Illinois’ Retirement Savings Mandate: Are You in Compliance?

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Illinois’ Retirement Savings Mandate: Are You in Compliance?

Under the Illinois Secure Choice Savings Program Act, which took effect in 2015, Illinois requires that certain employers provide a retirement savings program to their employees. Employers who do not provide a plan on their own must participate in Illinois Secure Choice.

Illinois Secure Choice is a state-sponsored retirement savings program. Under Illinois Secure Choice, the plan defaults to a ROTH IRA and requires employers to withhold 5% of an employee’s pay, up to the annual maximum allowed for a ROTH IRA. Employees may decide to opt out or reduce the amount they put into savings. They may also take their account with them to a new employer when they leave.

Employers who meet the following criteria must participate in Illinois Secure Choice:

  1. Have 25 or more employees;
  2. Have been in operation for at least two (2) years;
  3. Do not offer any employer-sponsored retirement plan to employees.

The 25-employee threshold is determined based on the number of employees reported in each quarter of the previous calendar year to the Illinois Department of Employment Security (IDES). Illinois proactively sends out notices to employers who meet these qualifications.

Employers that provide an employer-sponsored retirement plan already are exempt but must notify the state of the basis of their exemption. Employers that fail to comply with this requirement may face penalties of $500 per employee.

If you have questions regarding compliance with this Act, consult an employment attorney today to discuss your options.