
compensation for the limitation year to which the back pay relates to the
extent the back pay represents wages and compensation that would otherwise be
included under this subsection (c).
(Source: Amended at 38 Ill.
Reg. 9514, effective April 16, 2014)
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.250 SERVICE PURCHASES UNDER IRC SECTION 415(N)
Section 4445.250 Service Purchases under IRC Section
415(n)
a) Effective
for permissive service credit contributions made in limitation years beginning
after December 31, 1997, if a member makes one or more contributions to
purchase permissive service credit under the plan, then the requirements of IRC
section 415(n) will be treated as met only if:
1) the
requirements of IRC section 415(b) are met, determined by treating the accrued
benefit derived from all such contributions as an annual benefit for purposes
of IRC section 415(b); or
2) the
requirements of IRC section 415(b) are met, determined by treating all such
contributions as annual additions for purposes of IRC section 415(c).
b) For
purposes of applying this Section, a pension fund will not fail to meet the
reduced limit under IRC section 415(b)(2)(C) solely by reason of this Section
and will not fail to meet the percentage limitation under IRC section
415(c)(1)(B) solely by reason of this Section.
c) Permissive
Service Credit
1) For
purposes of this Section, the term "permissive service credit" means
service credit:
A) recognized
by the plan for purposes of calculating a member's benefit under the plan;
B) that
the member has not received under the plan; and
C) that
the member may receive only by making a voluntary additional contribution, in
an amount determined under the plan, that does not exceed the amount necessary
to fund the benefit attributable to the service credit.
2) Effective
for permissive service credit contributions made in limitation years beginning
after December 31, 1997, the term may include service credit for periods for
which there is no performance of service and, notwithstanding subsection
(c)(1)(B), may include service credited in order to provide an increased
benefit for service credit a member is receiving under the plan.
d) A pension fund will fail
to meet the requirements of this Section if:
1) more
than 5 years of nonqualified service credit are taken into account for purposes
of this Section; or
2) any
nonqualified service credit is taken into account under this Section before the
member has at least five years of participation under the plan.
e) For
purposes of subsection (d), effective for permissive service credit
contributions made in limitation years beginning after December 31, 1997, the
term "nonqualified service credit" means permissive service credit
other than that allowed with respect to:
1) service
(including parental, medical, sabbatical and similar leave) as an employee of
the Government of the United States, any state or political subdivision of the
United States, or any agency or instrumentality of any of the foregoing (other
than military service or service for credit that was obtained as a result of a
repayment described in IRC section 415(k)(3));
2) service
(including parental, medical, sabbatical and similar leave) as an employee
(other than as an employee described in subsection (e)(1)) of an education
organization described in IRC section 170(b)(1)(A)(ii) that is a public,
private or sectarian school that provides elementary or secondary education
(through grade 12), or a comparable level of education, as determined under the
applicable law of the jurisdiction in which the service was performed;
3) service
as an employee of an association of employees who are described in subsection
(e)(1); or
4) military
service (other than qualified military service under IRC section 414(u))
recognized by the plan.
f) In
the case of service described in subsections (e)(1) through (3), the service
will be nonqualified service if recognition of the service would cause a member
to receive a retirement benefit for the same service under more than one plan.
g) In
the case of a trustee-to-trustee transfer after December 31, 2001 to which IRC
section 403(b)(13)(A) or 457(e)(17)(A) applies (without regard to whether the
transfer is made between plans maintained by the same employer):
1) the
limitations of subsection (d) will not apply in determining whether the transfer
is for the purchase of permissive service credit; and
2) the
distribution rules applicable under federal law to the plan will apply to the
transferred amounts and any benefits attributable to those amounts.
h) For
an eligible participant, the limitation of IRC section 415(c)(1) shall not be
applied to reduce the amount of permissive service credit that may be purchased
to an amount less than the amount allowed to be purchased under the terms of
the plan as in effect on August
5, 1997. For purposes of this subsection (h), an eligible participant is an
individual who first became a participant in the plan before January
1, 1998.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.260 MODIFICATION OF CONTRIBUTIONS FOR 415(C) AND 415(N) PURPOSES
Section 4445.260 Modification of Contributions for
415(c) and 415(n) Purposes
Notwithstanding any other provision of law to the contrary,
a pension fund may modify a request by a member to make a contribution under
this Part if the amount of the contribution would exceed the limits provided in
IRC section 415 by using the following methods:
a) If
the law requires a lump sum payment for the purchase of service credit, a
pension fund may establish a periodic payment plan for the member to avoid a contribution
in excess of the limits under IRC section 415(c) or 415(n).
b) If
payment pursuant to this Section will not avoid a contribution in excess of the
limits imposed by IRC section 415(c) or 415(n), a pension fund may either
reduce the member's contribution to an amount within the limits of those IRC
sections or refuse the member's contribution.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.270 REPAYMENTS OF CASHOUTS
Section 4445.270 Repayments of Cashouts
Any repayment of contributions (including interest) to a
pension fund with respect to an amount previously refunded upon a forfeiture of
service credit under a pension fund shall not be taken into account for purposes
of IRC section 415, in accordance with applicable Treasury Regulations (26 CFR
1.415).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.280 REDUCTION OF BENEFITS PRIORITY
Section 4445.280 Reduction of Benefits Priority
a) Reduction
of benefits and/or contributions to all plans, when required, shall be
accomplished by first reducing the member's defined benefit component under any
defined benefit plans in which the member participated.
b) Except as otherwise
provided in subsection (c), the reduction shall be made:
1) first,
with respect to the plan in which the member most recently accrued benefits and
thereafter in the priority determined by the plan and the plan administrator of
the other plans; then
2) by
reducing the member's defined contribution component benefit under any defined
benefit plans; then
3) by
reducing or allocating excess forfeitures for defined contribution plans in
which the member participated, with the reduction to be made first with respect
to the plan in which the member most recently accrued benefits and thereafter
in the priority established by the plan and the plan administrator for the
other plans.
c) However,
the necessary reductions may be made in a different manner and priority
pursuant to the agreement of the plan and the plan administrator of all other
plans covering the member.
SUBPART E: RULE ON GENERAL COMPLIANCE
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.290 COMPLIANCE WITH INTERNAL REVENUE CODE
Section 4445.290 Compliance with Internal Revenue Code
Each of the plans established under Article 4 of the Pension
Code is intended to be a qualified defined benefit plan under IRC sections
401(a) and 414(d).
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.300 PLAN TERMINATION
Section 4445.300 Plan Termination
Upon plan termination, a member's interest in a pension fund
will be nonforfeitable.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.310 VESTING AND FORFEITURES
Section 4445.310 Vesting and Forfeitures
a)
A plan member shall be 100% vested in his or her accumulated
contributions at all times.
b)
In conformity with IRC section 401(a)(8), any forfeitures of benefits by
members or former members of the plan will not be used to pay benefit
increases. However, forfeitures shall be used to reduce employer
contributions.
| TITLE 50: INSURANCE
CHAPTER I: DEPARTMENT OF INSURANCE
SUBCHAPTER aaa: PENSIONS
PART 4445
IRS QUALIFICATION STATUS REQUIREMENTS FOR
ARTICLE 4 FIREFIGHTER PENSION FUNDS
SECTION 4445.320 HEART ACT
Section 4445.320 HEART Act
The downstate firefighters' pension funds will operate in
compliance with USERRA, as required by Section 1-118 of the Pension Code, and
as amended and expanded by the HEART Act.
a) Effective
with respect to deaths occurring on or after January 1, 2007, while a member is
performing qualified military service (as defined in USERRA), to the extent
required by IRC section 401(a)(37), survivors of a member in a State or local
retirement or pension system are entitled to any additional benefits that the
system would provide if the member had resumed employment and then died, such
as accelerated vesting or survivor benefits that are contingent on the member's
death while employed. In any event, a deceased member's period of qualified
military service must be counted for vesting purposes.
b) Beginning
January 1, 2009, to the extent required by IRC sections 3401(h) and 414(u)(12),
an individual receiving differential wage payments (while the individual is
performing qualified military service (as defined in USERRA)) from an employer
shall be treated as employed by that employer, and the differential wage
payment shall be treated as compensation for purposes of applying the limits on
annual additions under IRC section 415(c). This provision shall be applied to
all similarly situated individuals in a reasonably equivalent manner.
c) Effective
with respect to deaths and disabilities occurring on or after January 1, 2007,
while a member is performing qualified military service (as defined in USERRA),
to the extent permitted by IRC section 414(u)(8), for benefit accrual purposes
and, in the case of death, for vesting purposes, the member will be treated as
having earned years of service for the period of qualified military service,
having returned to employment on the day before the death and/or disability,
and then having terminated on the date of death or disability. This provision
applies only if the employer and the employee have made contributions equal to
those that would have been made had the employee been active during the period
of coverage. This provision shall be applied to all similarly situated
individuals with respect to an employer in a reasonably equivalent manner.
(Source: Added at 39 Ill. Reg. 4968,
effective March 23, 2015)
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