Mandatory Retirement Program for Illinois Employers
On January 16, 2015 we issued an alert about the Illinois Secure Choice Savings Program Act. This Act requires Illinois employers with 25 or more employees, who have been in operation for at least two years, and who do not offer an employer-sponsored retirement plan to participate in the Illinois Secure Choice Savings Program. The Act was effective June 1, 2015, however, due to the work necessary to create the program its implementation had been deferred.
The State of Illinois has now completed the creation of the program and is phasing-in participation in three waves.
Employers need to be mindful of the registration dates as non participation may result in penalties.
Program Basics for the Employer:
Affected Illinois employers are responsible for the distribution informational materials about the program to all employees; 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
The program 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 the program.
Program Basics for the Employee:
Employee’s contributions will fund a Roth Individual Retirement Account. The default investment choice is a target date retirement fund; however, the employee may choose other funds offered by the program. The default savings rate is 5% of wages, however, employees may choose another contribution rate. Employees may opt out at any time.
The State of Illinois contracted Ascensus to implement the program. Ascensus has representatives available to assist employers with implementation and questions. For more information contact Shaun Pesce at 312-237-0690, email@example.com, or visit www.ilsecurechoice.com.
Please contact a Warady & Davis advisor at 847-267-9600 with any questions you have about the IL Secure Choice program or your employee benefit plan options.