Illinois Safe Selection | Illinois Retirement Financial savings Program

A quarter of adults within the U.S. don’t have retirement financial savings. One purpose? Not all workers have entry to an employer-sponsored retirement program. Seeing this looming disaster, Illinois launched the Safe Selection Retirement Financial savings Program (Illinois Safe Selection).

Like different state retirement packages, Illinois Safe Selection mandates that every one companies with 5 or extra workers should facilitate Illinois Safe Selection or provide a retirement plan.

Are you an Illinois employer? In that case, learn on to be taught the ins and outs of the mandate, together with deadlines, qualifying alternate options, and extra. 

4 Questions employers might have about Illinois Safe Selection

Illinois Safe Selection is the state of Illinois’ retirement financial savings program. Workers can use a default Roth IRA to make a contribution with after-tax {dollars} by way of payroll deductions. Nevertheless, program contributors can go for a conventional IRA in the event that they select. Illinois companies with 5 or extra workers should facilitate Illinois Safe Selection or provide a certified retirement plan. 

What is Illinois Secure Choice? Illinois Secure Choice is the state of Illinois' retirement savings program, giving employees whose employers don't offer a retirement program the ability to contribute to a Roth IRA each paycheck. Employers with 5 or more employees must participate (or set up another qualifying retirement program).

Employers who select to facilitate Illinois Safe Selection must confirm further details about their taking part workers and register with this system.

For workers, the (fully voluntary!) Illinois Safe Selection program might revolutionize the best way they save. Earlier than Safe Selection, if an worker wished to begin an IRA on their very own, they must discover a monetary establishment that provides an IRA and arrange an account with them. However with this program, workers can save at work and contribute to a plan managed on their behalf.

By default, workers are enrolled with a 5% contribution price right into a goal date fund based mostly on their anticipated retirement age. Nevertheless, workers can select to extend or lower their price or opt-out anytime. 

1. How a lot can workers contribute? 

Like a conventional Roth IRA, workers can contribute as much as $7,000 (in 2024) to their Safe Selection account. 

Workers who’re 50 or over can contribute as much as $8,000 (in 2024). 

2. Do I’ve to take part? 

Not all Illinois employers should take part within the state-mandated retirement program. You should facilitate Illinois Safe Selection should you: 

  1. Have 5 or extra workers,
  2. Have been in operation for not less than two years, AND
  3. Don’t provide an employer-sponsored retirement plan

However once more, Illinois employers topic to the mandate do produce other choices. Should you don’t wish to facilitate the state program, you possibly can arrange one of many following qualifying retirement plans: 

  • 401(a) or 401(ok) plan
  • Certified annuity plan
  • Tax-sheltered annuity
  • Simplified Worker Pension (SEP) plan
  • SIMPLE IRA plan
  • Governmental tax-deferred compensation plan
  • Taft-Hartley plan

Earlier than selecting between Illinois Safe Selection and a qualifying different, contemplate what’s greatest for your corporation. 

3. Are there penalties for failing to register?

There are penalties for failing to register or provide a qualifying different. Should you fail to remit contributions to this system by your deadline, you can be penalized $250 per worker for the primary yr of noncompliance.

And should you’re nonetheless not compliant after the primary yr, your penalty will increase to $500 per worker. For extra info on penalties, take a look at the statute.

4. How can I begin a qualifying retirement program? 

Should you’re an Illinois employer desirous about establishing a 401(ok) for small enterprise as a substitute of facilitating the state program, assist is out there. 

Patriot and Vestwell have partnered to supply reasonably priced retirement plans for small companies in Illinois and throughout america. Vestwell’s digital retirement platform instantly integrates with Patriot’s payroll software program, making it simpler so that you can provide and administer a company-sponsored 401(ok). 

Fearful about administration prices? You could be eligible to obtain as much as $16,500 in tax credit, which will help cancel out administration prices. You possibly can be taught extra about eligibility for tax credit and the way to enroll in a 401(ok) by way of Vestwell right here.

This text has been up to date from its authentic publication date of July 28, 2022.

This isn’t supposed as authorized recommendation; for extra info, please click on right here.


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