The Illinois Secure Choice Savings Act was adopted in 2015 and is finally set to begin implementation in November of 2018.
Unless it isn’t.
In an eleventh hour move, on August 14, 2018, Illinois Governor Rauner issued an amendatory veto to the bill which would have a large impact if passed. The biggest impact would make the program permissive and not mandatory. At this time, a final decision may not be made until November. You can read the full proposed amendment here.
But because we like to be ready for anything, let’s get a fundamental understanding of the requirements of the Secure Choice Savings Act in case it does become mandatory.
A summary of the requirements:
Which Employers will be required to comply?
- Those that have at least 25 employees working in the state of Illinois,
- Have been operating in Illinois for at least two years, and
- Do not offer a qualified retirement plan to Illinois employees. (A qualified retirement plan under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b).)
Which Employees are eligible?
- Full-time and part-time employees are eligible
- Seasonal employees are eligible if they work for more than 60 days with the employer
For required Employers, what will be their responsibilities?
- Distribute program information and materials that will be provided by the Secure Choice Program Manager
- Facilitate employee enrollments
- Setup payroll deductions
- Remit employee deferral contributions
The program will not require employers to make employer contributions, pay administrative fees, act as a plan managers or fiduciaries, or take on any obligations under ERISA.
Proposed Program Roll-Out
The program is currently set to be rolled out in three waves; starting with the largest employers late this year, moving to smaller employers by late next year. Here are the details:
Wave 1- November 2018
- For employers with at least 500 employees
- Employers have until December 2018 to enroll employees and deductions begin January 2019
Wave 2- July 2019
- For employers with 100-499 employees
Wave 3- November 2019
- For employers with 25-99 employees
What comes next?
The FAQs on the Illinois Secure Choice site explain that the State will notify employers directly when they will be required to register or certify that they are exempt from the program. The notice will include instructions and due dates.
If you do not already have a qualified retirement savings plan in place for your employees, now may be a good time to start a cost/benefit analysis comparing a qualified plan (401k, 403b, etc) vs. a state-based plan like the ones proposed in the IL Secure Choice Savings Act.
We will continue to keep StratEx clients updated as the situation unfolds.