Illinois Secure Choice is a mandatory state-sponsored retirement savings program for employers with 25 or more employees who do not already offer a plan. The plan defaults to a ROTH IRA and requires employers to withhold 5% of employee pay, up to the annual max allowed for a ROTH IRA. Employees may choose a different amount; as little as 1% or they may opt-out. In addition, each individual owns their account and can move it from job to job. Consequently, employers who do not comply face penalties of $250 per employee for the first year and $500 per employee for each subsequent year.
Illinois Retirement Savings Program Business Notification
Employers who meet the criteria will be notified by the state of Illinois when it is time to register for the Illinois mandated retirement savings program. Employers are notified based on the number of employees reported annually to the Illinois Department of Employment Security (IDES). Therefore, an employer who typically has less than 25 employees at one time but has a lot of turnovers and issued 25 or more W-2’s last year (and therefore reported more than 25 employees in the prior year) is required to register.
Registration Criteria and Timeline
As of November 1, 2019 employers who meet the following criteria will be required to register for Illinois Secure Choice or prove that they are not subject to the requirement.
- Have 25 or more employees
- Have been in operation for at least two years
- Do not offer an employer-sponsored retirement plan
Employers are required to register by a certain date depending on the number of employees, as reported to IDES.
- November 1, 2018, for 500 or more employees.
- July 1, 2019, for businesses with 100-499 employees.
- November 1, 2019, for businesses with 25-99 employees.
Business Exemption Notification
Employers who receive a notification but have a plan in place are exempt from this mandate. However, employers are still required to log on and let the system know why they are exempt. Employers need their federal ID number and the access code included in the email notification in order to log on.
How DHJJ Can Help
Understanding the Illinois mandated retirement savings plan, registration, and business options are critical for business owners. If you feel you may meet the criteria for this state plan but would rather fund your own sponsored retirement plan or if you have received the notification and have questions about registration/exemptions please call DHJJ at 630-420-1360 or fill out the form below. For more information on Illinois Secure Choice, click here to visit their website.