What is the Secure Choice Savings Program?
The Illinois Secure Choice Savings Program is a state-run retirement savings vehicle for private sector workers in Illinois that do not have access to an employer-sponsored retirement plan. Secure Choice enables workers to save their own money easily and safely through a regular payroll deduction, and doesn’t burden employers with administrative or managerial costs and responsibilities. Employers can automatically enroll their workers in Secure Choice if:
- They are located in Illinois and have been operating in IL for two or more years,
- Have 25 or more employees, or
- They don’t offer a qualified savings plan.
Instead of participating in Secure Choice, an employer can choose to offer its own qualified plan to its workers.
“The Illinois Secure Choice Savings Program is now being tested by employers that volunteered to participate in a pilot program,” announced Illinois State Treasurer Michael W. Frerichs (D) on April 18, 2018.
While all participating employers will be notified in advance of Secure Choice’s roll-out, many may not begin enrolling employees until later enrollment periods in 2018 and 2019.
How the Secure Choice Savings Program Works
Employers will be responsible for distributing informational materials about the program (materials will be provided by the program manager) to all employees. They will facilitate the enrollment of their employees, set up the payroll deduction process, and ensure timely remittance of employee contributions to the retirement plan provider. Employers will not be allowed to contribute to the accounts, nor will they have any administrative or managerial duties. Employers are not considered plan managers or fiduciaries the way they would be with an ERISA-qualified savings plan.
Secure Choice participants will be enrolled in a default target date Roth IRA with a default 5% payroll deduction, but could choose to change their contribution level or fund option at any time or opt-out of the program altogether. Accounts are owned by individual participants and will be portable from job-to-job.
Employers who do not comply with the Illinois Secure Choice Savings Program Act may be subject to fines and penalties as described in 820 ILCS 80/85.
For more information on the Secure Choice Program or other retirement plan solutions that may be appropriate for your organization to consider, please feel free to contact Joe Connell, Partner at Sikich Retirement Plan Services, at 844-458-5018 or email@example.com.