Illinois Secure Choice: Understanding Your Options

Illinois Secure Choice: Understanding Your Options

We recently sat down with Kara Kudukis of ADP to discuss Illinois Secure Choice, a state-sponsored retirement program for employees that do not have access to a retirement savings plan through their employer. This retirement plan is required for all businesses with at least 25 employees. Kara provided us with the following details on this program:

  • IL Secure Choice accounts are a Roth Individual Retirement Arrangement (IRA)
  • There are 4 fund selection options: capital preservation, growth fund, target date fund, and conservative allocation
  • There is no tax benefit to the owner and parts as the owner isn’t contributing anything to the retirement program.
  • Roth IRA deductions are after tax (401K is before tax). The rules for withdrawals can be found here.
  • The maximum yearly contribution is $6,000 total
  • After age 50 you can contribute an additional $1,000 a year
  • If you make over 137K you cannot participate and are you are limited in how much you can contribute if you make between 122K-137K
  • There is some ongoing manual work for the owner such as managing your contributions
  • No monthly/yearly fees to the owner
  • Penalties and fines may be incurred if you don’t have some kind of retirement program after the effective date
  • No matching or profit sharing allowed
  • No loans can be taken from the account
  • There are 3 Fund Providers: State Street, BlackRock, and Charles Schwab
  • There is a 1.00% fee on all assets in the account (Roth IRA)

IL Secure Choice

Employers that satisfy the following criteria are subject to the Secure Choice program:

  • Have at least 25 employees as reported to the Illinois Department of Employment Security (IDES) for unemployment insurance payments;
  • Have been operating in Illinois for at least two years; and
  • Do not offer a qualified retirement plan to any Illinois employees. (A qualified retirement plan under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b).)

If you are a business with at least 25 employees and are unsure about your options or next steps, please reach out to us and we would be glad to discuss! 

About Lindsay Pastorino

Being organized and a bit of a clean freak, Lindsay's idea of a good time is cleaning out her closets.  We wouldn't even put it past her to “Danny Tanner it” and vacuum her vacuum from time to time!  These traits, however, make her the perfect person for the project manager role.  When she's not keeping things organized, Lindsay enjoys spending time with her husband and daughter, traveling, and trying new restaurants.