Illinois Secure Choice Applies to More Businesses

If You Have Five or more Employees, Illinois Secure Choice May Apply to You

Due to a recent amendment, Illinois Secure Choice applies to more businesses.  Businesses as small as 5 or more employees may need to register for the program or establish a similar plan to meet the mandate. 

Does Illinois Secure Choice Apply to Your Business?

If you have 5 or more employees and do not offer a qualified savings plan such as a 401(k), SEP-IRA, or Simple IRA, Illinois Secure choice applies to you.

While the most recent phase of the Illinois Secure Choice mandate was for businesses of 25-99 employees, the law has been amended to include two more groups: businesses with 16-24 employees and 5-15 employees, respectively.

Deadlines

Registration deadlines are based on employer size.  Be sure to register or request an exemption by the applicable deadline date below.  Register or request exemption

• An employer employing 500 or more employees: 11/1/2018
• An employer employing 100 to 499 employees: 7/1/2019
• An employer employing 25 to 99 employees: 11/1/2019
• An employer employing 16 to 24 employees: 11/1/2022 – NEW
• An employer employing 5 to 15 employees: 11/1/2023 – NEW

What is Illinois Secure Choice?

Many Americans find themselves financially unprepared for their non-working retirement years. In response, states such as Illinois have begun establishing their own retirement plans.

Illinois Secure Choice Savings Program is a state-facilitated retirement program designed to help workers in Illinois who lack access to employer-sponsored retirement plans. This state law became effective in 2015 but was delayed until November 2018. It is mandatory for eligible employers to provide, but it is a completely voluntary program for employees as they can opt-out at any time.

Features

• Illinois Secure Choice is a Roth Individual Retirement Account (IRA).
• Business owners or shareholders can participate if they are considered employees for tax purposes.
• Employees may only contribute a maximum of $6,000 per year. If they’re age 50 or older, the annual limit is $7,000.
• IRS’ annual IRA contribution limits apply to the combined amount contributed to a participant’s IRAs, both Traditional and Roth.

Penalties

Illinois Secure Choice is mandatory. Employers who don’t comply with the Illinois Secure Choice Savings Program Act may be subject to penalties.

• $250 fine for each employee for the full or portion of the first calendar year in which the employee isn’t enrolled or didn’t opt out of the plan.
• $500 fine for each employee for the full or portion of the second calendar year in which the employee isn’t enrolled or didn’t opt out of the plan.

What other retirement savings options are available for Illinois businesses?

Registering for the Illinois Secure Choice program is only one way to fulfill the requirement that every qualified employee in Illinois have access to a retirement plan. As a compliant alternative, businesses can also establish their own employee retirement plan, such as a 401(k) or SIMPLE IRA, to satisfy this requirement. You should consider all available options before making a decision.

Please refer Q&As on the program for more details and full eligibility requirements.  https://www.ilsecurechoice.com/home/faq.html

Resources: https://www.ilsecurechoice.com/

Questions?