Illinois employers with 25 or more employees will be required to establish a retirement savings plan

 

Illinois employers will be required to offer employees a retirement plan under a law signed by Governor Pat Quinn on January 4, 2015. The Illinois Secure Choice Savings Program (S.B. 2758) establishes the option of an individual retirement plan for more than two million Illinois private sector employees who currently do not have access to any retirement plan at work. The program creates a simple individual retirement savings option through a 3% payroll deduction for private sector employees whose employer does not offer a retirement plan besides Social Security. Employers that have been in business for at least two years and employ 25 or more employees are required to participate. Employees can opt-out of the program, or contribute more or less than the default 3%. The new law is effective June 1, 2015, and implementation must be completed within two years.

Employers will retain the option, at any time, to set up any type of employer-sponsored retirement plan or to offer an automatic enrollment payroll deduction IRA, instead of having a payroll deposit retirement savings arrangement to allow employee participation in the program.

Under the law, the Illinois Secure Choice Savings Board will be required to request an opinion or ruling from the federal Labor Department regarding the applicability of ERISA to the Program. The Board may not implement the Program if the IRA arrangements offered under the Program fail to qualify for the favorable federal income tax treatment ordinarily accorded to IRAs under the Code or if it is determined that the Program is an employee benefit plan and State or employer liability is established under ERISA.

Source: Illinois Government News Network, Press Release, January 4, 2015.

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