Mandatory Retirement Plans in Illinois

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Is Illinois the precursor to mandatory retirement savings programs across the country the way that Massachusetts was for mandatory health care? Illinois has become the first state to require that private-sector employers offer their employees retirement benefits. The Illinois Secure Choice Savings Program Act (S.B. 2758), signed into law by Illinois Governor Pat Quinn on January 4, 2015, requires employers to offer their employees a state-run automatic enrollment payroll deduction Individual Retirement Account (IRA) program (a Roth IRA) known as the “Illinois Secure Choice Savings Program Fund.” The Act’s stated purpose is to promote greater retirement savings for private-sector employees in a convenient, low-cost, and portable manner. Penalties for noncompliance may be assessed on employers by the Illinois Department of Revenue at $250 per employee per year, or $500 per employee for subsequent years.


The Act applies to both for-profit and not-for-profit employers, with 25 or more Illinois employees, that do not already offer their employees retirement benefits. (Note that the program is available to employers with fewer than 25 employees, but their participation is not required.) In general, the program requires employers to automatically enroll employees, aged 18 or older, in the program at a 3 percent payroll deduction. Employees can affirmatively opt out of the program, or elect to defer a different percentage of wages or dollar amount. Investments for the program will be directed by enrolled employees, selected from investments approved by a seven-member board which will oversee the program, including a default life-cycle fund.


The Illinois Secure Choice Savings Program is not intended to be an employer-sponsored retirement plan; rather, it is a state-run program that employers facilitate by offering to their employees and depositing payroll deductions. Also, the program does not require an employer to make any contributions (or match contributions); it just requires an employer to deposit employee payroll deductions into the program’s trust fund. A participating employer is not a fiduciary under the program, and is not intended to be responsible for the program’s administration or investments.


The Illinois Secure Choice Savings Program Act directs the newly-created Illinois Secure Choice Savings Board to implement the program within 24 months after the Act is signed into law. That being said, the program faces operational hurdles before it can become effective. The Act directs the Board to seek the opinion of the Internal Revenue Service as to whether the IRA arrangements offered under the program qualify for tax-favored status, and to seek the opinion of the U.S. Department of Labor (DOL) as to whether the program is subject to the Employee Retirement Income Security Act of 1974 (ERISA). The Board may not implement the program if it is determined that the IRA arrangements do not qualify for favorable federal tax treatment, or that the program is an ERISA employee benefit plan and state or employer liability is established under ERISA. While the DOL has recently opined that the myRA program is not an ERISA plan, the Illinois program is distinguishable and provides for mandatory automatic enrollment which could lead the DOL to find too much employer involvement and thus an ERISA plan.


The program appears to be designed so that most of the heavy-lifting associated with retirement plan sponsorship is borne by the Board, and not by the participating employers or by the state. The duties for participating employers appear to be limited to offering the program (using materials provided by the Board) to new employees, providing an annual enrollment period for ongoing employees, automatically enrolling employees that do not opt out, and facilitating employees’ payroll deductions.




DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ogletree, Deakins, Nash, Smoak & Stewart, P.C. | Attorney Advertising

Written by:

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Ogletree, Deakins, Nash, Smoak & Stewart, P.C. on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.