Illinois Statutes Chapter 40. Pensions § 5/18-133.1. Pickup of contributions

(a) Each employer may pick up the participant contributions required under Section 18-133 for all salary earned after December 31, 1981. If an employer decides not to pick up the contributions, the employee contributions shall continue to be deducted from salary. If contributions are picked up they shall be treated as employer contributions in determining tax treatment under the United States Internal Revenue Code.  1 However, the employer 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,  2 these contributions shall not be included as gross income of the participant until such time as they are distributed or made available. The employer shall pay these participant contributions from the same source of funds which is used in paying earnings to the participant. The employer may pick up these contributions by a reduction in the cash salary of the participant 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. If participant contributions are picked up they shall be treated for all purposes of this Article as participant contributions were considered prior to the time they were picked up.

(b) Subject to the requirements of federal law, a participant may elect to have the employer pick up optional contributions that the participant has elected to pay to the System, 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 participant and shall pay the contributions from the same fund that is used to pay earnings to the participant. The election to have optional contributions picked up 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), that requirement shall be deemed to have been satisfied if (i) on or before the stated date the participant executes a valid irrevocable election to have the contributions picked up under this subsection, and (ii) the picked-up contributions are in fact paid to the System as provided in the election.