A new state law, signed by Governor Pat Quinn in the waning days of his administration, takes effect January 1, 2018.
The Secure Choice Act applies to any company or organization which has been in operation for more than two years and employs 25 or more employees that does not offer a 401(k) or similar qualified retirement savings plan. These companies will be required to automatically default their employees into the new state government designed Secure Choice Retirement Program, and to initially deduct and remit 3% of each employee’s wages. Employers without a 401(k) or other qualified retirement savings plan may not opt out, and employers found not in compliance are subject to fines and prosecution. Employees, however, may choose to opt out of the Secure Choice Retirement Program, or may choose to adjust their withholding percentage, but they must actively request an opt out or adjustment in compliance with the programs rules. TMA members with more than 25 employees but without a 401(k) or similar plan are urged to prepare for the new government mandate. Contact TMA if we can be of assistance either helping you establish your own qualified plan or navigating the State of Illinois regulations.
U.S. Rep. Rodney Davis (R-Ill.) and Illinois State Treasurer Michael Frerichs (D-Ill.) released the following statements supporting Illinois retirement savings plans and the implementation of the Secure Choice Savings Program. Davis supported Illinois' program yesterday by voting against H.J. Res. 66, which uses the Congressional Review Act to repeal Department of Labor (DOL) rule that protects employers in states with these programs by removing their legal responsibility for facilitating enrollment into a payroll deduction.
“I want more people to save for retirement, not fewer. That is the responsible thing to do,” said Davis. “The Secure Choice Savings Program, which will be run by the state, will help people who don’t have an employment-based retirement benefit save for retirement. Repealing this Department of Labor rule will make it more difficult for Illinois to implement the Secure Choice program and eliminate protections for businesses whose employees participate in this program. With our state’s pension problems and the state of our nation’s entitlement programs, we need to be encouraging people to save for retirement on their own.”
The Secure Choice Savings Program was signed into law two years ago and will be implemented by Frerichs on January 1, 2018.
“Repealing the Department of Labor rule will hurt small businesses,” Frerichs said. “Allowing workers to save their own money while protecting employers from false accusations of inappropriate investing is exactly the commonsense that we need to encourage personal retirement savings.”
Below are important facts about Secure Choice. More can be found here.
• Half of Illinois workers, or 1.3 million, do not have access to employee retirement savings benefits.
• Secure Choice does not allow an employer contribution but allows workers to save their own money for retirement.
• Secure Choice only applies to employers with at least 25 employees, that have been in business for at least two years, and who do not currently provide a qualified retirement savings plan.
