40 ILCS 5/8-174.1
2021 Illinois Compiled Statutes|Chapter 40 - PENSIONS|40 ILCS 5/ - Illinois Pension Code.|Article 8 - Municipal Employees', Officers', And Officials' Annuity And Benefit Fund--Cities Over 500,000 Inhabitants

          (from Ch. 108 1/2, par. 8-174.1)Sec. 8-174.1. Employer contributions on behalf of employees.(a) The  employer may make and may incur an obligation to make  contributions on behalf of its employees in an amount not to exceed the  employee contributions required by Sections 8-137, 8-161, 8-174,  8-182 and 8-182.1 for all salary earned after December 31, 1981.  If such  employee contributions are not made or an obligation to make such contributions  is not incurred by the employer on behalf of its employees, the amount that  could have been contributed shall continue to be deducted from salary.  If  employee contributions are made by the employer on behalf of its employees,  they shall be treated as employer contributions in determining tax treatment  under the United States Internal Revenue Code; however, each city shall  continue to withhold Federal and State income taxes based upon these  contributions until the Internal Revenue Service or the Federal courts rule  that pursuant to Section 414(h) of the United  States Internal Revenue Code, these contributions shall not be included  as gross income of the employee until such time as they are distributed  or made available.  The employer may make these contributions on behalf  of its employees by a reduction in the cash salary of the employee or by  an offset against a future salary increase or by a combination of a reduction  in salary and offset against a future salary increase. The employer shall  pay these employee contributions from the same source of funds used in paying  salary to the employee or, if the employer is a Board of Education, it may also  or alternatively pay such contributions in whole or in part from the proceeds  of the pension contribution liability tax authorized by Section 34-60.1  of the School Code, as amended.  If such a tax is levied with respect to  any fiscal year of a Board of Education, that portion of the contributions  to be paid by the Board of Education on behalf of its employees for that  fiscal year from the proceeds of such a tax shall not be due and payable  into the Fund until the collection, in the calendar year following the calendar  year in which such levy was made, of the actual tax bills extending the  second installment of real estate taxes for the Board of Education for that  calendar year, pursuant to Section 21-30 of the Property Tax Code, and such Board of Education shall not  be required to pay those contributions to be paid from the proceeds of such a  tax into the Fund except as collected from the extension of the actual tax  bills. If employee contributions are made by the employer on behalf of its  employees, they shall be treated for all purposes  of this Article 8, including Section 8-173, in the same manner and to the  same extent as employee contributions made by employees and deducted from  salary; provided, however, that contributions which are made by a Board  of Education on behalf of its employees shall not be treated as a pension  or retirement obligation of the Board of Education for purposes of Section  12 of "An Act in relation to State revenue sharing with local governmental  entities", approved July 31, 1969, as amended.  For purposes of Section  8-173, contributions made by a Board of Education on behalf of its employees  shall be treated as contributions made by or on behalf of employees to the  Fund for the fiscal year for which the Board of Education incurred the  obligation to make such contributions.(b) Subject to the requirements of federal law and the rules of the Board,  the Fund may allow the employee to elect to have the employer make on behalf of  the employee the  optional contributions that the employee has elected to pay to the Fund, and  the contributions so made on the employee's behalf shall be treated as employer  contributions for  the purpose of determining federal tax treatment.  The employer shall make  contributions on behalf of an employee by a reduction in the cash salary of the  employee and shall  pay contributions from the same source of funds that is used to pay earnings of  the employee.  The election to have the contributions made on the employee's  behalf is irrevocable,  and the optional contributions may not thereafter be prepaid, by direct payment  or otherwise.If the provision authorizing the optional contribution requires payment by a  stated date (rather than the date of withdrawal or retirement), the requirement  will be deemed to have been satisfied if (i) on or before the stated date the  employee executes a valid irrevocable election to have the contributions made  on his or her behalf under this subsection, and (ii) the  contributions made on his or her behalf are in fact paid  to the Fund as provided in the election.If employee contributions are made by the employer on the employee's behalf  under this subsection, they shall be  treated for all purposes of this Article 8, including Section 8-173, in the  same manner and to the same extent as optional employee contributions made  prior to the date made on the employee's behalf.       (Source: P.A. 93-654, eff. 1-16-04.)