Illinois Secure Choice Overview

By November 2023, employers with 5 or more employees are required to register for this program unless they have established a retirement plan for their employees or have been in business less than two years. State-mandated retirement plans are designed to help employees save for retirement if they don’t have access to employer-sponsored plans. Secure Choice was signed into law in 2015, and currently, there are 14 other jurisdictions with state-mandated retirement programs, although not all have been implemented yet.

• • California
  • Colorado (2023)
  • Connecticut
  • Illinois
  • Maine (April 2023)
  • Maryland
  • Massachusetts
  • New Jersey (TBD)
  • New Mexico (July 1, 2024)
  • New York (TBD)
  • New York City (TBD)
  • Oregon
  • Vermont (TBD)
  • Virginia (July 1, 2023)
  • Washington

Businesses in Illinois with 5 or more employees that don’t offer an employer-sponsored retirement plan, have been in business longer than two years, and don’t register with Secure Choice, are subject to fines and penalties. The state will begin enforcement for noncompliant employers with 25 or more employees in early 2023. Employer fines and penalties include the following.

• • $250 per employee for the first calendar year the employer is noncompliant
  • $500 per employee for each subsequent calendar year (doesn’t need to be consecutive)

For Illinois Secure Choice, an “employee” is an individual who is 18 years or older, employed by an employer, and earns wages allocable to Illinois. This term includes both part-time and full-time employees. The following individuals are eligible employees if they work at least 60 days.

• • H-2A visa holders (must have verifiable information such as an individual tax identification number or a social security number)
  • Employees who live in other states but have wages allocable to Illinois
  • Seasonal employees
  • Undocumented workers (with verifiable information)
  • Family members who work for the business
  • Business owner/shareholders who are employees

An “employer” is a person or entity engaged in a business, industry, profession, trade, or other enterprise in Illinois. The business can be either for-profit or not-for-profit. Additionally, the business must not have employed fewer than 5 employees in Illinois in the previous calendar year, been in business for at least 2 years, and not offered a qualified plan in the preceding 2 years.

This is a very brief overview of Illinois Secure Choice. More extensive details can be found at www.ilsecurechoice.com/home/faq.html, and will be covered during an upcoming Tax School webinar on January 18, Illinois Tax Issues and Updates.  Additionally, the requirements in the other jurisdictions are likely different from Illinois’, so be sure to perform due diligence in researching those conditions.

By Kelly Golish,  CPA
University of Illinois Tax School
Assistant Director, Tax Materials

Sources

https://www.adp.com/resources/articles-and-insights/articles/s/state-mandated-retirement-plans.aspx

https://www.ilsecurechoice.com/home/faq.html

820 ILCS 80/85