Is Illinois Secure Choice a Legit Program?

The Illinois Secure Choice program is a state-sponsored initiative designed to facilitate retirement savings for private-sector workers. Established to address the lack of workplace retirement plans for many individuals, it provides a straightforward and legitimate method for employees to save for their future. This program operates as a state-mandated pathway to encourage broader participation in retirement planning across the state.

Understanding Illinois Secure Choice

The Illinois Secure Choice program is structured as a Roth Individual Retirement Account (IRA) and is overseen by the Illinois Secure Choice Savings Board. This state-run program aims to increase access to retirement savings for those whose employers do not offer a traditional retirement plan, thereby supporting financial preparedness among its workforce. Employers are required to participate if they meet specific criteria: having five or more employees (including full-time, part-time, and temporary staff) and having been in business for at least two years. An employer is exempt from the mandate if they already provide a qualified retirement plan, such as a 401(k), 403(b), SEP IRA, or SIMPLE IRA. Employee participation in the program is voluntary, though automatic enrollment is a feature.

Employer Responsibilities and Compliance

Eligible employers must register with the Illinois Secure Choice program, providing their Federal Employer Identification Number (FEIN) and other business details through the program’s portal. Once registered, employers are responsible for setting up payroll deductions and remitting employee contributions to the program. Employers do not contribute funds to employee accounts, nor do they assume any fiduciary responsibility for the investment performance of these accounts. Their function is limited to processing and remitting employee-directed deductions. Providing employees with comprehensive information about the program is another responsibility, including details on how to opt out, default contribution rates, and available investment options. Accurate record-keeping related to employee enrollment, contributions, and opt-out statuses is also necessary for compliance.

Employee Participation and Account Management

Employees of eligible businesses are automatically enrolled in the Illinois Secure Choice program. They receive information detailing their options, including the ability to opt out if they choose not to participate. If an employee does not opt out, a default contribution rate of 5% of their gross pay is applied, though individuals can adjust this rate up or down to align with their personal financial goals. The program offers a selection of investment options, typically including target-date funds, capital preservation funds, conservative options, and growth funds. Employees can access their accounts online to view balances, modify their contribution rates, update beneficiaries, and manage their investment choices at any time. A key feature of these accounts is their portability, meaning they remain with the employee even if they change jobs. This helps ensure continuity in retirement savings.

Alternative Retirement Savings Options

The Illinois Secure Choice program is designed for employers who do not already offer a qualified retirement plan. Businesses providing alternative employer-sponsored retirement plans are exempt from Secure Choice. Common alternatives that fulfill the state’s requirement include 401(k) plans, which are employer-sponsored and often feature matching contributions. Other options are Simplified Employee Pension (SEP) IRAs, with employer-only contributions, and Savings Incentive Match Plan for Employees (SIMPLE) IRAs, for businesses with 100 or fewer employees, involving both employer and employee contributions. Employers can establish one of these qualified plans as an alternative to facilitating Illinois Secure Choice, providing a range of options for their employees.