By Kelly Haab-Tallitsch – SmithAmundsen LLC
The Illinois Secure Choice Savings Act (Secure Choice Act) was quietly signed into law by Illinois Governor Pat Quinn over the weekend. The controversial legislation will require most businesses in Illinois to adopt a retirement savings plan for their employees by June 1, 2017.
The Secure Choice Act creates a state-run retirement savings program in which eligible workers can contribute to a Roth IRA through automatic payroll deductions from their paychecks. Employers with 25 or more employees, who do not offer another type of retirement program, will be required to offer the state-run IRA arrangement or be subject to a fine of $250 per employee per year. Employers that sponsor other types of private retirement plans, such as a 401(k) or pension plan, are not subject to the requirement or fines.
Once the Illinois Secure Choice Program is up and running – expected to be 2017 at the earliest – employees will be automatically enrolled in the program, with a default 3% payroll deduction per paycheck. Employees will have the option to change their deduction percent or to opt out of the program entirely. Employers and the state will not make contributions to employees’ accounts.