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SB 1747

PEN CD-TRS-457 PLANS

104th Regular Session Introduced by Cristina Castro

A pilot allows up to 10% of Illinois school districts to use a single 457(b) plan vendor, with protections, cost-free rollovers to the System, and tight ethics rules.

Referred to Assignments
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Bill Summary · SB 1747

Summary — SB 1747 (Illinois) — 457(b) Plans Offered Through a Single Vendor (Cristina Castro)

Purpose

SB 1747 creates a time‑limited pilot allowing certain Illinois school districts that already offer a 457(b) deferred compensation plan through a single vendor to use that single‑vendor plan to satisfy requirements of Public Act 102‑540. The bill aims to permit limited single‑vendor arrangements while imposing consumer protections and conflict‑of‑interest safeguards.

Key provisions

  • Pilot eligibility and duration

    • The pilot is available to at most 10% of school districts statewide.
    • The section is inoperative (expires) on January 1, 2031.

  • Plan requirements (local single‑vendor plan must:)

    • Not impose surrender charges.
    • Not include annuities.
    • Permit participants to transfer or roll over funds to the State Teachers’ Retirement System supplemental savings plan (the “System”) without cost to the employee and at the time instructed by the employee.

  • Fiduciary standard

    • When selecting a single vendor, the plan sponsor’s overriding consideration must be that all decisions be made solely in the best interests of plan participants and beneficiaries.

  • Conflict‑of‑interest and ethics rules

    • Defines “interested party” to include school district employees, elected school board representatives, and certain immediate family members (and spouses).
    • Interested parties may not have financial interests in a plan vendor other than as a participant under the same terms.
    • Vendors may not offer a plan under the pilot if anyone employed by or working for the vendor offers or gives anything of value to a school employee who participates in the vendor selection.
    • Employees who participate in vendor selection must:
    • Avoid outside business interests with vendors under consideration;
    • Disclose all such outside business interests to the board and selected bargaining representatives;
    • Not accept gifts, preferential treatment, or benefits that could affect decisions;
    • Act honestly and ethically in participants’ best interests; and
    • Refrain from seeking employment with a chosen (or under‑consideration) vendor during their involvement with the district and for one year after.

Who is affected

  • School districts (limited to a pilot population equal to 10% of districts) and their plan sponsors/boards.
  • School district employees and elected board members who participate in vendor selection.
  • Vendors that provide 457(b) plans to school districts.
  • Participants in district 457(b) plans (employees and eligible workers), particularly regarding portability and plan features.

Potential impacts and considerations

  • Pros:

    • May simplify administration for participating districts that already use a single vendor.
    • Protects participant portability by requiring cost‑free rollovers to the System.
    • Imposes explicit ethics and disclosure rules to reduce vendor influence.

  • Cons / concerns:

    • Single‑vendor arrangements can raise competitive procurement concerns and risks of reduced fee/feature competition; the pilot and conflicts rules attempt to mitigate these risks.
    • Limited scope (10% of districts) and sunset date (1/1/2031) mean the program is experimental and temporary.

Procedural status

  • Introduced in the Illinois Senate by Sen. Cristina Castro (first reading Feb 5, 2025) and referred to committee (Assignments). (As legislative documents may reference multiple jurisdictions with the same bill number, this summary focuses on the Illinois SB 1747 text concerning 457(b) single‑vendor pilot provisions.)

Compiled from official sources — confirm details with the bill’s official record.

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