By now, you might have heard that the final group of Illinois Small Businesses (5+ employees) has been notified by the State of Illinois, that they are required to sponsor a retirement plan for their employees. We wanted to communicate to you the pertinent details of the Illinois Secure Choice Program so you can make an informed decision regarding their next steps.
What does this mean?
This means that all Illinois employers with 5 or more employees, who have been in business for at least two years, and did not sponsor a plan qualified retirement plan in the last two years, are required to sponsor a retirement plan for their employees. If the employer does not currently offer a plan, they are required to register as a participant in the Illinois Secure Choice Plan.
What does the Illinois Secure Choice Plan entail?
~Employees can to defer their own money into the plan via 401(k) deferrals.
~Business Owners are NOT permitted to contribute into the plan and can receive none of the benefits.
~The plan does not allow for any employer-funded contributions resulting in no tax benefits for the employer.
~Contributions are limited to $6,000 per year ($7,000 if you are over 50).
What happens if I do not register?
~The first year penalty for non-compliance is $250 per eligible employee.
~Each subsequent year penalty for non-compliance is $500 per eligible employee.
Another option is to form your own plans so you do not need to register as a participant in the
Illinois Secure Choice Plan. You should contact a benefit plan advisor to explore the available options. If you want our input in that process please contact us.