Looming Deadline For Small Sized Employers to Comply with the Illinois Secure Choice Act
The Illinois Secure Choice Act applies to Illinois employers with 25 or more employees, which have been operating in the state for two years or more, and which do not offer employees a qualified retirement savings plan (under sections 401(a), 401(k), 403(a), 403(b), 408(p), or 457(b)).
Under the Act, employers without a qualified retirement savings plan must register under the Illinois Secure Choice Program, which is administered through the Illinois State Treasurer’s Office, to enable workers to save their own money through regular payroll deductions. Instead of participating in Secure Choice, an employer may choose to offer a qualified plan.
Larger employers (over 500 employees) were required to register for Secure Choice in 2018; midsize employers (100-499 employees) had to register by July 1, 2019, and the deadline for small employers (25-99 employees) is upcoming on November 1, 2019. Employers with less than 25 employees are permitted to voluntarily participate in the program.
Employers that do participate are required to distribute informational materials about the program to all employees, facilitate enrollment, set up the payroll deduction process, and ensure timely remittance of employee contributions. The default employee contribution is five-percent, but employees are permitted to elect a deferral percentage. Employers are not required, nor allowed, to contribute to the accounts, nor have any administrative or managerial duties. Secure Choice accounts are owned by the individual participant and will be portable. An employer is not responsible for a departed employee’s account. Full-time and part-time employees are eligible to participate, but are not required to participate and may opt-out.
Employers who do not comply with the Act may be subject to fines and penalties as high as $250 per eligible employee (increasing to $500 in 2020).
Please contact Rachel Yarch (312-840-7029) or Alex Marks (312-840-7022) with any questions.