Illinois Employers – You Might be Required to Provide an Employee Benefit Plan to Your Employees

Under recent changes in the law, employers in Illinois who have more than twenty-five employees and do not offer their employees an employer sponsored retirement plan must comply with the Illinois Secure Choice Savings Plan Act (“Secure Choice”). Secure Choice requires employers to automatically withhold five percent of an employee’s compensation (up to the annual maximum allowed for IRA contributions each year) unless the employee elects a different amount or opts out of the program entirely, and the employer must remit those contributions to the Secure Choice program.

Employers who do not comply with the Illinois Secure Choice Savings Program Act may face a penalty of $250 per employee for the first year and $500 per employee for each subsequent year.

Employers who are subject to Secure Choice

Employers who meet the following criteria must register and participate in the Secure Choice Program:

1. Have at least 25 employees as reported to the Illinois Department of Employment Security (IDES) for unemployment insurance payments;
2. Have been operating in Illinois for more than two years; and
3. Do not offer a qualified retirement plan to any Illinois employees (such as 401(k) plans, profit-sharing plans, SEP or SIMPLE plans, or defined benefit plans).

Registration Deadlines

You should have received notice from the State of Illinois about the Secure Choice Program with instructions on how to register. If you are an employer with more than 100 employees and are subject to Secure Choice, you should have already registered. If you are an employer with 25-99 employees and are subject to Secure Choice, you have until November 1, 2019 to register. Employers can register at https://employer.ilsecurechoice.com/

Minimal Burden for Employers

Secure Choice is intended to be a simple and convenient savings plan for employers who do not already have a plan. Employers cannot make contributions to the plan, all contributions are made by employees. There are no costs to the employer, they are merely a facilitator.

Benefit for Employees

Under Secure Choice, employees can:

• Save for their retirement through payroll deductions into a Roth Individual Retirement Account.
• Elect their contribution amount – there is a default savings rate of 5% of gross pay, but the employees can elect a lower contribution amount or can opt out.
• Be auto-enrolled after 30 days.
• Direct the investment of their accounts into one of several funds offered under the Secure Choice Program.

If you need help or have questions about the Secure Choice Program, please contact attorney David O’Leary at 847-705-7555 or doleary@lavellelaw.com.