Since 2012, state-mandated retirement savings programs have continued to gain momentum and bridge the gap for many small businesses struggling to afford administrative costs. Illinois became the first state to adopt a state-run program in 2015 and now has enacted new provisions, including allowing that plans now become portable, essentially allowing employees to retain their accounts and eliminating the need for complex rollovers when changing jobs. 

The Illinois Secure Choice Savings Program requires employers with at least five employees, that have been in operations for at least two years, and that do not offer or contribute to a qualified retirement plan to enroll their employees in the plan.

The new amendment would ensure that enrollees’ accounts are individual retirement accounts, either Roth or Traditional, which can be contributed to from multiple employers and are portable.

Related: State auto-IRA programs hit snag: 2M workers can’t be verified, under federal rule

Last week, Illinois Governor J.B. Pritzker signed the new legislation into law, effective immediately, which includes these new provisions in the Secure Choice Savings Program:

  • Accounts established under the Program Shall be IRAs, into which enrollees contribute funds that are invested in investment options established by the Illinois Secure Choice Savings Board.
  • A separate account shall be established for each enrollee and the accounts shall be owned by the enrollee.
  • The savings accounts established under the Program shall be portable and allow for an enrollee to make contributions from multiple employers into a single account.
  • An enrollee in the Program may have both a Roth IRA and a Traditional IRA through the Program.
  • The llinois Secure Choice Savings Board should assess the feasibility of auto-IRA agreements with other states to achieve greater economies of scale through shared resources and to enter into those agreements if determined to be beneficial.
  • An employer who fails without reasonable cause to enroll an employee in the Program within 120 days after their hiring date and fails to remit their contributions (rather than fails without reasonable cause to enroll an employee in the Program within the time provided) shall be subject to a penalty.

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