State of Illinois
2019 and 2020


Introduced 2/14/2020, by Sen. Robert F. Martwick


820 ILCS 80/5
820 ILCS 80/30
820 ILCS 80/60
820 ILCS 80/85

    Amends the Illinois Secure Choice Savings Program Act. Provides that the Act applies to employers with at least one employee, rather than fewer than 25 employees. Provides for automatic increases in contributions. Makes changes regarding penalties for employers who fail, without reasonable cause, to enroll an employee in the Program. Provides that, for purposes of the penalties, the Department of Revenue shall determine total employee count for employers using the annual average from employer-reported quarterly data. Provides that the Department may provide notice regarding penalties in an electronic format to be determined by the Department. Provides that penalty provisions shall become operative by January 1, 2021, rather than 9 months after the Illinois Secure Choice Savings Board notifies the Director of Revenue that the Program has been implemented.

LRB101 20726 JLS 70401 b






SB3811LRB101 20726 JLS 70401 b

1    AN ACT concerning employment.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Secure Choice Savings Program Act
5is amended by changing Sections 5, 30, 60, and 85 as follows:
6    (820 ILCS 80/5)
7    Sec. 5. Definitions. Unless the context requires a
8different meaning or as expressly provided in this Section, all
9terms shall have the same meaning as when used in a comparable
10context in the Internal Revenue Code. As used in this Act:
11    "Board" means the Illinois Secure Choice Savings Board
12established under this Act.
13    "Department" means the Department of Revenue.
14    "Director" means the Director of Revenue.
15    "Employee" means any individual who is 18 years of age or
16older, who is employed by an employer, and who has wages that
17are allocable to Illinois during a calendar year under the
18provisions of Section 304(a)(2)(B) of the Illinois Income Tax
20    "Employer" means a person or entity engaged in a business,
21industry, profession, trade, or other enterprise in Illinois,
22whether for profit or not for profit, that (i) has at no time
23during the previous calendar year employed, at least one



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1employee fewer than 25 employees in the State during every
2quarter of the previous calendar year, (ii) has been in
3business at least 2 years, and (iii) has not offered a
4qualified retirement plan, including, but not limited to, a
5plan qualified under Section 401(a), Section 401(k), Section
6403(a), Section 403(b), Section 408(k), Section 408(p), or
7Section 457(b) of the Internal Revenue Code of 1986 in the
8preceding 2 years.
9    "Enrollee" means any employee who is enrolled in the
11    "Fund" means the Illinois Secure Choice Savings Program
13    "Internal Revenue Code" means Internal Revenue Code of
141986, or any successor law, in effect for the calendar year.
15    "IRA" means a Roth or Traditional IRA (individual
16retirement account) under Section 408 or 408A of the Internal
17Revenue Code.
18    "Participating employer" means an employer or small
19employer that facilitates a payroll deposit retirement savings
20arrangement as provided for by this Act for its employees.
21    "Payroll deposit retirement savings arrangement" means an
22arrangement by which a participating employer facilitates
23payroll deduction contributions from enrollees to the Program.
24    "Program" means the Illinois Secure Choice Savings
26    "Small employer" means a person or entity engaged in a



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1business, industry, profession, trade, or other enterprise in
2Illinois, whether for profit or not for profit, that (i)
3employed less than 25 employees at any one time in the State
4throughout the previous calendar year, or (ii) has been in
5business less than 2 years, or both items (i) and (ii), but
6that notifies the Board that it is interested in being a
7participating employer.
8    "Wages" means any compensation within the meaning of
9Section 219(f)(1) of the Internal Revenue Code that is received
10by an enrollee from a participating employer during the
11calendar year.
12(Source: P.A. 101-353, eff. 8-9-19.)
13    (820 ILCS 80/30)
14    Sec. 30. Duties of the Board. In addition to the other
15duties and responsibilities stated in this Act, the Board
17        (a) Cause the Program to be designed, established and
18    operated in a manner that:
19            (1) accords with best practices for retirement
20        savings vehicles;
21            (2) maximizes participation, savings, and sound
22        investment practices;
23            (3) maximizes simplicity, including ease of
24        administration for participating employers and
25        enrollees;



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1            (4) provides an efficient product to enrollees by
2        pooling investment funds;
3            (5) ensures the portability of benefits; and
4            (6) provides for the deaccumulation of enrollee
5        assets in a manner that maximizes financial security in
6        retirement.
7        (b) Appoint a trustee to the IRA Fund in compliance
8    with Section 408 of the Internal Revenue Code.
9        (c) Explore and establish investment options, subject
10    to Section 45 of this Act, that offer employees returns on
11    contributions and the conversion of individual retirement
12    savings account balances to secure retirement income
13    without incurring debt or liabilities to the State.
14        (d) Establish the process by which interest,
15    investment earnings, and investment losses are allocated
16    to individual program accounts on a pro rata basis and are
17    computed at the interest rate on the balance of an
18    individual's account.
19        (e) Make and enter into contracts necessary for the
20    administration of the Program and Fund, including, but not
21    limited to, retaining and contracting with investment
22    managers, private financial institutions, other financial
23    and service providers, consultants, actuaries, counsel,
24    auditors, third-party administrators, and other
25    professionals as necessary.
26        (e-5) Conduct a review of the performance of any



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1    investment vendors every 4 years, including, but not
2    limited to, a review of returns, fees, and customer
3    service. A copy of reviews conducted under this subsection
4    (e-5) shall be posted to the Board's Internet website.
5        (f) Determine the number and duties of staff members
6    needed to administer the Program and assemble such a staff,
7    including, as needed, employing staff, appointing a
8    Program administrator, and entering into contracts with
9    the State Treasurer to make employees of the State
10    Treasurer's Office available to administer the Program.
11        (g) Cause moneys in the Fund to be held and invested as
12    pooled investments described in Section 45 of this Act,
13    with a view to achieving cost savings through efficiencies
14    and economies of scale.
15        (h) Evaluate and establish the process by which an
16    enrollee is able to contribute a portion of his or her
17    wages to the Program for automatic deposit of those
18    contributions and the process by which the participating
19    employer provides a payroll deposit retirement savings
20    arrangement to forward those contributions and related
21    information to the Program, including, but not limited to,
22    contracting with financial service companies and
23    third-party administrators with the capability to receive
24    and process employee information and contributions for
25    payroll deposit retirement savings arrangements or similar
26    arrangements.



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1        (i) Design and establish the process for enrollment
2    under Section 60 of this Act, including the process by
3    which an employee can opt not to participate in the
4    Program, select a contribution level, select an investment
5    option, and terminate participation in the Program.
6        (j) Evaluate and establish the process by which an
7    individual may voluntarily enroll in and make
8    contributions to the Program.
9        (k) Accept any grants, appropriations, or other moneys
10    from the State, any unit of federal, State, or local
11    government, or any other person, firm, partnership, or
12    corporation solely for deposit into the Fund, whether for
13    investment or administrative purposes.
14        (l) Evaluate the need for, and procure as needed,
15    insurance against any and all loss in connection with the
16    property, assets, or activities of the Program, and
17    indemnify as needed each member of the Board from personal
18    loss or liability resulting from a member's action or
19    inaction as a member of the Board.
20        (m) Make provisions for the payment of administrative
21    costs and expenses for the creation, management, and
22    operation of the Program, including the costs associated
23    with subsection (b) of Section 20 of this Act, subsections
24    (e), (f), (h), and (l) of this Section, subsection (b) of
25    Section 45 of this Act, subsection (a) of Section 80 of
26    this Act, and subsection (n) of Section 85 of this Act.



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1    Subject to appropriation, the State may pay administrative
2    costs associated with the creation and management of the
3    Program until sufficient assets are available in the Fund
4    for that purpose. Thereafter, all administrative costs of
5    the Fund, including repayment of any start-up funds
6    provided by the State, shall be paid only out of moneys on
7    deposit therein. However, private funds or federal funding
8    received under subsection (k) of Section 30 of this Act in
9    order to implement the Program until the Fund is
10    self-sustaining shall not be repaid unless those funds were
11    offered contingent upon the promise of such repayment. The
12    Board shall keep total annual expenses as low as possible,
13    but in no event shall they exceed 0.75% of the total trust
14    balance.
15        (n) Allocate administrative fees to individual
16    retirement accounts in the Program on a pro rata basis.
17        (o) Set minimum and maximum contribution levels in
18    accordance with limits established for IRAs by the Internal
19    Revenue Code.
20        (o-5) Select a default contribution rate for Program
21    participants within the range of 3% to 6% of an enrollee's
22    wages.
23        (o-10) Establish annual, automatic increases to the
24    contribution rates based upon a schedule provided for in
25    rules up to a maximum of 10% of an enrollee's wages.
26        (p) Facilitate education and outreach to employers and



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1    employees.
2        (q) Facilitate compliance by the Program with all
3    applicable requirements for the Program under the Internal
4    Revenue Code, including tax qualification requirements or
5    any other applicable law and accounting requirements.
6        (q-5) Verify employee eligibility for auto-enrollment
7    in accordance with the Internal Revenue Code and applicable
8    Federal and State laws. The verification shall include the
9    rejection of any enrollee under 18 years of age.
10        (r) Carry out the duties and obligations of the Program
11    in an effective, efficient, and low-cost manner.
12        (s) Exercise any and all other powers reasonably
13    necessary for the effectuation of the purposes,
14    objectives, and provisions of this Act pertaining to the
15    Program.
16        (t) Deposit into the Illinois Secure Choice
17    Administrative Fund all grants, gifts, donations, fees,
18    and earnings from investments from the Illinois Secure
19    Choice Savings Program Fund that are used to recover
20    administrative costs. All expenses of the Board shall be
21    paid from the Illinois Secure Choice Administrative Fund.
22    The Board may enter into agreements with other governmental
23entities, including other states or their agencies and
24instrumentalities, to enable residents of other states to
25participate in the Program.
26(Source: P.A. 100-6, eff. 6-30-17; 101-353, eff. 8-9-19.)



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1    (820 ILCS 80/60)
2    Sec. 60. Program implementation and enrollment. Except as
3otherwise provided in Section 93 of this Act, the Program shall
4be implemented, and enrollment of employees shall begin in
52018. The Board shall establish an implementation timeline
6under which employers shall enroll their employees in the
7Program. The timeline shall include the date by which an
8employer must begin enrollment of its employees in the Program
9and the date by which enrollment must be complete. The Board
10shall adopt the implementation timeline at a public meeting of
11the Board and shall publicize the implementation timeline. The
12Board shall provide advance notice to employers of their
13enrollment date and the amount of time to complete enrollment.
14The Board's implementation timeline shall ensure that all
15employees are required to be enrolled in the Program by
16December 31, 2020. The provisions of this Section shall be in
17force after the Board opens the Program for enrollment.
18    (a) Each employer shall establish a payroll deposit
19retirement savings arrangement to allow each employee to
20participate in the Program within the timeline set by the Board
21after the Program opens for enrollment.
22    (b) Employers shall automatically enroll in the Program
23each of their employees who has not opted out of participation
24in the Program using the form described in subsection (c) of
25Section 55 of this Act and shall provide payroll deduction



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1retirement savings arrangements for such employees and
2deposit, on behalf of such employees, these funds into the
3Program. Small employers may, but are not required to, provide
4payroll deduction retirement savings arrangements for each
5employee who elects to participate in the Program. Small
6employers' use of automatic enrollment for employees is subject
7to final rules from the United States Department of Labor.
8Utilization of automatic enrollment by small employers may be
9allowed only if it does not create employer liability under the
10federal Employee Retirement Income Security Act.
11    (c) Enrollees shall have the ability to select a
12contribution level into the Fund. This level may be expressed
13as a percentage of wages or as a dollar amount up to the
14deductible amount for the enrollee's taxable year under Section
15219(b)(1)(A) of the Internal Revenue Code. Enrollees may change
16their contribution level at any time, subject to rules
17promulgated by the Board. If an enrollee fails to select a
18contribution level using the form described in subsection (c)
19of Section 55 of this Act, then he or she shall contribute the
20default contribution rate of his or her wages to the Program,
21provided that such contributions shall not cause the enrollee's
22total contributions to IRAs for the year to exceed the
23deductible amount for the enrollee's taxable year under Section
24219(b)(1)(A) of the Internal Revenue Code.
25    (d) Enrollees may select an investment option from the
26permitted investment options listed in Section 45 of this Act.



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1Enrollees may change their investment option at any time,
2subject to rules promulgated by the Board. In the event that an
3enrollee fails to select an investment option, that enrollee
4shall be placed in the investment option selected by the Board
5as the default under subsection (c) of Section 45 of this Act.
6If the Board has not selected a default investment option under
7subsection (c) of Section 45 of this Act, then an enrollee who
8fails to select an investment option shall be placed in the
9life-cycle fund investment option.
10    (e) Following initial implementation of the Program
11pursuant to this Section, at least once every year,
12participating employers shall designate an open enrollment
13period during which employees who previously opted out of the
14Program may enroll in the Program.
15    (f) An employee who opts out of the Program who
16subsequently wants to participate through the participating
17employer's payroll deposit retirement savings arrangement may
18only enroll during the participating employer's designated
19open enrollment period or if permitted by the participating
20employer at an earlier time.
21    (g) Employers shall retain the option at all times to set
22up any type of employer-sponsored retirement plan, such as a
23defined benefit plan or a 401(k), Simplified Employee Pension
24(SEP) plan, or Savings Incentive Match Plan for Employees
25(SIMPLE) plan, or to offer an automatic enrollment payroll
26deduction IRA, instead of having a payroll deposit retirement



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1savings arrangement to allow employee participation in the
3    (h) An employee may terminate his or her participation in
4the Program at any time in a manner prescribed by the Board.
5    (i) The Board shall establish and maintain an Internet
6website designed to assist employers in identifying private
7sector providers of retirement arrangements that can be set up
8by the employer rather than allowing employee participation in
9the Program under this Act; however, the Board shall only
10establish and maintain an Internet website under this
11subsection if there is sufficient interest in such an Internet
12website by private sector providers and if the private sector
13providers furnish the funding necessary to establish and
14maintain the Internet website. The Board must provide public
15notice of the availability of and the process for inclusion on
16the Internet website before it becomes publicly available. This
17Internet website must be available to the public before the
18Board opens the Program for enrollment, and the Internet
19website address must be included on any Internet website
20posting or other materials regarding the Program offered to the
21public by the Board.
22(Source: P.A. 99-571, eff. 7-15-16; 100-6, eff. 6-30-17;
23100-863, eff. 8-14-18.)
24    (820 ILCS 80/85)
25    Sec. 85. Penalties.



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1    (a) An employer who fails without reasonable cause to
2enroll an employee in the Program within the time prescribed
3under Section 60 of this Act shall be subject to a penalty
4equal to:
5        (1) $250 per for each employee for the first each
6    calendar year the employer is noncompliant or portion of a
7    calendar year during which the employee neither was
8    enrolled in the Program nor had elected out of
9    participation in the Program; or
10        (2) $500 per employee for each subsequent calendar year
11    the employer is noncompliant; noncompliance does not need
12    to be consecutive to qualify for the $500 penalty beginning
13    after the date a penalty has been assessed with respect to
14    an employee, $500 for any portion of that calendar year
15    during which such employee continues to be unenrolled
16    without electing out of participation in the Program.
17    The Department shall determine total employee count using
18the annual average from employer-reported quarterly data.
19    (b) After determining that an employer is subject to a
20penalty under this Section for a calendar year, the Department
21shall issue a notice of proposed assessment to such employer,
22stating the number of employees for which the penalty is
23proposed under item (1) of subsection (a) of this Section or
24and the number of employees for which the penalty is proposed
25under item (2) of subsection (a) of this Section for such
26calendar year, and the total amount of penalties proposed.



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1    Upon the expiration of 90 days after the date on which a
2notice of proposed assessment was issued, the penalties
3specified therein shall be deemed assessed, unless the employer
4had filed a protest with the Department under subsection (c) of
5this Section.
6    If, within 90 days after the date on which it was issued, a
7protest of a notice of proposed assessment is filed under
8subsection (c) of this Section, the penalties specified therein
9shall be deemed assessed upon the date when the decision of the
10Department with respect to the protest becomes final.
11    (c) A written protest against the proposed assessment shall
12be filed with the Department in such form as the Department may
13by rule prescribe, setting forth the grounds on which such
14protest is based. If such a protest is filed within 90 days
15after the date the notice of proposed assessment is issued, the
16Department shall reconsider the proposed assessment and shall
17grant the employer a hearing. As soon as practicable after such
18reconsideration and hearing, the Department shall issue a
19notice of decision to the employer, setting forth the
20Department's findings of fact and the basis of decision. The
21decision of the Department shall become final:
22        (1) if no action for review of the decision is
23    commenced under the Administrative Review Law, on the date
24    on which the time for commencement of such review has
25    expired; or
26        (2) if a timely action for review of the decision is



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1    commenced under the Administrative Review Law, on the date
2    all proceedings in court for the review of such assessment
3    have terminated or the time for the taking thereof has
4    expired without such proceedings being instituted.
5    (d) As soon as practicable after the penalties specified in
6a notice of proposed assessment are deemed assessed, the
7Department shall give notice to the employer liable for any
8unpaid portion of such assessment, stating the amount due and
9demanding payment. If an employer neglects or refuses to pay
10the entire liability shown on the notice and demand within 10
11days after the notice and demand is issued, the unpaid amount
12of the liability shall be a lien in favor of the State of
13Illinois upon all property and rights to property, whether real
14or personal, belonging to the employer, and the provisions in
15the Illinois Income Tax Act regarding liens, levies and
16collection actions with regard to assessed and unpaid
17liabilities under that Act, including the periods for taking
18any action, shall apply.
19    (e) An employer who has overpaid a penalty assessed under
20this Section may file a claim for refund with the Department. A
21claim shall be in writing in such form as the Department may by
22rule prescribe and shall state the specific grounds upon which
23it is founded. As soon as practicable after a claim for refund
24is filed, the Department shall examine it and either issue a
25refund or issue a notice of denial. If such a protest is filed,
26the Department shall reconsider the denial and grant the



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1employer a hearing. As soon as practicable after such
2reconsideration and hearing, the Department shall issue a
3notice of decision to the employer. The notice shall set forth
4briefly the Department's findings of fact and the basis of
5decision in each case decided in whole or in part adversely to
6the employer. A denial of a claim for refund becomes final 90
7days after the date of issuance of the notice of the denial
8except for such amounts denied as to which the employer has
9filed a protest with the Department. If a protest has been
10timely filed, the decision of the Department shall become
12        (1) if no action for review of the decision is
13    commenced under the Administrative Review Law, on the date
14    on which the time for commencement of such review has
15    expired; or
16        (2) if a timely action for review of the decision is
17    commenced under the Administrative Review Law, on the date
18    all proceedings in court for the review of such assessment
19    have terminated or the time for the taking thereof has
20    expired without such proceedings being instituted.
21    (f) No notice of proposed assessment may be issued with
22respect to a calendar year after June 30 of the fourth
23subsequent calendar year. No claim for refund may be filed more
24than 1 year after the date of payment of the amount to be
26    (g) The provisions of the Administrative Review Law and the



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1rules adopted pursuant to it shall apply to and govern all
2proceedings for the judicial review of final decisions of the
3Department in response to a protest filed by the employer under
4subsections (c) and (e) of this Section. Final decisions of the
5Department shall constitute "administrative decisions" as
6defined in Section 3-101 of the Code of Civil Procedure. The
7Department may adopt any rules necessary to carry out its
8duties pursuant to this Section.
9    (h) Whenever notice is required by this Section, it may be
10given or issued by mailing it by first-class mail addressed to
11the person concerned at his or her last known address or in an
12electronic format as determined by the Department.
13    (i) All books and records and other papers and documents
14relevant to the determination of any penalty due under this
15Section shall, at all times during business hours of the day,
16be subject to inspection by the Department or its duly
17authorized agents and employees.
18    (j) The Department may require employers to report
19information relevant to their compliance with this Act on
20returns otherwise due from the employers under Section 704A of
21the Illinois Income Tax Act and failure to provide the
22requested information on a return shall cause such return to be
23treated as unprocessable.
24    (k) For purposes of any provision of State law allowing the
25Department or any other agency of this State to offset an
26amount owed to a taxpayer against a tax liability of that



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1taxpayer or allowing the Department to offset an overpayment of
2tax against any liability owed to the State, a penalty assessed
3under this Section shall be deemed to be a tax liability of the
4employer and any refund due to an employer shall be deemed to
5be an overpayment of tax of the employer.
6    (l) Except as provided in this subsection, all information
7received by the Department from returns filed by an employer or
8from any investigation conducted under the provisions of this
9Act shall be confidential, except for official purposes within
10the Department or pursuant to official procedures for
11collection of penalties assessed under this Act. Nothing
12contained in this subsection shall prevent the Director from
13publishing or making available to the public reasonable
14statistics concerning the operation of this Act wherein the
15contents of returns are grouped into aggregates in such a way
16that the specific information of any employer shall not be
17disclosed. Nothing contained in this subsection shall prevent
18the Director from divulging information to an authorized
19representative of the employer or to any person pursuant to a
20request or authorization made by the employer or by an
21authorized representative of the employer.
22    (m) Civil penalties collected under this Act and fees
23collected pursuant to subsection (n) of this Section shall be
24deposited into the Tax Compliance and Administration Fund. The
25Department may, subject to appropriation, use moneys in the
26fund to cover expenses it incurs in the performance of its



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1duties under this Act. Interest attributable to moneys in the
2Tax Compliance and Administration Fund shall be credited to the
3Tax Compliance and Administration Fund.
4    (n) The Department may charge the Board a reasonable fee
5for its costs in performing its duties under this Section to
6the extent that such costs have not been recovered from
7penalties imposed under this Section.
8    (o) By January 1, 2021, This Section shall become operative
99 months after the Board notifies the Director that the Program
10has been implemented. Upon receipt of such notification from
11the Board, the Department shall immediately post on its
12Internet website a notice stating that this Section is
13operative and the date that it is first operative. This notice
14shall include a statement that rather than enrolling employees
15in the Program under this Act, employers may sponsor an
16alternative arrangement, including, but not limited to, a
17defined benefit plan, 401(k) plan, a Simplified Employee
18Pension (SEP) plan, a Savings Incentive Match Plan for
19Employees (SIMPLE) plan, or an automatic enrollment payroll
20deduction IRA offered through a private provider. The Board
21shall provide a link to the vendor Internet website described
22in subsection (i) of Section 60 of this Act, if applicable.
23(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)