Among the many changes to laws impacting Illinois Employers, one of the most novel changes in Illinois is the “Secure Choice” Law that goes into effect on June 1, 2017. In a time when people are concerned that Social Security won’t be there when they retire, and the State of Illinois declares its budget is in crisis because its public employee retirement program is underfunded by 1-Billion dollars, new legislation will encourage Illinois employees to build their own retirement funds. At its heart, personal retirement plans will be voluntary and totally employee funded. However, to encourage participation, employers who have 25 or more employees and have been in business at least two years must offer a qualifying plan by June 1, 2017. The plans will be 100% employee funded. The only expense to the employer will be the cost of taking the deduction out of the employee’s paycheck and the initial expense of setting up the program. If employees take no action, the employer will automatically deduct 3% of the employee’s paycheck which will go into the retirement plan. However, employees may elect not to participate or may elect to have a larger or smaller percentage of their paycheck go into their retirement plan. In other words, the State of Illinois is saying, “We think it’s a good idea to save more for your retirement, but you’re not required to”.
What Business Are Covered?
o Must Have 25 or more employees;
o The business must have been in business for at least two years; and
o The business must not already offer a qualifying retirement plan
How are Employees Impacted?
o If you work for a covered business, you will be automatically enrolled. Employees have the option of opting out.
o A qualifying plan will apply 3% of an employee’s paycheck to be be invested in the qualifying retirement plan
o The employee will have the ability to modify the percentage of income or select an alternative retirement plan option
How Much will it Cost?
o Employers are not required to provide a match
o Employers will be required to pay for the administrative cost of deducting the retirement contribution from the employee’s paycheck
o Employers are specifically immune from liability resulting from an employee’s investment decisions.
o Employers are not fiduciaries under the plan This will not go into effect until the middle of 2017.
However, employers should be aware that they will be required to provide notice to their employees and complete the administrative hurdles to get the programs in place before the effective date.
The attorneys at Maduff & Maduff are highly experienced in employment law, specializing in discrimination, wage theft and overtime, as well as civil rights. Contact us today for your employment law needs.