Starting in May 2018, a new retirement savings plan called Illinois Secure Choice is being introduced in Illinois. For the first few months, the program will be voluntary, but beginning in November 2018, most Illinois employers will be legally required to participate in this plan, unless they offer a qualified retirement savings plan to their employees.
What Employers Need to Know About Illinois Secure Choice:
- Illinois Secure Choice is a retirement savings vehicle for private sector employees in Illinois that do not have access to an employer-sponsored plan. It enables employees to save their own money through a regular payroll deduction.
- Any employer in Illinois with 25 or more employees, that has been operating in the state for two years or more, and that doesn’t offer a qualified savings plan (such as a 401(k), Simple IRA or SEP-IRA plan) will be required to automatically enroll their employees in Secure Choice. Employees can opt out at any time.
- Secure Choice will be rolled out in phases. Starting in November 2018, Illinois employers with 500 or more employees will be notified of their legal requirement to participate in the program. Illinois employers with 100-499 employees will be notified by July 2019, and employers with 25-99 employees will be notified by November, 2019. The State will notify employers directly when they will be required to register or certify that they are exempt from the program. This notice will include instructions and due dates.
- Employers will be responsible for distributing informational materials about the program (provided by the State) to all employees. They will facilitate the enrollment of their employees, set up the payroll deduction process, and ensure timely remittance of employee contributions to the retirement plan provider.
- Employers will not be allowed to contribute to the accounts, nor will they have any administrative or managerial duties. Employers are not considered plan managers or fiduciaries the way they would be with a qualified savings plan.
- Secure Choice does not have a cost for employers. While employers will need to spend some time enrolling employees and ensuring money is remitted in a timely fashion, they will not be charged any sort of administrative or program fee and will not need to pay any costs associated with Secure Choice.
- Employers who do not comply with the Illinois Secure Choice Savings Program Act may be subject to fines and penalties.
More information for Illinois employers, including FAQs and resources, can be found here.
Source: illinoistreasurer.gov; Lynell Meeth, Director, Member Content, MRA – The Management Association