The Illinois Secure Choice Savings Program (Secure Choice) allows workers to save money for retirement on their own. This is required for any business in the state of Illinois that has at least five employees, has been in business for two or more years, and does not currently offer a retirement plan. Businesses who fall into this category must begin offering a qualified plan to their employees, or automatically enroll their employees into Secure Choice.

Program Overview 

Participants of the Secure Choice Program are enrolled in a default target-date Roth IRA with a default five percent payroll contribution. However, participants can change their contribution level or fund option at any time or choose to opt-out of the program. Employers register their employees for this program so that accounts can be created, and payroll contributions can be made.

The Illinois Secure Choice Program differs from a traditional retirement plan. When enrolled in the Secure Choice Program, employers are not considered plan fiduciaries, they do not pay fees, they do not make contributions into their accounts, and they’re not responsible for plan paperwork or administration. Instead, the Secure Choice is run by a seven-person Board with Treasurer Michael Frerichs serving as Chair. Frerichs office administers Secure Choice on behalf of the Board, and then partners with private-sector financial service firms for a variety of services.

The Secure Choice Savings Program launched in 2018 with a phased implementation that’s based on employer size. The next phase in this program begins in November of 2022 for businesses that consist of 16-24 employees.

Employer Registration Deadlines

Depending on the size of the employer, program deadlines vary. The deadline for businesses with 16-24 employees is November 1st, 2022, and the deadline for 5-15 employees is November 1st, 2023. Any employer who does not meet their required deadline may be subject to enforcement which could consist of financial penalties. The Illinois Secure Choice Program has over 97,200 participants as of December 1st, 2021. Altogether, these participants have saved nearly $80 million for retirement.

Partner With A PEO Today!

Employers face a constant challenge today in retaining good talent. It’s more important than ever for employers to offer their employees a retirement plan, in order to attract good talent. The constant change in legislation adds strenuous time and energy to your business. When you partner with GMS, our experts help you navigate through these changes and assist in the process of enrolling your new employees. Do what you do best and outsource the rest!

In March of 2019, Governor Phil Murphy signed the New Jersey Secure Choice Savings Program Act to close the retirement savings gap. This Act created the Secure Choice Savings Program which was designed to provide a private path for employees to save for retirement. This means that certain employers are required to establish a payroll deposit retirement savings plan that permits eligible employees to take part in the program.

Although the implementation of the program remains in the works, the new website is now operational as of April 2022. More information is expected soon which will include the next steps concerning how to implement this program in your business. To keep up to date on this Act, visit their website today.

Employers Subject To The Act:

The Secure Choice Savings Program applies to any person and entities that are engaged in a business, industry, profession, trade, or other enterprise within the state of New Jersey that:

• Have not employed fewer than 25 employees in the state the previous calendar year
• Have been in business for at least two years
• Have not offered a qualified retirement plan in the past

Qualified Retirement Plans:

There is a common misconception that plans must be offered as a 401(k). However, there are a variety of qualified retirement plans offered to an employer, to avoid complying with the Act. These include Sections: 401(a) and (k), 403(a) and (b), 408(k) and (p), 457(b), or a plan sponsored by a PEO.

How Employers Will Comply:

To comply, covered employers must follow the steps below: 

• Establish a payroll deposit retirement savings arrangement no more than nine months after the Board opens this program for enrollment. Each employee that will enroll in the program will be able to choose their individual contribution level.
• Each employee who has not opted out will be automatically enrolled in the program.
• Deposit deductions from employees’ payroll into the program.

As this new Act rules out, employers are permitted to contract with a third party. A third party means partnering with a Professional Employer Organization like GMS, who will perform the tasks listed above on behalf of the employer.

What This Act Means for Employees:

Employees that were hired more than six months after the Board opens the program for enrollment and have not opted out, will be automatically enrolled. New employees who are eligible to enroll, will be automatically enrolled. New employees will be eligible to enroll annually. Employers are required to have an annual open enrollment period where eligible employees are able to change their elections under the Program. That also means that any employee who opted out in the previous year will be able to opt in during the new enrollment period.

Penalties for Employers:

Any employer who fails to enroll any employee without a reasonable cause in a timely manner is subject to the penalties listed below:

• A written warning for the first calendar year in which a violation occurs.
• For the second calendar year, there will be a $100 fine when a violation occurs.
• For the third and fourth calendar year, there is a $250 fine for each employee who was not enrolled in nor opted out of participation in the program.
• For the fifth calendar year and the years to follow, there will be a fine of $500 for each employee who wasn’t enrolled in nor opted out of participation in the program.
• There will be a first offense penalty of $2,500, and a $5,000 fine for the second offense and each offense following when the employer collects employee contributions but fails to remit any portion of the contributions to the fund.

Be Proactive And Partner With A PEO Today!

As the board is still working on the implementation of this program, employers have time to figure out a game plan for their business. When partnering with a PEO like GMS, our experts will keep you up to date on these changes and assist in the process of enrolling your employees into this program. Offering a retirement plan is more important than ever to retain quality employees. However, at GMS, we know how challenging it can be to decide which plan is best for you and your employees. Are you looking for proactive ways to ensure your business’ success? Contact us today to learn more!