Category Archives: Retirement

Illinois Mandatory Retirement Program Enrollment Deadlines Coming Later this Year

Contributed by Kelly Haab-Tallitsch, March 27, 2019

money plant growing

Illinois employers that have 25 or more employees and have been in business at least two years will be required to participate in the state-run retirement savings program or offer another qualifying retirement plan later this year.

The status of the Illinois Secure Choice Program was uncertain last fall following an amendatory veto issued by former Governor Bruce Rauner making the program optional, instead of mandatory, as discussed in a previous blog post. The Illinois legislature generally opposed making the program optional, and chose not to act on the amendment, effectively overriding the veto. As a result, the Secure Choice Program remains mandatory for covered employers that do not offer another retirement program. 

Employers with 100 – 499 employees must register for the Illinois Secure Choice Savings Program by July 1, 2019 and employers with 25 – 99 employees must register by November 1, 2019 (employers with 500+ employees were required to register in late 2018). The Illinois State Treasurer’s office will notify employers directly (by mail or email) when they are required to register. Employers will receive two notifications – an early registration notice 120 days prior to the required registration date and a second notice 30 days prior to the registration date. 

During the registration process, employers will provide basic information for the state to determine if the employer must participate in the Secure Choice Program (e.g., number of employees, and whether another retirement plan is offered). Participating employers will be required to automatically enroll employees in the savings program, withhold five percent of an employee’s compensation (up to an annual IRS maximum), and remit employees’ contributions to the state-run savings program, unless the employee elects a different amount or opts out of the program. Employer contributions to the plan are not permitted.

After registration, employers will be given instructions on how to enroll employees and remit payroll contributions, and provided enrollment forms and communication materials to give to employees. Employees will have 30 days to opt out or make adjustments to their savings rate or investment choices. At the end of this 30 day period, the employer must record employees’ elections in an online employer portal. Payroll deductions must begin within the following 30 days. Employers can remit employee contributions to the Secure Choice Program by ACH, wire transfer or check.

Employee contributions will be deposited into Roth Individual Retirement Accounts (IRAs) for each participant and invested at the participant’s direction among a menu of investment alternatives.

An Illinois employer that offers another qualifying retirement plan is exempt from the Secure Choice Program. This includes a 401(k) plan, 403(b) tax-sheltered annuity plan, 403(a) qualified annuity plan, Simplified Employee Pension plan, SIMPLE IRA plan, governmental 457(b) plan, or any other plan qualified under Internal Revenue Code section 401(a) (payroll deduction IRAs are not included). As such, employers required to participate in the Secure Choice Program should examine the options available to determine whether implementing a qualified retirement plan may be a better alternative. 

Employers can find additional information on the Illinois Secure Choice website.

Future of Illinois’ Mandatory Retirement Program Uncertain

Contributed by Kelly Haab-Tallitsch, September 12, 2018

The future of Illinois’ mandatory retirement savings program, Illinois Secure Choice, is up in the air after Governor Bruce Rauner issued an amendatory veto to change the word “shall” to “may” in key passages of the law, making the program optional, instead of mandatory.  The program is scheduled to roll-out in a series of “waves” starting this November.


close up hand stacking gold coins isolated on white background

The Illinois Secure Choice Savings Act (Secure Choice Act), enacted in 2015, requires private employers with more than 25 employees that have been operating in Illinois for at least two years to participate in the Illinois Secure Choice program or offer another qualified retirement plan. Covered employers will be required to automatically enroll employees in the program and withhold five percent (5%) of an employee’s compensation (up to an annual IRS maximum), unless the employee elects a different amount or opts out of the program. Employers then remit employees’ contributions to the state-run program. Employer contributions are not permitted.

In his veto message, issued August 14, 2018, Governor Rauner pointed to concerns that the mandatory program could lead to fewer small employers offering retirement plans and the termination of existing small plans and changes in federal guidance on the relationship of state-run retirement programs with the Employee Retirement Income Security Act of 1974 (ERISA), as reasons behind his veto. He also cited the Secure Choice program’s history of delays and poor implementation.

It is unclear whether the veto will stand, or whether the Illinois Legislature will override it. A vote may not occur until November, when the legislature is scheduled to be in session next. Illinois State Treasurer Michael W. Frerichs, the state official responsible for implementation of the program, opposes the Governor’s action and has vowed to work with both parties to override the veto.

The Secure Choice program is set to roll out in a series of “waves” beginning November 1, 2018 with larger employers. Under current rules employers with 500 or more employees have until December 2018 to enroll employees, with payroll deductions beginning in January 2019. Implementation is scheduled to begin July 1, 2019 for employers with 100-499 employees and November 1, 2019 for employers with 25-99 employees.

What Should You Do?

For now, Illinois employers will have to sit tight and wait for more information. Those most likely to be affected by mandatory participation in the Secure Choice program – employers with less than 500 employees – have until at least July 1, 2019 to comply. If you do not currently offer a retirement plan you should examine alternatives, including traditional savings plans (i.e. 401(k)) and plans designed for small employers, such as a SIMPLE IRA or SEP, to determine the best option for your business. Employers with 500 or more employees (who do not offer another retirement plan) should be prepared to enroll employees later this year, if necessary.