Illinois Secure Choice requires small employers to offer a retirement savings program

Illinois Secure Choice requires small employers to offer a retirement savings program

By the end of this year, most small employers in the state of Illinois will be required to offer employees a retirement savings program to save in—an attempt from the state government to protect its citizenry from reaching retirement age without having adequate savings to get them to and through retirement.

Illinois is far from the only state looking at implementing a mandated retirement savings programs but it is one of the first to successfully pass legislation regarding the mandate and put plans into action. But is Illinois Secure Choice actually mandatory, and if so, how will small employers potentially be affected?

What is Illinois Secure Choice?

Illinois Secure Choice is a retirement savings program implemented by the state of Illinois in an effort to increase the amount of workers who have access to an employer-sponsored retirement plan and decrease the amount of upcoming retirees who may have to rely on public-funded taxpayer assistance to live stably in the future. The program opens up access to retirement plans specifically for employees of smaller businesses—workers who usually lack access to any type of savings plan that may help them prepare for their future.

Secure Choice retirement savings program details

Illinois Secure Choice is setup as a payroll-deducted Roth IRA account, meaning workers can contribute on an after-tax basis via deductions from their paycheck. Employees are automatically enrolled into the program when they become eligible (usually 30 days after their employer registers for Secure Choice, giving the employee time to make changes to their account, update investment selections, or opt out if they choose) and are automatically enrolled at a 5 percent contribution rate. Employees are able to opt in or out at any time, and the account belongs to the employee—so it stays with them through job changes and the like.

On the employer side of the house, the Secure Choice retirement savings program is designed to have no employer fees for facilitating the program—which is important since the state is telling many employers that they have to offer the program or find a qualified alternative instead.

But more on that in a minute.

Employers cannot make matching contributions to their employees’ accounts and only serve a limited role in the day-to-day operation of the plan, though that doesn’t mean employers won’t have manual responsibilities and regulations they need to adhere to.

You might also be interested in: Why are states beginning to mandate small business retirement plans?

Is the Secure Choice program mandatory?

As we mentioned, the Illinois Secure Choice savings program was implemented to help close to coverage gap among employees working for small businesses, who are significantly less likely to have access to a retirement savings plan than their large corporation counterparts [1]. As such, the Illinois state government wants the Secure Choice mandate to be as effective as possible, so employers who satisfy the following criteria will be required to register for and participate in the program:

  • Company has 25 or more employees

  • Business has been in operation for at least two years

  • Employer does not already offer a qualified retirement plan

Any business that meets that criteria will be subject to participation in Illinois Secure Choice and will be required to adhere to the following registration deadlines, or face penalties:

  • Over 500 employees: your deadline passed in November 2018.

  • Over 100 employees: your deadline passed in July 2019.

  • Over 25 employees: your deadline is quickly approaching (November 2019). Make sure you evaluate all of your options, and register for Secure Choice prior to the deadline if you determine that the state-run IRA program is the best fit for your business.

Illinois Secure Choice retirement program employer registration deadlines.png

What do employers have to do to comply with Illinois Secure Choice?

While Illinois Secure Choice is designed to be relatively hands-off for the employer, there are multiple steps the employer will have to take to ensure they are compliant with the regulations set by the state-mandated program.

  • Register for Secure Choice prior to registration deadline

First and foremost, employers that are subject to participation in Illinois Secure Choice, as outlined in the criteria above, will need to register their business for the program. Employers will receive an email from Secure Choice with a customized access code to start the registration process; they’ll need to input important company information, such as phone number and email address for the primary contact, the business’s Federal Employer Identification or Tax Identification Number.

Once the business is registered, information for eligible employees will need to be entered as well. Make sure you have each eligible employee’s Social Security Number or ITIN handy, as well as their first name, last name, birthdate, physical address, mailing address, phone number, and email. Employers can complete this process manually or by using Illinois Secure Choice’s available Employee Payroll Census Template.

Keep in mind: registration sessions time out after a few minutes of inactivity for security purposes. If you need to step away from your computer, click ‘Submit’ to save your progress—even if you aren’t finished. Your work will not automatically save, but you can always come back to it later if you submit it.

  • Add delegates or payroll representatives to assist with ongoing administrative tasks

  • Prepare employee contribution information

Employees have 30 days after you upload their information to make changes to their account, select their investment offering, or opt-out of the program. After the 30-day window has passed, employers will need to add the employee’s desired contribution amount.

This can, again, be done manually or by using Secure Choice’s Employee Contribution Info Template.

  • Perform regular account maintenance

Once the business is registered and employee contributions have been prepared, the employer will still face ongoing maintenance tasks unless they’ve enlisted a payroll provider or delegate to help with regular account maintenance. Employers are responsible for processing payroll contributions on a timely basis, updating employee contribution rates with their payroll software or provider, adding new employees as they become eligible, and marking employees as inactive when they leave or are terminated from the company.

  • Employers who participate in Secure Choice are NOT responsible for:

    • Managing investment selections, including helping employees choose investment funds or processing employee investment change requests

    • Processing distributions when requested by the employee

    • Answering investment-related questions

      • In fact, you should actively avoid giving advice related to investment options

    • Managing changes to employee accounts, including updating contact info or beneficiary selections

What are the alternatives to Illinois Secure Choice?

As a state-run auto-IRA program, Illinois Secure Choice faces certain limitations—especially as it relates to other employer-sponsored retirement plan options. For starters, the program offers no tax benefits for the business owner, high earners may not be able to participate due to income thresholds set by the IRS (participation is limited if earnings exceed $122,000 for a single taxpayer and $193,000 for a married taxpayer and prohibited at income levels equal or exceeding $137,700 for single and $203,000 for married taxpayers [2019 Roth Limits]), and regular contribution limits cap at $6,000 per year. Additionally, the state-run program requires ongoing manual maintenance for the owner, penalties and fees can be imposed on employers who fail to comply with registration deadlines, and no matching contributions or profit sharing options are allowed.

Furthermore, state-run auto-IRA programs have limitations for the participant as well. Roth IRA contributions are after-tax, no loans can be taken, and there are only four fund selection options employees have available to choose from: capital preservation, growth fund, target date fund, and conservative allocation.

Read more: Why a state retirement plan may not be a good fit for small businesses

Business owners looking for more flexible options that may better fit their business needs will want to look into other qualified plan options—like a 401(k) plan. A 401(k) offers more flexibility for business owners and allows them to design a plan that truly fits their needs, like adding a Safe Harbor provision to help pass non-discrimination testing or changing vesting schedules to encourage employee retention. Additionally, 401(k) plans boast higher contribution levels than IRA programs do—for both the employer and the employee—giving everyone involved a better chance at reaching retirement readiness over the course of their career.

If the Illinois Secure Choice retirement program mandates will or already have affected your small business, remember that you’re not in it alone—we’re here to help. Let’s start the conversation by determining which state-compliant retirement plan option is the best fit for you and your business: 800.236.7400, Option 1.

*Keep in mind that other payroll deducted IRA programs are not qualified retirement plans as defined by either federal or Illinois state statutes.


For more information about Illinois Secure Choice and its potential implications on you as a small business owner, visit the Secure Choice website here. If you’d rather speak to a representative from Secure Choice by phone, you can contact the program’s Client Services Team at


[1] 18th Annual Transamerica Retirement Survey, Transamerica Center for Retirement Studies, 2018.