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(40 ILCS 5/7-173.2)
(from Ch. 108 1/2, par. 7-173.2)
Pickup of employee contributions.
(a) Until July 1, 1984, each participating municipality and each
participating instrumentality may elect, for all of its employees, to pick up
the employee contributions required by subparagraphs 1 and 3 of subsection (a)
of Section 7-173 and, in the case of sheriff's law enforcement employees,
required by Section 7-173.1. The pick up may be for employee contributions on
earnings received by employees after December 31, 1981 and shall be applicable
to the contributions on total earnings paid in any month. The decision to pick
up contributions shall be made by the governing body.
Beginning July 1, 1984, the pick up of employee contributions shall cease to
be optional. Each participating municipality and participating instrumentality
shall pick up the employee contributions required by subparagraphs 1 and 3 of
subsection (a) of Section 7-173 and, in the case of sheriff's law enforcement
employees, contributions required by Section 7-173.1, for all compensation
earned after such date.
(b) Contributions that are picked up shall be treated as employer
contributions in determining tax treatment under the United States Internal
Revenue Code. The employee contribution shall be paid from the same source
of funds as is used in payment of earnings to the employee and may not be
paid from funds raised by the tax levy authorized by Section 7-171. The
contributions shall be picked up by a reduction in earnings payment to
employees. Employee contributions that are picked up shall be considered as
earnings under Section 7-114. If a participating municipality or
participating instrumentality fails to report participating employee earnings
which should have been reported to the fund and pays the employee the full
amount of earnings including employee contributions which should have been
picked up and forwarded to the fund, then the employee shall make payment of
the employee contributions to the fund on behalf of employer and such
contributions shall be considered as picked up contributions
if paid in the year the earnings were received, or by January 31st of the
following year, and are reflected as picked up on reports to the Internal
Revenue Service. If they cannot be so reflected, or if received after that
date, they shall not be treated as picked up contributions. Picked up employee
contributions shall be considered as employee contributions in computing
benefits paid under this Article 7.
(c) Subject to the requirements of federal law, an employee may elect to
have the employer pick up 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 purposes 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 the contributions from the same source of funds
that is used to pay earnings to the employee. The employee's election to have
the optional contributions picked up is irrevocable and the optional
contributions may not thereafter be prepaid, by direct payment or otherwise.
(Source: P.A. 90-766, eff. 8-14-98.)