Illinois Secure Choice
The Illinois Secure Choice Savings Program, signed into law January 2015, will help small businesses that struggle to offer retirement savings opportunities to their employees and provide retirement security to the 2.5 million Illinoisans who do not have access to an employment-based retirement plan. Below is an overview of what small businesses need to know about the program.
What is the Illinois Secure Choice Savings Program?
- The Illinois Secure Choice Savings Program will automatically enroll employees into a retirement savings program. Employees may opt out at any time.
- Once enrolled, workers will contribute a portion of their income (default rate = 5%) into an investment fund managed by a private company and overseen by the Illinois Secure Choice Savings Board.
- Workers are allowed to opt out or change their investment contributions, and the fund is entirely employee-funded.
How will the law impact employers?
- Employers will not contribute to funds, pay fees, manage funds or have any responsibility for providing financial advice. Employers must communicate that employees have the option to opt out of the program and use their existing payroll system to send employees’ contributions to the fund each month.
- Small Business Majority’s scientific polling found the majority of Illinois small business owners supported legislation establishing the Secure Choice Savings Program.
- Many small businesses would like to offer retirement plans to their employees—to help attract a talented workforce and boost employee morale—but can’t afford the overhead and administrative costs. The Secure Choice Savings Program provides a way for small businesses to offer their employees access to a retirement savings program without incurring the associated burdens of employer- sponsored retirement programs.
- Nearly 80% of those who work for small businesses do not have access to a retirement savings option at work; meanwhile, the small business market is not being adequately served by the financial services industry. The Secure Choice Savings Program will help serve an underserved population that wants to save for retirement.
What businesses qualify for the program?
The program does not currently apply to businesses that meet at least one of the following criteria:
- Have 5 or more eligible employees;
And currently do not offer a qualified retirement plans, such as
401(a) Qualified Plan (including profit-sharing plans and defined benefit plans)
401(k) plans (including multiple employer plans or pooled employer plans)
403(a) Qualified Annuity Plan or 403(b) Tax-Sheltered Annuity Plan
408(k) Simplified Employee Pension (SEP) plans
408(p) Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA Plan
457(b) Governmental tax-deferred compensation plan or Taft-Hartley plan
For businesses with more than 25 employees, the deadline to apply has passed. However, be sure to register now to avoid penalties.
For businesses with 16-25 employees, registration is now open. To avoid penalties, you must register by November 1, 2022.
For businesses with 5-15 employees, registration is now open. To avoid penalties, you must register by November 1, 2023.