Illinois businesses should be aware that an important deadline to register for Illinois Secure Choice has already passed, but there’s still time to ensure your business won’t face exorbitant fees for not registering. All employers that have been in operation for at least two years and employ 16 or more employees must, as of November 1, 2022, offer a retirement plan such as a 401(k) or a 403(b) among other options. Failure to do so can result in hefty fines per employee, so immediate action should be taken to avoid paying several thousand dollars per year in penalties.
Key Takeaways:
- Deadline to register was November 1, 2022
- Should a business fail to comply with this law, they will be served with a notice, which may be sent electronically rather than solely through first-class mail
- 120 days following the notice, the business will be fined $250 per eligible
- If the business remains in noncompliance for an additional year, the fees will increase in value to $500 per eligible employee
- Companies that already offer retirement plans such as a 401(k) or another qualified plan are exempt and aren’t required to enroll employees in Illinois Secure Choice
What Is the Illinois Secure Choice Act?
The Illinois Secure Choice Act was signed into law in 2018, requiring all businesses operating for two or more years in Illinois with more than five employees to provide a retirement plan for their employees. All employees, except for those who opt out, are required to be automatically enrolled into the program by the employer. Companies who already provide qualified retirement plans aren’t required to enroll in Illinois Secure Choice, but they do have to report their exemption.
Since 2018, Illinois has been slowly implementing the Illinois Secure Choice Savings Program to progressively smaller businesses. Under the program, businesses must provide a retirement plan to their employees once a certain threshold has been reached. Businesses with over 500 employees were required to implement the program November 2018. In 2019, employers with between 100 and 499 employees were required to register in July and businesses with 25 to 99 employees had to register by November.
Illinois Secure Choice Act November 2022 Deadline
Employers with 16 to 24 employees were required to register by November 1, 2022. The deadline for employers with five to 15 employees to register comes on November 1, 2023. If a business has not registered yet, there are still actions that can be taken to avoid the hefty fines that accompany noncompliance with this program.
Failure to offer a retirement savings plan to employees can result in a fine of $250 per eligible employee. After the first year, fines double to $500 per eligible employee. To avoid these hefty fees, companies who missed the deadline should visit the Illinois Secure Choice website to register.
Fines for Noncompliance Could Cost Your Business Thousands
For a business with 24 employees, these fines can reach $6,000 in the first year and $12,000 in the second year if they are found to be in noncompliance. According to the final version of the law that passed in July 2021, employers have been granted 120 days to file a protest with the Department of Revenue rather than the 90 days that was initially proposed.
Our advisors will continue to monitor legislative changes that could affect your business in order to provide you with up-to-date information. Learn more by contacting an Anders advisor below.
