Law Aims to Promote Retirement Savings

A new law amends the Illinois Secure Choice Savings Programs Act (Secure Choice).

Background
Secure Choice requires Illinois businesses with at least 25 employees—that have been in business for two or more years and that do not currently offer a qualified retirement savings plan—the option to eitheroffer a private market savings plan or automatically enroll their employees into Secure Choice.

Secure Choice participants will be enrolled into a default target date Roth IRA with a default 3% payroll deduction, but can choose to change their contribution level or opt out of the program altogether at any time. Secure Choice accounts are owned by individual participants and will be portable from job to job.

Implementation of the program is underway, and the program is estimated to be open for enrollment in 2017.

Amended Law
Recent legislation amends the Secure Choice Savings Program Act by providing that (among other things):

  • The total annual expenses (rather than the annual administrativeexpenses) of the trust fund administered by the Secure Choice Board may not exceed 0.75% of the total trust balance;
  • The Secure Choice Board investment policy—and any changes to the investment policy—must be published on the board’s (or state treasurer’s) website at least 30 days prior to implementation; and
  • Small employers’ use of automatic enrollment is subject to final rules from the U.S. Department of Labor, and that utilization of automatic enrollment by small employers may be allowed only if it does not create employer liability under the federal Employee Retirement Income Security Act (ERISA).

The law is effective as of July 15, 2016. Click here to read the text of the new law. More information on the Illinois Secure Choice Savings Program Act is available from the Illinois State Treasurer.

ORIGINALLY POSTED BY HR360

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