40 ILCS 5/3-109.3
2021 Illinois Compiled Statutes|Chapter 40 - PENSIONS|40 ILCS 5/ - Illinois Pension Code.|Article 3 - Police Pension Fund - Municipalities 500,000 And Under

Sec. 3-109.3. Self-managed plan.(a) Purpose.  The General Assembly finds that it is  important for municipalities to be able to attract and retain the most  qualified police officers and that in order to attract and retain these police  officers, municipalities should have the flexibility to provide a defined  contribution plan as an alternative for eligible employees who elect not  to participate in a defined benefit retirement program provided under this  Article.  Accordingly, a self-managed plan shall be provided, which shall offer  participating employees the opportunity to accumulate assets for retirement  through a combination of employee and employer contributions that may be  invested in mutual funds, collective investment funds, or other investment  products and used to purchase annuity contracts, either fixed or variable,  or a combination thereof.  The plan must be qualified under the Internal  Revenue Code of 1986.(b) Study by Commission; Adoption of plan.  The Illinois Pension Laws Commission (or its successor, the Commission on Government Forecasting and Accountability) shall study  and evaluate the creation  of a statewide self-managed plan for eligible employees under this Article.  The Commission shall report its findings and recommendations to the General  Assembly no later than January 1, 2002.In accordance with the recommendations of the Commission and any action  taken by the General Assembly in response to those recommendations, a statewide  self-managed plan shall be adopted for eligible employees under this Article.  The self-managed plan shall take effect as specified in the plan, but in no  event earlier than July 1, 2002 or the date of its approval by the U.S.  Internal Revenue Service, whichever occurs later.The self-managed plan shall include a plan document and shall provide for the  adoption of such rules and procedures as are necessary or desirable for the  administration of the self-managed plan.  Consistent with fiduciary duty to the  participants and beneficiaries of the self-managed plan, it may provide for  delegation of suitable aspects of plan administration to companies authorized  to do business in this State.(c) Selection of service providers and funding vehicles.  The principal  administrator of the self-managed plan shall solicit proposals to provide  administrative services and funding vehicles for the self-managed plan from  insurance and annuity companies and mutual fund companies, banks, trust  companies, or other financial institutions authorized to do business in this  State.  In reviewing the proposals received and approving and contracting with  no fewer than 2 and no more than 7 companies, the principal administrator shall  consider, among other things, the following criteria:(1) the nature and extent of the benefits that would     be provided to the participants;(2) the reasonableness of the benefits in relation to     the premium charged;(3) the suitability of the benefits to the needs and     interests of the participating employees and the employer;(4) the ability of the company to provide benefits     under the contract and the financial stability of the company; and(5) the efficacy of the contract in the recruitment     and retention of employees.The principal administrator shall periodically review each approved company.  A company may continue to provide administrative services and funding vehicles  for the self-managed plan only so long as it continues to be an approved  company under contract with the principal administrator.(d) Employee Direction.  Employees who are participating in the  program must be allowed to direct the transfer of their account balances among  the various investment options offered, subject to applicable contractual  provisions.  The participant shall not be deemed a fiduciary by reason of  providing such investment direction.  A person who is a fiduciary shall not be  liable for any loss resulting from such investment direction and shall not be  deemed to have breached any fiduciary duty by acting in accordance with that  direction.  The self-managed plan does not guarantee any of the investments in  the employee's account balances.(e) Participation.  An eligible employee must make a written election in  accordance with the provisions of Section 3-109.2 and the procedures  established under the self-managed plan.  Participation in the self-managed  plan by an eligible employee who elects to participate in the self-managed plan  shall begin on the first day of the first pay period following the later of the  date the employee's election is filed with the fund or the employer, but in no  event sooner than the effective date of the self-managed plan.A police officer who has elected to participate in the self-managed plan  under this Section must continue participation while employed in an eligible  position, and may not participate in any other retirement program administered  by the municipality while employed as a police officer by that municipality.  Participation in the self-managed plan under this Section shall constitute  membership in an Article 3 pension fund.(f) No Duplication of Service Credit.  Notwithstanding any other provision  of this Article, a police officer may not purchase or receive service or  service credit applicable to any other retirement program administered by a  fund under this Article for any period during which the police officer was a  participant in the self-managed plan established under this Section.(g) Contributions.  The self-managed plan shall be funded by contributions  from participants in the self-managed plan and employer contributions as  provided in this Section.The contribution rate for a participant in the self-managed plan under  this Section shall be a minimum of 10% of his or her salary.  This required  contribution shall be made as an "employer pick-up" under Section 414(h) of  the Internal Revenue Code of 1986 or any successor Section thereof.  An  employee may make additional contributions to the self-managed plan in  accordance with the terms of the plan.The self-managed plan shall provide for employer contributions to be credited  to each self-managed plan participant at a rate of 10% of the participating  employee's salary, less the amount of the employer contribution used to provide  disability benefits for the employee.  The amounts so credited shall be paid  into the participant's self-managed plan accounts in the manner prescribed by  the plan.An amount of employer contribution, not exceeding 1.5% of the participating  employee's salary, shall be used for the purpose of providing disability  benefits to the participating employee.  Prior to the beginning of each plan  year under the self-managed plan, the principal administrator shall determine,  as a percentage of salary, the amount of employer contributions to be allocated  during that plan year for providing disability benefits for employees in the  self-managed plan.(h) Vesting; Withdrawal; Return to Service.  A participant in the  self-managed plan becomes fully vested in the employer contributions credited  to his or her account in the self-managed plan on the earliest to occur of the  following:(1) completion of 6 years of service with the     municipality; or(2) the death of the participating employee while     employed by the municipality, if the participant has completed at least 1.5 years of service.A participant in the self-managed plan who receives a distribution of his or  her vested amounts from the self-managed plan upon or after termination of  employment shall forfeit all service credit and accrued rights in the fund of  his or her employer; if subsequently re-employed, the participant shall be  considered a new employee.  If a former participant again becomes a  participating employee and continues as such for at least 2 years, all such  rights, service credit, and previous status as a participant shall be restored  upon repayment of the amount of the distribution without interest.(i) Benefit amounts.  If a participating employee who is fully vested in  employer contributions terminates employment, the participating employee shall  be entitled to a benefit which is based on the account values attributable to  both employer and employee contributions and any investment return thereon.If a participating employee who is not fully vested in employer contributions  terminates employment, the employee shall be entitled to a benefit based on the  account values attributable to the employee's contributions and any investment  return thereon, plus the following percentage of employer contributions and any  investment return thereon: 20% after the second year; 40% after the third year;  60% after the fourth year; 80% after the fifth year; and 100% after the sixth  year. The remainder of employer contributions and investment return thereon  shall be forfeited.  Any employer contributions  that are forfeited shall be held in escrow by the company investing those  contributions and shall be used as directed by the municipality for future  allocations of employer contributions or for the restoration of amounts  previously forfeited by former participants who again become participating  employees.         (Source: P.A. 93-632, eff. 2-1-04; 93-1067, eff. 1-15-05.)