Illinois Teachers’ Retirement System Supplemental Savings Plan Update
On January 10, 2022, teachers will be able to begin submitting applications to the Illinois Teachers’ Retirement System (TRS) to participate in TRS’s new Supplemental Savings Plan (SSP) which is a tax-deferred compensation program under Section 457(b) of the United States Internal Revenue Code. Payroll deductions for participants are expected to start in March, 2022.
However, TRS will allow participation only if the board of education which employs the teacher has adopted a resolution approving TRS’s prescribed form of Employer Participation Agreement (EPA), submitted the resolution and EPA to TRS and received TRS approval.
School district participation in the SSP is required by the Illinois Pension Code, but TRS has not set a deadline by which boards of education must approve and submit the EPA.
We suggest consideration be given to waiting until at least March for the board of education to act on the EPA and submit the resolution and EPA to TRS. In our view, issues with the current EPA and the SSP may be resolved with additional time and there may be technical advantages to not being in the start-up group of districts. To date, it appears that approximately 300 of the 800 plus school districts in Illinois have submitted the EPA to TRS.
For those clients who prefer to begin participation in the SSP at its inception, we have prepared a resolution approving the EPA which is different from the form suggested by TRS and a notice to/agreement with participating employees. Both the resolution and the notice attempt to disclaim and minimize certain liability risks associated with participation in the SSP under TRS’s current requirements.
Please contact the Franczek attorney with whom you regularly work or Todd Faulkner to discuss in detail the options of moving forward with approval of the EPA in order to begin employee payroll deductions and contributions to the SSP in March or delaying action on the EPA until at least March.