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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008 HB4991
Introduced , by Rep. Gary Hannig SYNOPSIS AS INTRODUCED: |
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40 ILCS 5/4-105e new |
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40 ILCS 5/4-109 |
from Ch. 108 1/2, par. 4-109 |
40 ILCS 5/4-109.4 new |
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Amends the Downstate Firefighter Article of the Illinois Pension Code. Allows a firefighter to elect to receive either a lump sum payment or an actuarially equivalent annuity for up to 5 years of service as part of a deferred retirement option plan. Amends the State Mandates Act to require implementation without reimbursement. Effective July 1, 2008.
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FISCAL NOTE ACT MAY APPLY |
PENSION IMPACT NOTE ACT MAY APPLY |
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT |
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A BILL FOR
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| AN ACT concerning employee benefits.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 5. The Illinois Pension Code is amended by changing |
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| Section 4-109 and by adding Sections 4-105e and 4-109.4 and by |
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| changing Section 4-109 as follows: |
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| (40 ILCS 5/4-105e new) |
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| Sec. 4-105e. Deferred Retirement Option Plan. "Deferred
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| Retirement Option Plan" or "DROP plan" means the Deferred
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| Retirement Option Plan established under Section 4-109.3.
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| (40 ILCS 5/4-109) (from Ch. 108 1/2, par. 4-109)
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| Sec. 4-109. Pension.
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| (a) A firefighter age 50 or more with 20 or more years of |
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| creditable
service, who is no longer in service as a |
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| firefighter, shall receive a monthly
pension of 1/2 the monthly |
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| salary attached to the rank held by him or her in
the fire |
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| service at the date of retirement.
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| The monthly pension shall be increased by 1/12 of 2.5% of |
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| such
monthly salary for each additional month over 20 years of |
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| service through 30
years of service, to a maximum of 75% of |
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| such monthly salary.
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| For a firefighter who retires at the conclusion of
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| participation in the DROP plan, calculation of the amount of
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| the retirement pension shall be based on the firefighter's
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| salary and accumulated service on the date he or she began
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| participation in the DROP plan, but the monthly retirement
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| pension shall not be less than the last monthly amount
payable |
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| to the DROP account under subdivision (g)(1) of
Section |
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| 4-109.4. |
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| The changes made to this subsection (a) by this amendatory |
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| Act of the
91st General Assembly apply to all pensions that |
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| become payable under this
subsection on or after January 1, |
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| 1999. All pensions payable under this
subsection that began on |
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| or after January 1, 1999 and before the effective date
of this |
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| amendatory Act shall be recalculated, and the amount of the |
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| increase
accruing for that period shall be payable to the |
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| pensioner in a lump sum.
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| (b) A firefighter who retires or is separated from service |
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| having at
least 10 but less than 20 years of creditable |
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| service, who is not entitled
to receive a disability pension, |
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| and who did not apply for a refund of
contributions at his or |
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| her last separation from service shall receive a
monthly |
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| pension upon attainment of age 60 based on the monthly salary |
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| attached
to his or her rank in the fire service on the date of |
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| retirement or separation
from service according to the |
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| following schedule:
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| For 10 years of service, 15% of salary;
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| For 11 years of service, 17.6% of salary;
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| For 12 years of service, 20.4% of salary;
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| For 13 years of service, 23.4% of salary;
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| For 14 years of service, 26.6% of salary;
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| For 15 years of service, 30% of salary;
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| For 16 years of service, 33.6% of salary;
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| For 17 years of service, 37.4% of salary;
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| For 18 years of service, 41.4% of salary;
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| For 19 years of service, 45.6% of salary.
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| (Source: P.A. 91-466, eff. 8-6-99.)
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| (40 ILCS 5/4-109.4 new) |
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| Sec. 4-109.4. Deferred Retirement Option Plan (DROP). |
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| (a) To be eligible to participate in the DROP plan, a
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| firefighter must (i) be in active service, (ii) have attained
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| age 50, and (iii) have at least 20 years of creditable
service |
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| in the Fund. A firefighter may participate in the
DROP plan |
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| only once and for a maximum period of 5 years. |
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| (b) An election to participate in the DROP plan must be
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| made within 3 years after becoming eligible under subsection
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| (a) The election, once made, is irrevocable.
The election to |
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| participate in the DROP plan shall be
made in writing on forms |
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| provided for that purpose by the
Board and shall be filed with |
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| the Board. The application
must indicate the date upon which |
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| participation in the DROP
plan is to begin, which shall be the |
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| first day of a calendar
month and not less than 30 days nor |
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| more than 90 days after
the date of filing the application.
As |
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| a part of the application, the firefighter must file
with the |
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| Board and with his or her employer an irrevocable
letter of |
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| resignation from employment, effective on the date
of |
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| termination of the firefighter's participation in the DROP
plan |
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| (unless that termination results from acceptance of a
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| disability benefit). |
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| (c) A firefighter's participation in the DROP plan shall
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| commence on the date specified in the application and shall
end |
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| upon (i) termination of service, (ii) death of the
firefighter, |
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| (iii) disability for which the firefighter
receives a benefit |
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| under Section 4-110, 4-110.1, or 4-111, or
(iv) completion of |
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| the maximum 5 years of participation in the
DROP plan, |
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| whichever occurs first. |
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| (d) A firefighter who is participating in the DROP plan
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| shall be considered an active firefighter for the purposes of
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| this Article, including Section 4-121, but shall be subject
to |
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| the special conditions of the DROP plan.
A firefighter shall |
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| continue to make the contributions
that are required for active |
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| firefighters during his or her
participation in the DROP plan. |
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| These contributions shall be
accumulated in the firefighter's |
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| DROP account and shall be
treated as being "picked up" within |
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| the meaning of Section
4-118.2 of this Code and Section |
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| 414(h)(2) of the Internal
Revenue Code of 1986, as amended.
A |
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| firefighter who is participating in the DROP plan shall
not |
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| receive service credit for the period of that
participation, |
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| and the salary earned during that period shall
be disregarded |
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| in calculating the firefighter's benefit
under this Article. |
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| (e) A firefighter who participates in the DROP plan may
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| terminate service at any time during participation in the
DROP |
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| plan. A firefighter who participates in the DROP plan
must |
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| terminate service on the last day of participation in
the DROP |
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| plan, unless participation in the DROP plan is ended
due to |
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| acceptance of a disability benefit. |
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| (f) A firefighter who is participating in the DROP plan
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| remains eligible to apply for a disability benefit under
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| Section 4-110, 4-110.1, or 4-111, but participation in the
DROP |
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| plan ceases upon acceptance of the disability benefit.
If |
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| participation in the DROP plan is ended due to acceptance
of a |
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| disability benefit, (1) the disabled firefighter shall
be |
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| credited with employee contributions and creditable
service |
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| for the period of participation in the DROP plan, (2)
the |
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| firefighter's letter of resignation from service that is
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| required to be filed at the time of application to
participate |
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| in the DROP plan is void, and (3) the amounts in
the disabled |
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| firefighter's DROP account are forfeited to the
Fund. |
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| (g) The Fund shall maintain a separate DROP account for
the |
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| benefit of each firefighter who becomes a participant in
the |
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| DROP plan. The Fund shall pay into the firefighter's
DROP |
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| account: |
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| (1) for each month of the firefighter's
participation |
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| in the DROP plan, an amount equal to the
monthly retirement |
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| pension that the firefighter would
have been eligible to |
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| receive if the firefighter had
terminated service and begun |
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| receiving a retirement
pension on the date his or her |
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| participation in the DROP
plan began, but calculating the |
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| amount of any increase
that would accrue under Section |
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| 4-109.1(d) to exclude the
period before attainment of age |
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| 55; |
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| (2) the employee contributions paid by the
firefighter |
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| during the period of participation in the
DROP plan; and |
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| (3) interest on the balance in the DROP account, at
the |
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| rate of 6% per annum, paid and compounded monthly,
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| throughout the period of participation in the DROP plan.
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| The DROP account shall cease earning interest when the
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| firefighter's participation in the DROP plan ends.
DROP |
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| accounts shall be treated as separate accounts for
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| accounting purposes, but the actual assets shall be
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| commingled with the other assets of the pension fund for
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| investment purposes, rather than kept in separate |
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| investment
accounts. |
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| (h) In addition to the retirement pension under Section
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| 4-109, a firefighter who terminates service and retires at
the |
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| conclusion of his or her participation in the DROP plan
shall |
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| receive, upon retirement, a DROP benefit equal to the
balance |
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| in the firefighter's DROP account at the time of
retirement. |
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| At the time of application for a retirement pension, the
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| firefighter shall elect to receive the DROP benefit in the
form |
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| of either a lump sum or an actuarially equivalent
annuity for |
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HB4991 |
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LRB095 18343 AMC 44428 b |
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| life. If a lump sum payment is elected, it may
be taken in the |
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| form of cash or a cash equivalent or be
rolled over into an |
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| individual retirement account (IRA) or a
qualified retirement |
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| plan. A DROP benefit payable in the
form of an annuity shall be |
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| in a fixed amount not subject to
annual or other increases; the |
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| amount of the annuity shall be
calculated in the manner |
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| prescribed by the Public Pension
Division of the Department of |
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| Financial and Professional
Regulation. A DROP benefit shall be |
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| treated as a retirement
benefit for the purposes of Section |
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| 1-119 (QILDROs). |
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| (i) If a firefighter receiving a DROP benefit in the
form |
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| of an annuity re-enters service, the DROP benefit
annuity |
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| payments shall be suspended until the firefighter's
subsequent |
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| retirement. |
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| (j) If a firefighter dies while participating in the
DROP |
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| plan, the DROP benefit shall be paid as a lump sum to
the |
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| surviving spouse or other survivor of the firefighter
entitled |
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| to a pension under Section 4-114 or, if there is no
such |
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| survivor, then to the deceased firefighter's estate. |
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| (k) If a retired firefighter dies while receiving a DROP
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| benefit in the form of an annuity, and the DROP account
balance |
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| at the time of retirement exceeds the total amount of
DROP |
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| benefit annuity payments received, the excess shall be
refunded |
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| to the surviving spouse or other survivor of the
firefighter |
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| entitled to a pension under Section 4-114 or, if
there is no |
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| such survivor, then to the deceased firefighter's
estate.
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