Illinois General Assembly - Full Text of SB0208
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Full Text of SB0208  102nd General Assembly

SB0208eng 102ND GENERAL ASSEMBLY

  
  
  

 


 
SB0208 EngrossedLRB102 04034 KTG 14050 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,
9all terms shall have the same meaning as when used in a
10comparable context in the Internal Revenue Code. As used in
11this Act:
12    "Board" means the Illinois Secure Choice Savings Board
13established under this Act.
14    "Department" means the Department of Revenue.
15    "Director" means the Director of Revenue.
16    "Employee" means any individual who is 18 years of age or
17older, who is employed by an employer, and who has wages that
18are allocable to Illinois during a calendar year under the
19provisions of Section 304(a)(2)(B) of the Illinois Income Tax
20Act.
21    "Employer" means a person or entity engaged in a business,
22industry, profession, trade, or other enterprise in Illinois,
23whether for profit or not for profit, that (i) has at no time

 

 

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1during the previous calendar year employed at least 5
2employees fewer than 25 employees in the State during every
3quarter of the previous calendar year, (ii) has been in
4business at least 2 years, and (iii) has not offered a
5qualified retirement plan, including, but not limited to, a
6plan qualified under Section 401(a), Section 401(k), Section
7403(a), Section 403(b), Section 408(k), Section 408(p), or
8Section 457(b) of the Internal Revenue Code of 1986 in the
9preceding 2 years.
10    "Enrollee" means any employee who is enrolled in the
11Program.
12    "Fund" means the Illinois Secure Choice Savings Program
13Fund.
14    "Internal Revenue Code" means Internal Revenue Code of
151986, or any successor law, in effect for the calendar year.
16    "IRA" means a Roth or Traditional IRA (individual
17retirement account) under Section 408 or 408A of the Internal
18Revenue Code.
19    "Participating employer" means an employer or small
20employer that facilitates a payroll deposit retirement savings
21arrangement as provided for by this Act for its employees.
22    "Payroll deposit retirement savings arrangement" means an
23arrangement by which a participating employer facilitates
24payroll deduction contributions from enrollees to the Program.
25    "Program" means the Illinois Secure Choice Savings
26Program.

 

 

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1    "Small employer" means a person or entity engaged in a
2business, industry, profession, trade, or other enterprise in
3Illinois, whether for profit or not for profit, that (i)
4employed less than 5 25 employees during any quarter of at any
5one time in the State throughout the previous calendar year,
6or (ii) has been in business less than 2 years, or both items
7(i) and (ii), but that notifies the Board that it is interested
8in being a participating employer.
9    "Wages" means any compensation within the meaning of
10Section 219(f)(1) of the Internal Revenue Code that is
11received by an enrollee from a participating employer during
12the calendar year.
13(Source: P.A. 101-353, eff. 8-9-19.)
 
14    (820 ILCS 80/30)
15    Sec. 30. Duties of the Board. In addition to the other
16duties and responsibilities stated in this Act, the Board
17shall:
18        (a) Cause the Program to be designed, established and
19    operated in a manner that:
20            (1) accords with best practices for retirement
21        savings vehicles;
22            (2) maximizes participation, savings, and sound
23        investment practices;
24            (3) maximizes simplicity, including ease of
25        administration for participating employers and

 

 

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

 

 

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

 

 

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

 

 

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1    this Act, and subsection (n) of Section 85 of this Act.
2    Subject to appropriation, the State may pay administrative
3    costs associated with the creation and management of the
4    Program until sufficient assets are available in the Fund
5    for that purpose. Thereafter, all administrative costs of
6    the Fund, including repayment of any start-up funds
7    provided by the State, shall be paid only out of moneys on
8    deposit therein. However, private funds or federal funding
9    received under subsection (k) of Section 30 of this Act in
10    order to implement the Program until the Fund is
11    self-sustaining shall not be repaid unless those funds
12    were offered contingent upon the promise of such
13    repayment. The Board shall keep total annual expenses as
14    low as possible, but in no event shall they exceed 0.75% of
15    the total trust balance.
16        (n) Allocate administrative fees to individual
17    retirement accounts in the Program on a pro rata basis.
18        (o) Set minimum and maximum contribution levels in
19    accordance with limits established for IRAs by the
20    Internal Revenue Code.
21        (o-5) Select a default contribution rate for Program
22    participants within the range of 3% to 6% of an enrollee's
23    wages.
24        (o-10) Establish annual, automatic increases to the
25    contribution rates based upon a schedule provided for in
26    rules up to a maximum of 10% of an enrollee's wages.

 

 

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

 

 

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1states to participate in the Program.
2(Source: P.A. 100-6, eff. 6-30-17; 101-353, eff. 8-9-19.)
 
3    (820 ILCS 80/60)
4    Sec. 60. Program implementation and enrollment. Except as
5otherwise provided in Section 93 of this Act, the Program
6shall be implemented, and enrollment of employees shall begin
7in 2018. The Board shall establish an implementation timeline
8under which employers shall enroll their employees in the
9Program. The timeline shall include the date by which an
10employer must begin enrollment of its employees in the Program
11and the date by which enrollment must be complete. The Board
12shall adopt the implementation timeline at a public meeting of
13the Board and shall publicize the implementation timeline. The
14Board shall provide advance notice to employers of their
15enrollment date and the amount of time to complete enrollment.
16The enrollment deadline for employers with fewer than 25
17employees and more than 15 employees shall be no sooner than
18September 1, 2022. The enrollment deadline for employers with
19at least 5 employees but not more than 15 employees shall be no
20sooner than September 1, 2023. Board's implementation timeline
21shall ensure that all employees are required to be enrolled in
22the Program by December 31, 2020. The provisions of this
23Section shall be in force after the Board opens the Program for
24enrollment.
25    (a) Each employer shall establish a payroll deposit

 

 

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1retirement savings arrangement to allow each employee to
2participate in the Program within the timeline set by the
3Board after the Program opens for enrollment.
4    (b) Employers shall automatically enroll in the Program
5each of their employees who has not opted out of participation
6in the Program using the form described in subsection (c) of
7Section 55 of this Act and shall provide payroll deduction
8retirement savings arrangements for such employees and
9deposit, on behalf of such employees, these funds into the
10Program. Small employers may, but are not required to, provide
11payroll deduction retirement savings arrangements for each
12employee who elects to participate in the Program. Small
13employers' use of automatic enrollment for employees is
14subject to final rules from the United States Department of
15Labor. Utilization of automatic enrollment by small employers
16may be allowed only if it does not create employer liability
17under the federal Employee Retirement Income Security Act.
18    (c) Enrollees shall have the ability to select a
19contribution level into the Fund. This level may be expressed
20as a percentage of wages or as a dollar amount up to the
21deductible amount for the enrollee's taxable year under
22Section 219(b)(1)(A) of the Internal Revenue Code. Enrollees
23may change their contribution level at any time, subject to
24rules promulgated by the Board. If an enrollee fails to select
25a contribution level using the form described in subsection
26(c) of Section 55 of this Act, then he or she shall contribute

 

 

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1the default contribution rate of his or her wages to the
2Program, provided that such contributions shall not cause the
3enrollee's total contributions to IRAs for the year to exceed
4the deductible amount for the enrollee's taxable year under
5Section 219(b)(1)(A) of the Internal Revenue Code.
6    (d) Enrollees may select an investment option from the
7permitted investment options listed in Section 45 of this Act.
8Enrollees may change their investment option at any time,
9subject to rules promulgated by the Board. In the event that an
10enrollee fails to select an investment option, that enrollee
11shall be placed in the investment option selected by the Board
12as the default under subsection (c) of Section 45 of this Act.
13If the Board has not selected a default investment option
14under subsection (c) of Section 45 of this Act, then an
15enrollee who fails to select an investment option shall be
16placed in the life-cycle fund investment option.
17    (e) Following initial implementation of the Program
18pursuant to this Section, at least once every year,
19participating employers shall designate an open enrollment
20period during which employees who previously opted out of the
21Program may enroll in the Program.
22    (f) An employee who opts out of the Program who
23subsequently wants to participate through the participating
24employer's payroll deposit retirement savings arrangement may
25only enroll during the participating employer's designated
26open enrollment period or if permitted by the participating

 

 

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1employer at an earlier time.
2    (g) Employers shall retain the option at all times to set
3up any type of employer-sponsored retirement plan, such as a
4defined benefit plan or a 401(k), Simplified Employee Pension
5(SEP) plan, or Savings Incentive Match Plan for Employees
6(SIMPLE) plan, or to offer an automatic enrollment payroll
7deduction IRA, instead of having a payroll deposit retirement
8savings arrangement to allow employee participation in the
9Program.
10    (h) An employee may terminate his or her participation in
11the Program at any time in a manner prescribed by the Board.
12    (i) The Board shall establish and maintain an Internet
13website designed to assist employers in identifying private
14sector providers of retirement arrangements that can be set up
15by the employer rather than allowing employee participation in
16the Program under this Act; however, the Board shall only
17establish and maintain an Internet website under this
18subsection if there is sufficient interest in such an Internet
19website by private sector providers and if the private sector
20providers furnish the funding necessary to establish and
21maintain the Internet website. The Board must provide public
22notice of the availability of and the process for inclusion on
23the Internet website before it becomes publicly available.
24This Internet website must be available to the public before
25the Board opens the Program for enrollment, and the Internet
26website address must be included on any Internet website

 

 

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1posting or other materials regarding the Program offered to
2the public by the Board.
3(Source: P.A. 99-571, eff. 7-15-16; 100-6, eff. 6-30-17;
4100-863, eff. 8-14-18.)
 
5    (820 ILCS 80/85)
6    Sec. 85. Penalties.
7    (a) An employer who fails without reasonable cause to
8enroll an employee in the Program within the time prescribed
9under Section 60 of this Act shall be subject to a penalty
10equal to:
11        (1) $250 per for each employee for the first each
12    calendar year the employer is noncompliant or portion of a
13    calendar year during which the employee neither was
14    enrolled in the Program nor had elected out of
15    participation in the Program; or
16        (2) $500 per employee for each subsequent calendar
17    year the employer is noncompliant; noncompliance does not
18    need to be consecutive to qualify for the $500 penalty
19    beginning after the date a penalty has been assessed with
20    respect to an employee, $500 for any portion of that
21    calendar year during which such employee continues to be
22    unenrolled without electing out of participation in the
23    Program.
24    The Department shall determine total employee count using
25the annual average from employer-reported quarterly data.

 

 

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1    (b) After determining that an employer is subject to a
2penalty under this Section for a calendar year, the Department
3shall issue a notice of proposed assessment to such employer,
4stating the number of employees for which the penalty is
5proposed under item (1) of subsection (a) of this Section or
6and the number of employees for which the penalty is proposed
7under item (2) of subsection (a) of this Section for such
8calendar year, and the total amount of penalties proposed.
9    Upon the expiration of 120 90 days after the date on which
10a notice of proposed assessment was issued, the penalties
11specified therein shall be deemed assessed, unless the
12employer had filed a protest with the Department under
13subsection (c) of this Section or come into full compliance
14with the Program as required under Section 60 of this Act.
15    If, within 120 90 days after the date on which it was
16issued, a protest of a notice of proposed assessment is filed
17under subsection (c) of this Section, the penalties specified
18therein shall be deemed assessed upon the date when the
19decision of the Department with respect to the protest becomes
20final.
21    (c) A written protest against the proposed assessment
22shall be filed with the Department in such form as the
23Department may by rule prescribe, setting forth the grounds on
24which such protest is based. If such a protest is filed within
25120 90 days after the date the notice of proposed assessment is
26issued, the Department shall reconsider the proposed

 

 

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1assessment and shall grant the employer a hearing. As soon as
2practicable after such reconsideration and hearing, the
3Department shall issue a notice of decision to the employer,
4setting forth the Department's findings of fact and the basis
5of decision. The decision of the Department shall become
6final:
7        (1) if no action for review of the decision is
8    commenced under the Administrative Review Law, on the date
9    on which the time for commencement of such review has
10    expired; or
11        (2) if a timely action for review of the decision is
12    commenced under the Administrative Review Law, on the date
13    all proceedings in court for the review of such assessment
14    have terminated or the time for the taking thereof has
15    expired without such proceedings being instituted.
16    (d) As soon as practicable after the penalties specified
17in a notice of proposed assessment are deemed assessed, the
18Department shall give notice to the employer liable for any
19unpaid portion of such assessment, stating the amount due and
20demanding payment. If an employer neglects or refuses to pay
21the entire liability shown on the notice and demand within 10
22days after the notice and demand is issued, the unpaid amount
23of the liability shall be a lien in favor of the State of
24Illinois upon all property and rights to property, whether
25real or personal, belonging to the employer, and the
26provisions in the Illinois Income Tax Act regarding liens,

 

 

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1levies and collection actions with regard to assessed and
2unpaid liabilities under that Act, including the periods for
3taking any action, shall apply.
4    (e) An employer who has overpaid a penalty assessed under
5this Section may file a claim for refund with the Department. A
6claim shall be in writing in such form as the Department may by
7rule prescribe and shall state the specific grounds upon which
8it is founded. As soon as practicable after a claim for refund
9is filed, the Department shall examine it and either issue a
10refund or issue a notice of denial. If such a protest is filed,
11the Department shall reconsider the denial and grant the
12employer a hearing. As soon as practicable after such
13reconsideration and hearing, the Department shall issue a
14notice of decision to the employer. The notice shall set forth
15briefly the Department's findings of fact and the basis of
16decision in each case decided in whole or in part adversely to
17the employer. A denial of a claim for refund becomes final 120
1890 days after the date of issuance of the notice of the denial
19except for such amounts denied as to which the employer has
20filed a protest with the Department. If a protest has been
21timely filed, the decision of the Department shall become
22final:
23        (1) if no action for review of the decision is
24    commenced under the Administrative Review Law, on the date
25    on which the time for commencement of such review has
26    expired; or

 

 

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1        (2) if a timely action for review of the decision is
2    commenced under the Administrative Review Law, on the date
3    all proceedings in court for the review of such assessment
4    have terminated or the time for the taking thereof has
5    expired without such proceedings being instituted.
6    (f) No notice of proposed assessment may be issued with
7respect to a calendar year after June 30 of the fourth
8subsequent calendar year. No claim for refund may be filed
9more than 1 year after the date of payment of the amount to be
10refunded.
11    (g) The provisions of the Administrative Review Law and
12the rules adopted pursuant to it shall apply to and govern all
13proceedings for the judicial review of final decisions of the
14Department in response to a protest filed by the employer
15under subsections (c) and (e) of this Section. Final decisions
16of the Department shall constitute "administrative decisions"
17as defined in Section 3-101 of the Code of Civil Procedure. The
18Department may adopt any rules necessary to carry out its
19duties pursuant to this Section.
20    (h) Whenever notice is required by this Section, it may be
21given or issued by mailing it by first-class mail addressed to
22the person concerned at his or her last known address or in an
23electronic format as determined by the Department.
24    (i) All books and records and other papers and documents
25relevant to the determination of any penalty due under this
26Section shall, at all times during business hours of the day,

 

 

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1be subject to inspection by the Department or its duly
2authorized agents and employees.
3    (j) The Department may require employers to report
4information relevant to their compliance with this Act on
5returns otherwise due from the employers under Section 704A of
6the Illinois Income Tax Act and failure to provide the
7requested information on a return shall cause such return to
8be treated as unprocessable.
9    (k) For purposes of any provision of State law allowing
10the Department or any other agency of this State to offset an
11amount owed to a taxpayer against a tax liability of that
12taxpayer or allowing the Department to offset an overpayment
13of tax against any liability owed to the State, a penalty
14assessed under this Section shall be deemed to be a tax
15liability of the employer and any refund due to an employer
16shall be deemed to be an overpayment of tax of the employer.
17    (l) Except as provided in this subsection, all information
18received by the Department from returns filed by an employer
19or from any investigation conducted under the provisions of
20this Act shall be confidential, except for official purposes
21within the Department or pursuant to official procedures for
22collection of penalties assessed under this Act. Nothing
23contained in this subsection shall prevent the Director from
24publishing or making available to the public reasonable
25statistics concerning the operation of this Act wherein the
26contents of returns are grouped into aggregates in such a way

 

 

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1that the specific information of any employer shall not be
2disclosed. Nothing contained in this subsection shall prevent
3the Director from divulging information to an authorized
4representative of the employer or to any person pursuant to a
5request or authorization made by the employer or by an
6authorized representative of the employer.
7    (m) Civil penalties collected under this Act and fees
8collected pursuant to subsection (n) of this Section shall be
9deposited into the Tax Compliance and Administration Fund. The
10Department may, subject to appropriation, use moneys in the
11fund to cover expenses it incurs in the performance of its
12duties under this Act. Interest attributable to moneys in the
13Tax Compliance and Administration Fund shall be credited to
14the Tax Compliance and Administration Fund.
15    (n) The Department may charge the Board a reasonable fee
16for its costs in performing its duties under this Section to
17the extent that such costs have not been recovered from
18penalties imposed under this Section.
19    (o) The This Section shall become operative 9 months after
20the Board notifies the Director that the Program has been
21implemented. Upon receipt of such notification from the Board,
22the Department shall immediately post on its Internet website
23a notice stating that this Section is operative and the date
24that it is first operative. This notice shall include a
25statement that rather than enrolling employees in the Program
26under this Act, employers may sponsor an alternative

 

 

SB0208 Engrossed- 20 -LRB102 04034 KTG 14050 b

1arrangement, including, but not limited to, a defined benefit
2plan, 401(k) plan, a Simplified Employee Pension (SEP) plan, a
3Savings Incentive Match Plan for Employees (SIMPLE) plan, or
4an automatic enrollment payroll deduction IRA offered through
5a private provider. The Board shall provide a link to the
6vendor Internet website described in subsection (i) of Section
760 of this Act, if applicable.
8(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)