By: Joni Senkpeil, SVP Member Solutions
More than 30 states have taken action concerning retirement savings plans for small business employees and ten states have enacted legislation, including Illinois. Launched as a pilot in 2018, Secure Choice offers Illinois businesses (including credit unions) the option to either offer a private market savings vehicle, or automatically enroll their employees into Secure Choice.
Secure Choice FAQs:
Which employers are required to participate? Every employer in Illinois must participate if it:
• Has 25 or more employees
• Has been in business for two or more years, and
• Does not currently provide a qualified savings plan
When do employers need to enroll? Secure Choice uses a phase in approach based on the number of employees. The registration deadlines are scheduled as follows:
• Phase 1: November 2018 for employers employing 500 or more
• Phase 2: July 2019 for employers employing 100 – 499 employees
• Phase 3: November 2019 for employers employing 25 to 99 employees
Approximately 120 days prior to your registration deadline, the State will notify employers directly when they will be required to register or indicate that they are exempt from the program. Notice will include instructions and due dates.
If you have less than 25 employees and do not offer an employer sponsored retirement plan you may also register for the program but are not required to do so.
Early registration is permitted, if you wish to participate before the required deadline.
What is the employer role?
• Register at Illinois Secure Choice, here
• Distribute information to employees
o Secure Choice will make materials available online. Employers can provide materials electronically to their employees or print them out. If employers provide email addresses for their employees, the program can provide the materials directly to the employees on behalf of the employer.
• Enroll all employees in Illinois Secure Choice
o The account administrator will provide employers with access to an online portal to register for the program and facilitate enrollment of their employees
o An “employee” includes both part-time and full-time employees
• Set up the payroll deduction process
• Remit participating employee contributions to the plan provider
• Wait 30 days from the date of hire to enroll a new employee in Illinois Secure Choice or accept their election to opt out of the program and 30 days before payroll deductions begin.
Is there a fee for employers? No. There are no employer fees, and employers are not allowed to contribute to the program.
Who manages the investment options? The Secure Choice Savings Board is responsible for making decisions about the investments options available to participants of the program. All accounts are Roth IRAs and managed by Ascensus.
What benefits can employees expect?
• Employee participation is completely voluntary and they can opt in or out at any time.
• Default savings rate at 5%, the employee may adjust savings rate at any time within the federal contribution limits for a Roth IRA
• Employees are responsible for maintaining their account information once it is established.
Is there a penalty for businesses for failing to comply with the mandate? Yes. An employer who fails to comply within 90 days of the initial assessment notice is subject to a penalty of $250 for each employee. After the date a penalty has been assessed, the penalty is $500 for any portion of a calendar year during which an employee continues to be unenrolled without opting out.