In the April, 1991 issue of the Review, we reported on the changes in the OBRA of 1990 that require all municipal employees (including part-time, seasonal and elected employees) to be covered either by social security or by a "retirement system" after July 1, 1991. There are a couple of clarifications and additions to be made to the article we wrote in April, as further information has been made available on this nebulous new federal regulation.

First, elected officials who make under $100 annually are not exempt from social security/retirement system coverage as was reported in April. This rule applies only to election campaign workers who make less than $100 annually.

Second, any part-time, seasonal or temporary (PST) municipal employee must be 100% vested in benefits under any retirement plan established by the municipality. According to the National League of Cities (NLC) it appears that municipalities may cover PST employees with a Section 457 plan that has 100% immediate vesting and that has any match of employee/employer contributions equal to 7.5% of annual employee income. This would satisfy the new law for PST employees, and avoid mandatory social security.

Third, as you will see in Dave Zahller's article, the new law will allow for options other than social security for compliance. Section 457 and 401 (a) plans may be viable alternatives to social security coverage for some municipalities.

Finally, there has been clarification as to the six month "grace period" being offered by the IRS on establishing new retirement plans, or providing social security. It appears that the six month "transition" period will allow municipalities to treat an employee "as a member of a retirement system if he or she will become a member of the system by the end of the plan year." This is not a free grace period, however. This period appears to be retroactive, and requires that in 1992, the municipality pay all the contributions to the retirement plan for the period of July 1 through December 31, 1991 for the employee that was brought into the plan in July of 1991.

As usual, you must consult your municipal attorney for advice and consent when making any new changes in pensions or adopting any new plans for compliance with the federal regulations. Requests for more materials regarding this law change may be directed to Jim McCurdy at the IML staff offices at 217/525-1220. •

FROM THE EDITOR'S DESK . . .
(Continued from page 3)

Wendellyn J. Briggs, Deputy Clerk, Town of Normal, Illinois, has been awarded the designation of "Certified Municipal Clerk" (CMC) from the International Institute of Municipal Clerks (IIMC) for achieving its high educational, experience, and service requirements.

Ms. Briggs has been Deputy Clerk of Normal, Illinois, since 1986. Worked part-time in City Clerk's office and City Managers office from 1973-1976. . .

Ruth A. Donahue, Village Clerk, Village of Evergreen Park, Illinois, has been awarded the designation of "Certified Municipal Clerk" (CMC) from the International Institute of Municipal Clerks (IIMC) for achieving its high educational, experience, and service requirements.

Ms. Donahue has been Village Clerk of Evergreen Park, Illinois, since 1985. She began her career with the Village in 1983, as Village Trustee and Youth Commissioner. •

June 1991 / Illinois Municipal Review / Page 5