The Illinois Secure Choice program has already made a significant impact on retirement savings for Illinois workers, with close to 129,000 individuals now actively building their retirement funds courtesy of it. Now, an important deadline is fast approaching for small employers to empower even more of their employees to better secure their financial futures.
According to state regulations, businesses with employee counts ranging from 5 to 15 in 2022 have until November 1, 2023, to help their workforce access a retirement savings option. This can be achieved either by enrolling in the Illinois Secure Choice program or offering a private retirement plan.
The Illinois General Assembly established Secure Choice in 2015, entrusting the Illinois State Treasurer’s Office with its implementation. Lawmakers ensured employers would not be responsible for investment decisions and prohibited them from contributing to employees’ accounts. Workers are also guaranteed that their accounts will remain with them if they switch employers, and they have the option to opt out of participating in the program.
How Does the Illinois Secure Choice Program Work?
Participants are defaulted to enroll in a target-date Roth IRA with a 5 percent contribution rate, although they can adjust their contribution level or select a different fund option at any time. Contributions are deducted from their paychecks through a payroll deduction facilitated by their employer. Individual participants own their accounts, which are transferable from job to job. Professional investment managers handle the investments in a separate trust, distinct from the Illinois Treasury.
The program introduced a phased approach to employer onboarding based on company size, starting with businesses with 500 or more employees when it launched in 2018. The final onboarding group, known as Wave 5, includes employers with five or more employees, and their registration deadline is November 1, 2023.
Wave 5 presents a significant opportunity to encourage more Illinois workers to save for retirement, particularly because the retirement savings gap is largest among employees of small businesses. These employers often face challenges in offering private retirement plans.
Employers in Wave 5 have been receiving notification emails and letters from Illinois Secure Choice, with more outreach efforts planned for October. The initiative has yielded positive results thus far, with a 37% increase in employer registrations since the increased outreach efforts began in July. Businesses that do not take action could potentially face penalties imposed by the Illinois Department of Revenue.
Illinois Secure Choice FAQs for Employers
What am I required to do?
Employers contacted by the program must either initiate the process of implementing Illinois Secure Choice or request an exemption if they already provide a qualified retirement plan for their employees.
Eligible employers can register or request an exemption before November 1, 2023 deadline, by visiting www.ilsecurechoice.com.
How do I get started?
Register for Illinois Secure Choice before your deadline on November 1, 2023. You’ll need your Federal Employer ID Number (FEIN) and your unique access code. Your company’s access code can be found in communications sent to the employer. You can request one via the registration page if you cannot locate yours. Within 30 days of registration, you will upload contact information for each eligible employee.
Which employees are eligible to participate in the program?
Eligible employees must earn Illinois wages, be age 18 or older, and have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN) in order to participate.
Can add a delegate to help me administer the program?
Yes. An authorized representative of the employer will need to complete the registration process. Once registered, the authorized representative can then add employees or representatives from an external non-payroll vendor as delegates to help facilitate the program. Representatives from your external payroll provider can be added as payroll representatives to assist as well.
For more information on the Illinois Secure Act, visit the program’s website or contact a trusted HR professional.