New Bill Requires Employers to Set Up Mandatory IRAs for Employees

IRA, retirement, Illinois small business lawyer, small business attorney, new law, Illinois legislationA new bill has been passed by the Illinois State Senate that requires employers to set up retirement accounts for all of their employees. This bill passed earlier this week imposes significant requirements on business owners throughout the state. It is unclear yet what effects this employer managed retirement account law will have on employer obligations, but a small business attorney in Illinois can help answer all of your legal questions.

 The Illinois Secure Choice Savings Program

 On Wednesday, Senate Bill 2758 was passed by the Illinois State Senate. Known as the Illinois Secure Choice Savings Program, this bill received ample support from a variety of local businesses and organizations, including AARP Illinois, Sargent Shriver National Center on Poverty Law, Heartland Alliance, the Woodstock Institute, the Illinois Asset Building Group, and SEIU Illinois/Indiana.

In effect the bill creates an Individual Retirement Account (IRA) plan that must be administered by employers for their employees. This bill explicitly states that Illinois will not have the liability or duty to provide any party covered under the law with payment for any savings and benefits accrued under an employer’s retirement account.

 What Does the Illinois Secure Choice Savings Program Mean for My Small Business?

 This law requires employers to create and manage retirement savings accounts on behalf of their employees. The legislation only applies to a small business that has at least 25 employees. Essentially, this bill serves to create a legal requirement for employers to help their employees prepare and save for retirement.

There are two basic requirements for following the Bill. First, the employer is required to set up and manage a retirement account for all of its employees. Second the employer must also set up an automatic deduction of at least three percent of every paycheck received by the employee.

However, the employee has the ability to opt out of the retirement program and the automatic paycheck deduction. It is important to note that employers are not required to match their employees’ contributions, as is often the case for employer based retirement accounts. The bill requires an employer to provide annual reports regarding the Program, and employers also must conduct regular audits of the Program. Penalties are imposed for those small businesses who do not comply with the legal requirements of the Bill.

Contact a Business Law Attorney in Naperville

 Small businesses have a host of legal issues to maneuver in Illinois. The creation of the Illinois Secure Choice Savings Program is another legal mandate that small businesses must follow in order to legally operate in Illinois. If you have any questions about your legal obligations under the Illinois Secure Choice Savings Program, you should contact the small business attorneys here at The Gierach Law Firm in Naperville, Illinois today.