By Adam Dauksas

February 19, 2019

On June 4, 2018, then-Governor Bruce Rauner signed into law Public Act 100-0587, which reduces the 6% soft cap on end-of-career TRS creditable earnings increases to 3% for any individual employment contracts and collective bargaining agreements entered into on or after that date.  “Grandfathered” contracts and collective bargaining agreements entered into before June 4th are still subject to the old 6% limit.  Also, for employees not covered by a bargaining agreement or an employment contract, TRS will accept employment policies for grandfathering if notice was provided as required by the employment policy prior to June 4, 2018 and payments are made pursuant to the term of the policy prior to June 30, 2022.

 Now, in order to help it administer the new law, TRS has launched a CBA/Contract Collection Portal and is requiring school districts to submit all grandfathered employment contracts and collective bargaining agreements to TRS via this online portal by March 29, 2019.  Employees covered by grandfathered retirement policies also need to be identified through the portal.  According to TRS, “[i]f the required information is not received by TRS, any year-over-year salary increases in the 2018-19 and future years will be subject to the 3 percent threshold.”  Districts can access the portal here.

 To avoid any unforeseen TRS excess cost penalties, we recommend that your district comply with this mandate.  Should you have any questions regarding these new TRS obligations, your attorneys at Scariano, Himes and Petrarca, Chtd. stand ready to assist.

Tags     Personnel; Pensions


July 13, 2016

By Adam Dauksas

TRS’ Early Retirement Option (“ERO”) expired on July 1st. As a result, payroll contributions for TRS members going forward will be reduced from 9.4% of their salaries to 9.0%, as that .4% had been previously used to fund the ERO program. Moreover, approximately 200,000 active and inactive TRS members will soon be eligible to receive a refund of the total ERO contributions they paid from 2005 until 2016. Beginning in December, TRS members will be able to apply for this refund.  For now, TRS members can estimate their refund by simply adding up their annual TRS creditable earnings from each year between July 1, 2005 and June 30, 2016, and then multiplying that amount by 0.004.

According to TRS, members will have three options with respect to their refund: (1) apply for a cash refund; (2) apply for a withdrawal with the intention of “rolling over” the taxable portion of the refund into a qualified non-TRS retirement plan (e.g. a 401(k), 403(b) or an IRA); or (3) do nothing for now and leave the prior  ERO  contributions  withTRS,  and  applyfor  arefund  later  (no  interest  will  accruein  thiscase, however).  Cash refunds will have federal income taxes withheld at a rate of 20%, and TRS members will subsequently receive an IRS Form 1099-R after getting their refund.

For more information regarding the expiration of ERO, TRS has published its guidance here.

Tag:  Personnel; Benefits, Pension

The information herein was prepared by Scariano, Himes and Petrarca, Chtd. to provide general guidance on issues affecting educators. This publication is not intended to provide specific legal advice or to create an attorney-client relationship.  We are pleased to provide legal assistance to you on the subjects addressed in this communication or on other subjects.  Reproduction is permitted with credit to Scariano, Himes & Petrarca, Chtd. 

Scariano, Himes and Petrarca, Chtd., represents school districts, special education cooperatives, vocational education cooperatives and community colleges. Our attorneys have experience in all areas of education law and practice throughout Illinois and the Midwest with our principal office located at Two Prudential Plaza, 180 N. Stetson, Suite 3100, Chicago, Illinois 60601-6702.

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© 2016 Scariano, Himes & Petrarca, Chtd.

TRS Pension Cap – Start Date for Contracts

August 4, 2014

By John E. Fester

TRS has recently cast doubt on whether an employment contract starting on May 31, 2014 will be considered “effective on or before June 1, 2014” for purposes of pension cap grandfathering.  Because May 31 is a Saturday, and TRS generally does not recognize weekends as days on which service credit can be earned, it could be argued that the contract is not truly effective until Monday, June 2 (the first day of creditable service), which is after the June 1 deadline.  In order to protect against this argument, employees seeking to have a multi-year contract in place for purposes of pension cap grandfathering should make sure the effective date of the contract (i.e. the first day of creditable service under the contract) is earlier than May 31, 2014.  If you have any questions regarding this matter, please contact your attorney at Scariano, Himes and Petrarca.


Employing IMRF Retirees

 October 19, 2010

By Adam Dauksas

A recent interpretation of pension rules by the Illinois Municipal Retirement Fund (“IMRF”) should have your District exercising caution when hiring an IMRF annuitant to work in an IMRF-qualified position.

Retirees receiving an IMRF pension who return to work in an IMRF qualifying position, without being re- enrolled in the retirement system, could be held responsible for paying back to IMRF the entire amount of all annuity payments that were improperly received while working in that qualifying position during retirement.  Moreover, these repayment amounts would be in addition to any member contributions owed by the retiree.

School districts, and other IMRF employers should also be aware that in the event a retiree is unable to repay to IMRF the entire past annuity amounts improperly received by them, and all or a part of the fault for failing to re- enroll the retiree lies with the district, IMRF may seek to recover the annuity payments directly from the district.  In fact, IMRF has recovered such improperly paid annuity amounts directly from at least one school district in the past.

If you have any questions regarding the employment of IMRF retirees, please do not hesitate to contact Scariano, Himes and Petrarca.