Mandatory Retirement Plans
The State of Illinois employees over 76,000 people, the Governor's office has 157 staff members, and every Senator and Representative has several staff members. I assume most of these people have no idea what it is like to run a small business, but they love to pile on the requirements for those of you who do. One of the latest requirements is mandatory retirement plans for businesses, including not-for-profit businesses, which now applies to any employer with five or more employees that has been in business for at least two years.
The Illinois Secure Choice Savings Program Act (the "Act") was passed in 2015 to give access to a retirement plan for employees that did not have access through their employers. It has applied to more and more employers each year. It applied to employers
with 500 or more employees in 2018, employers with 100 to 499 employees in 2019, employers with 25 to 99 employees in 2020, employers with 16 to 24 employees in 2022, and for 2023 it will apply to employers with as few as five employees.
The Act requires each employer to register at https://employer.ilsecurechoice.com/illinoisertpl/enroll/createEmp/viewCollectEmpPreRegDetails.cs. In order to do so, you need an access code provided by the Illinois Treasurer's office. I received an email informing me of the registration requirement with the access code for our office. If you have not received an email, you can request one at https://employer.ilsecurechoice.com/illinoisertpl/register/viewCollectResendAccessCode.cs.
If you already offer a 401(a) or 401(k) plan), 403(a) Qualified annuity plan, 403(b) Tax-sheltered annuity, 408(k) Simplified Employee Pension (SEP) plan, 408(p) SIMPLE IRA plan, 457(b) Governmental tax-deferred compensation plan, or Taft-Hartley plan, your business is exempt from registration.
If you do not offer one of these plans, you must enroll in the Secure Choice plan. You provide your employees' information, and your employees can then enroll in the plan. They are not required to enroll in the plan, but if they do, you are required to deduct their contributions from their paychecks and submit them to Secure Choice.
If you fail to comply with the Act, you can be subject to a fine of $250 per employee for the first year and $500 per employee for each subsequent year. Per the Secure Choice website, "enforcement for select noncompliant employers with 25 or more employees will begin in 2023."
Instead of using the Secure Choice plan, you can, of course, create your own plan. This can be expensive, depending on the type of plan. You should talk to your financial advisor to see what his/her firm offers. Or, your trade association or other group may offer a plan for small employers.
And, while you're making sure you are in compliance with the Secure Choice Act, don't forget that:
● If you have even one employee you are required to provide sexual harassment prevention training to all employees every year; and
● If your business is a corporation, limited liability company, or similar entity, in January you must register with the Financial Crimes Enforcement Network (FinCEN). See https://www.fincen.gov/boi.
If only there was an act requiring legislators to take annual business harassment prevention training.
This article is for informational and educational purposes only and does not constitute legal advice.