Is Your Restaurant Required to Participate in the Illinois Secure Choice Savings Program?
The Illinois Secure Choice Savings Program is a simple and convenient state-sponsored retirement savings program for employers who do not already offer a qualified plan. With Illinois Secure Choice, employers can help their hard-working employees save for their retirement. Under the Illinois Secure Choice Savings Program, covered employers do not contribute to employees’ accounts or pay any fees. However, employers are required to distribute certain information to employees, facilitate employee enrollment, and set up a system for making appropriate payroll deductions and remitting employee contributions to the state for deposit in a Secure Choice Roth IRA.
The Illinois Secure Choice Savings Program requires employers to automatically withhold five percent of each eligible employee’s compensation (up to the contribution limits set annually by the IRS), unless the employee elects a smaller amount or opts out of the program altogether.
Who is required to participate?
Employers are required to participate in the Illinois Secure Choice Savings Program if their business:
- Has at least 25 employees;
- Has been operating in Illinois for two years or more; and
- Does not offer a qualified retirement plan, such as a 401(k) or profit-sharing plan, Simplified Employee Pension (SEP) plan or SIMPLE IRA plan. A payroll deduction IRA is not considered a qualified plan.
An employer meets the 25-employee threshold if their business reports at least 25 employees to the Illinois Department of Employer Security (IDES) for unemployment insurance purposes in all four quarters of the previous calendar year. The number of employees is not based on payroll. Thus, if an employer reported fewer than 25 employees in at least one quarter in the previous calendar year, the business is exempt from the Illinois Secure Choice Savings Program.
What are the penalties for noncompliance?
Businesses that are required to but fail to facilitate employee participation in the Illinois Secure Choice Savings Program, are subject to penalties of $250 per employee for the first year and $500 per employee for each subsequent year.
What are the next steps?
The State of Illinois has been notifying employers directly to inform them whether they are exempt from the program or required to register. For those employers required to participate, the State will provide instructions and due dates for completing the enrollment process.
If you believe that your business is covered by the Illinois Secure Choice Savings Program and you have not been notified by the State, please contact us as soon as possible to discuss next steps. ORBA can help you understand your obligations under the program and set up appropriate processes, procedures and systems to facilitate employee participation in the program and ensure that you comply with its requirements.
If you have any questions, please contact Ken Kobiernicki or your ORBA advisor at 312.670.7444. Visit ORBA.com to learn more about our Restaurant Group.