Illinois is the first state in the nation to fully enact a state-sponsored retirement plan for employees of private-sector businesses that don't offer such a benefit. The Illinois program, called Secure Choice, is a Roth individual retirement account (IRA). It's intended to help the 2.5 million workers in the Prairie State who lack access to employer-sponsored retirement plans.
Under Secure Choice, Illinois businesses with 25 or more employees operating in the state for two years or more, and that don't offer workers a qualified savings plan, will:
- Automatically enroll eligible employees. However, an employer that does not want to participate in Secure Choice can choose to offer its workers another qualified retirement savings plan;
- Be responsible for distributing information about the program to all employees, facilitate enrollment, set up the payroll deduction mechanism, and ensure prompt transfer of employee contributions to the Secure Choice plan;
- Not be able to make employer contributions to the plan;
- Have no administrative or managerial duties; and
- Not incur any costs.
However, Secure Choice's start date has been delayed slightly.
Secure Choice implementation delayed
Originally set to launch June 1, 2017, Secure Choice is now scheduled for a gradual phase-in, beginning with a pilot program in 2018. (Oregon and California are also phasing in plans, with OregonSaves to start July 2017, and California's CalSavers to begin in 2019. Connecticut, Maryland, Massachusetts, Washington state, and New Jersey have also approved the formation of state-sponsored retirement plans.)
The future of state-sponsored retirement plans is ever-changing, and is still evolving as this is written. Paychex will continue to monitor developments as they happen.