Does your business need to register?
In response to the retirement savings crisis many retirees face across the U.S., many states are imposing state-mandated plans. Fourteen states have plans at the time of writing, and more than 30 states have considered legislation on such state-mandated plans.
Illinois will now require employers with more than 15 employees in business for more than two years to offer a business-provided retirement program or facilitate the state-offered Illinois Secure Choice plan. The deadline to enroll is November 1, 2022.
History and Deadlines
Beginning November 1, 2018, employers of more than 500 employees were required to offer a program if they did not offer another employer-sponsored plan. Employers with more than 100 employees were required to register by July 2019, and those with more than 25 employees had a deadline of November 1, 2019, to offer a plan or enroll in the Illinois Secure Choice program. Employers with more than 15 employees are required to register by November 1, 2022, and employers with five or more employees face a November 1, 2023 deadline.
The Illinois Secure Choice Plan
For those employers that have more than five employees that do not already offer a retirement plan in place, Illinois Secure Choice is a simple retirement savings program. Employers only need to register with Secure Choice and maintain the account by adding and removing employees. There are no fees to employers and no matching contributions. The only requirement is to deduct the employee deferral from their payroll if they do not opt-out of the plan. There will be a ROTH IRA automatically set up for each employee. Employees have 30 days to participate or opt-out of the program. They will be automatically enrolled in the program if they do not select any option. The automatic default savings rate is 5% of gross pay. Employees can change the rate once they enroll.
The state should notify employers that they are eligible to register and will provide a PIN. However, DHJJ recommends employers meeting the qualifications should not wait for the state to initiate contact. Instead, they can go online and request a PIN and get registered.
Penalties for Non-Compliance
This plan has been in place for some time. However, Illinois has not acted on enforcement because of the COVID-19 pandemic. Enforcement for non-compliance will begin after the November 2022 deadline. Penalties can be up to $250 per employee for the first year and $500 for the second year.
How can DHJJ help?
DHJJ helps clients navigate changing legislation that affects their business. Knowing what affects you and your business helps business owners make the best decisions for the business and their employees. If you’re interested in business advisory services, contact DHJJ using the form below.