ILLINOIS RETIREMENT PLAN STATE MANDATE: HELP BUSINESS OWNERS BENEFIT
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Illinois Secure Choice is a retirement savings program that’s part of a larger state-wide retirement mandate. Employers who meet the eligibility criteria must either enroll their employees in Secure Choice or sponsor a qualified plan through the private market.
Since it launched in 2018, the program has brought retirement savings access to workers in every county across Illinois. Those who haven’t yet adopted an employer-based plan have two choices:
- Adopt their own retirement plan
- Register for Illinois Secure Choice Savings Program, the state-sponsored retirement savings program
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Contact your Regional Plan Consultant
Non-Compliant Employers Face Stiff Penalties
IL businesses that don’t adhere to state-mandated retirement legislation within one year will receive a written warning from the government. Each subsequent year of non-compliance will result in these penalties:
- The penalty for one year of non-compliance is $250 per eligible employee;
- Each year thereafter is $500 per eligible employee.
Under the Secure Choice Savings Program, employers are responsible for administering the plan for current and new employees who have chosen to opt in, including:
- Employees are automatically enrolled, but can opt out at any time
- The default contribution rate is 5% of gross pay
- Contribution rates automatically escalate up to 10%
The Secure Choice enrollment deadline for businesses with more than 25 employees has passed. Employers with 16 to 24 employees have until September 1, 2022 to enroll and employers with 5 to 15 employees have until September 1, 2023.
You can help your clients avoid these fines and offer a retirement plan that will:
- Comply with the Illinois mandate
- Reduce taxes
- Control costs
- Attract and retain top talent
- Maximize business value
- Enable them to work with their preferred business partners
Illinois Secure Choice OR Customized Plan?
New York Secure Choice is a basic, one-size-fits-all retirement savings program for businesses that do not wish to sponsor a plan for their own employees. Yet there are many businesses that would be better served with a plan from TRA that’s customized to their needs.
| Illinois Secure Choice | Custom 401(k) from TRA | |
|---|---|---|
| Pre- and Post-Tax Deferrals | Roth IRA w/ auto after-tax payroll deduction | Pre-tax or Roth elective deferral contributions |
| Contributions | Auto-enrolled at a 5% contribution rate | Lesser of 100% of compensation or $23,000 |
| Catch-Up Contributions | Determined by Roth IRA contribution limits | $7,500 annually for those age 50 and older |
| Employer Match | Not permitted | Available |
| Income Limit | Employees are responsible for determining if they meet income limits and are not eligible to contribute to Roth IRA accounts. | No income limits |
| Investment Choices | Target retirement fund, Capital preservation fund, Conservative fund or a Growth fund | Can provide a wide variety from top asset managers |
| Automated Payroll Integration | Available | Available |
| Customizable for businesses | Not customizable | Yes – for example, Safe Harbor, SIMPLE, Profit-Sharing & Cash Balance |
| Tax Credit | Available | Yes – 100% of the expenses paid up to the greater of $500 or the lesser of $250 for each non-HCE’s. A maximum tax credit of $5,000 per year would be available for 3 years. |
TRA Plans to Consider
For New York Secure Choice businesses who want to sponsor a retirement plan, some plans to consider include:
• 401(k)
• Safe Harbor 401(k)
• Cross Tested Profit-Sharing Allocation
• 401(k) plus Cash Balance Plan
Other alternatives to New York Secure Choice include SIMPLE 401(k) Plans, Group 401(k) Plans (MEPs, PEPs and Aggregation Programs), and 403(b) Plans (for non-profits).
Working closely with you, TRA will create a customized plan that meets your client’s business. We partner with top recordkeepers and investment managers around the country and deliver exceptional client service. We also offer 3(16) Plan Administration Relief Services (PARS) to relieve business owners of day-to-day plan administration responsibilities and manage their fiduciary risk.
Complete the form below and one of TRA’s Regional Plan Consultants will be in contact with you.
