Full Text of SB2400 98th General Assembly
SB2400 98TH GENERAL ASSEMBLY |
| | 98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014 SB2400 Introduced 2/15/2013, by Sen. Daniel Biss SYNOPSIS AS INTRODUCED: |
| New Act | | 30 ILCS 105/5.829 new | | 30 ILCS 105/5.830 new | |
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Creates the Automatic Individual Retirement Account Program Act. Establishes a portable retirement savings program for employees of employers that have not offered a qualified retirement plan to their employees within the last 2 years. Provides for the deduction of moneys from the wages of persons enrolled in the program. Provides for the deposit of those moneys in the Automatic IRA Program Fund. Authorizes a 7-member board to invest those moneys, choose permitted retirement program investment options, and make other programmatic decisions. Sets forth requirements pertaining to the Board and its composition and duties. Grants the Department of Employment Security administrative and enforcement powers. Also contains provisions concerning: investment firms; permissible investments; default enrollee contributions; investment policies; payroll deduction retirement savings arrangements; duties and liabilities of the State and employers; enrollee information packets; required audits and reports; penalties; rules; and program implementation. Effective immediately.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 1 | | AN ACT concerning State government.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 1. Short title. This Act may be cited as the | 5 | | Automatic Individual Retirement Account Program Act. | 6 | | Section 5. Definitions. As used in this Act, unless the | 7 | | context requires a different meaning: | 8 | | "Board" means the Automatic IRA Program Board. | 9 | | "Department" means the Department of Employment Security. | 10 | | "Eligible employee" means any individual who is employed by | 11 | | an eligible employer. | 12 | | "Eligible employer" means a person or entity engaged in a | 13 | | business, industry, profession, trade, or other enterprise in | 14 | | this State, whether for profit or not for profit, that (i) has | 15 | | employed 10 or more employees at any one time in the State | 16 | | during the previous calendar year, (ii) has been in business at | 17 | | least 2 years, and (iii) has not offered a qualified retirement | 18 | | plan, including, but not limited to, a plan qualified under | 19 | | Section 401(a), Section 401(k), Section 403(a), Section | 20 | | 403(b), Section 408(k), Section 408(p), or Section 457(b) of | 21 | | the Internal Revenue Code of 1986 in the preceding 2 years. | 22 | | "Eligible employer" also includes a person or entity engaged in | 23 | | a business, industry, profession, trade, or other enterprise in |
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| 1 | | this State, whether for profit or not for profit, that fails to | 2 | | satisfy item (i) or (ii), or both items (i) and (ii), but | 3 | | notifies the Department that it is interested in being an | 4 | | eligible employer. | 5 | | "Enrollee" means any eligible employee who is enrolled in | 6 | | the Program. | 7 | | "Fund" means the Automatic IRA Program Fund. | 8 | | "IRA" means a trust created or organized in the United | 9 | | States for the exclusive benefit of an individual or his | 10 | | beneficiaries, but only if the written governing instrument | 11 | | creating the trust meets all of the following requirements:
| 12 | | (1) The instrument creating the trust must specify | 13 | | that, except in the case of a rollover contribution | 14 | | described in Section 402(c), 403(a)(4), 403(b)(8), or | 15 | | 457(e)(16) of the Internal Revenue Code of 1986, no | 16 | | contribution to the trust may be accepted unless that | 17 | | contribution is in cash. | 18 | | (2) The instrument creating the trust must specify that | 19 | | no contributions to the trust may be accepted for a taxable | 20 | | year on behalf of any individual if those contributions | 21 | | exceed the limitation specified in Section 219(b)(1)(A) of | 22 | | the Internal Revenue Code of 1986 for that taxable year. | 23 | | (3) The instrument creating the trust must provide for | 24 | | the appointment of the Board as trustee of the trust. | 25 | | (4) The instrument creating the trust must prohibit the | 26 | | investment of any of the trust's funds in life insurance |
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| 1 | | contracts. | 2 | | (5) The instrument creating the trust must specify that | 3 | | an individual's interest in the balance of his or her | 4 | | account is non-forfeitable. | 5 | | (6) The instrument creating the trust must prohibit the | 6 | | assets of the trust from being commingled with other | 7 | | property, except in a common trust fund or common | 8 | | investment fund. | 9 | | (7) The instrument creating the trust must require the | 10 | | Board to adopt, in accordance with the Illinois | 11 | | Administrative Procedure Act, rules governing the | 12 | | distribution of the entire interest of an individual for | 13 | | whose benefit the trust is maintained that are similar to | 14 | | the requirements of Section 401(a)(9) of the Internal | 15 | | Revenue Code of 1986 and the incidental death benefit | 16 | | requirement of Section 401(a). | 17 | | "Participating employer" means an eligible employer that | 18 | | has eligible employees who are enrollees and that provides a | 19 | | payroll deposit retirement savings arrangement as provided for | 20 | | by this Act for its eligible employees who are enrollees. | 21 | | "Payroll deposit retirement savings arrangement" means an | 22 | | arrangement by which a participating employer allows eligible | 23 | | employees who are enrollees to remit payroll deduction | 24 | | contributions to the Program. | 25 | | "Program" means the Automatic IRA Program. | 26 | | "Wages" mean any compensation owed to an enrollee by a |
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| 1 | | participating employer pursuant to an employment contract or | 2 | | agreement between the 2 parties, irrespective of whether the | 3 | | amount is determined on a time, task, piece, or other basis. | 4 | | Section 10. Establishment of Automatic IRA Program. A | 5 | | retirement savings program known as the Automatic IRA Program | 6 | | is hereby established and shall be administered by the Board | 7 | | with the intent of promoting greater retirement savings for | 8 | | private-sector employees in a convenient, low-cost, and | 9 | | portable manner. | 10 | | Section 15. Automatic IRA Program Fund. The Automatic IRA | 11 | | Program Fund is hereby established as a special fund in the | 12 | | State treasury and shall be administered by the Board for the | 13 | | purpose of promoting greater retirement savings for Illinois | 14 | | private-sector employees in a convenient, voluntary, low-cost, | 15 | | and portable manner. The Fund shall be operated as follows: | 16 | | (1) The assets of the Fund shall be used exclusively for | 17 | | the purpose of paying benefits to the enrollees of the Program | 18 | | and for administrative and investment costs of the Program.
| 19 | | (2) The Fund shall include the individual accounts of | 20 | | enrollees, which shall be accounted for as individual accounts.
| 21 | | (3) Moneys in the Fund shall consist of moneys received | 22 | | from enrollees and participating employers pursuant to | 23 | | automatic payroll deductions and contributions to savings made | 24 | | under this Act, grants from the United States Government and |
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| 1 | | its agencies and instrumentalities, and any other available | 2 | | sources of funds, public or private.
| 3 | | (4) Interest and income earned from the investment of these | 4 | | funds shall remain in the Fund and credited to it.
| 5 | | (5) Subject to appropriation, the State may pay | 6 | | administrative costs associated with the creation and | 7 | | management of the Program until sufficient assets are available | 8 | | in the Fund for that purpose. Thereafter, all administrative | 9 | | costs of the Fund, including repayment of any start-up funds | 10 | | provided by the State, shall be paid only out of moneys on | 11 | | deposit therein. | 12 | | (6) Administrative fees shall be allocated to each | 13 | | individual account in the Program on a pro rata basis.
| 14 | | (7) Annual administrative expenses shall not exceed 1% of | 15 | | the total Fund balance. | 16 | | Section 20. Composition of Board. | 17 | | (a) The Automatic IRA Program Board is hereby created and | 18 | | shall consist of the following 7 members:
| 19 | | (1) the State Treasurer, ex officio, or his or her | 20 | | designee, who shall serve as chair;
| 21 | | (2) the State Comptroller, ex officio, or his or her | 22 | | designee;
| 23 | | (3) the Director of the Governor's Office of Management | 24 | | and Budget, ex officio, or his or her designee;
| 25 | | (4) two public representatives with retirement |
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| 1 | | savings, investment expertise, or both, appointed by the | 2 | | Governor;
| 3 | | (5) a representative of participating employers, | 4 | | appointed by the Governor; and
| 5 | | (6) an representative of enrollees, appointed by the | 6 | | Governor.
| 7 | | (b) Members of the Board shall serve without compensation | 8 | | but shall be reimbursed for necessary travel expenses incurred | 9 | | in connection with their Board duties.
| 10 | | (c) Members of the Board, the Program Administrator, and | 11 | | persons serving as staff shall not do any of the following:
| 12 | | (1) directly or indirectly have any interest in the | 13 | | making of any investment made for the Program, or in the | 14 | | gains or profits accruing from any investment made for the | 15 | | Program;
| 16 | | (2) borrow any funds or deposits of the Program, or use | 17 | | such funds or deposits in any manner, for themselves or as | 18 | | agents or partners of others;
or | 19 | | (3) become an endorser, surety, or obligor on | 20 | | investments by the Board.
| 21 | | (d) Members of the Board, the Program Administrator, and | 22 | | persons serving as staff shall discharge their duties with | 23 | | respect to the Program solely in the interest of the Program's | 24 | | enrollees and beneficiaries as follows:
| 25 | | (1) for the exclusive purposes of providing benefits to | 26 | | enrollees and beneficiaries and defraying reasonable |
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| 1 | | expenses of administering the Program;
and | 2 | | (2) by investing with the care, skill, prudence, and | 3 | | diligence under the circumstances then prevailing that a | 4 | | prudent person acting in a like capacity and familiar with | 5 | | those matters would use in the conduct of an enterprise of | 6 | | a like character and with like aims.
| 7 | | (e) On the effective date of this Act, the Governor's | 8 | | appointees shall serve terms as follows:
| 9 | | (1) The term of office of one public representatives | 10 | | shall be 4 years. | 11 | | (2) The initial term of office for the second public | 12 | | representative shall be for 2 years; thereafter, the terms | 13 | | of the second public representative shall be for 4 years. | 14 | | (3) The initial term of office for the representative | 15 | | of participating employers shall be for 1 year; thereafter, | 16 | | the terms of the representative of participating employers | 17 | | shall be for 4 years. | 18 | | (4) The initial term of office for the representative | 19 | | of enrollees shall be for 3 year; thereafter, the terms of | 20 | | the representative of enrollees shall be for 4 years. | 21 | | (5) A vacancy in the term of an appointed Board member | 22 | | shall be filled for the unexpired term by appointment of | 23 | | the Governor. | 24 | | Section 25. Powers and duties of the Board. The Board, in | 25 | | the capacity of trustee of the Fund, shall have the power and |
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| 1 | | authority to: | 2 | | (1) cause the Program to be designed, established and | 3 | | operated in a manner:
| 4 | | (i) in accordance with best practices for retirement | 5 | | savings vehicles;
| 6 | | (ii) to maximize participation, saving, sound | 7 | | investment practices;
and | 8 | | (iii) to maximize simplicity, ease of administration | 9 | | for participating employers and enrollees, and portability | 10 | | of benefits;
| 11 | | (2) explore and establish investment options that offer | 12 | | employees returns on contributions and the conversion of | 13 | | individual retirement savings account balances to secure | 14 | | retirement income without incurring debt or liabilities to the | 15 | | State; | 16 | | (3) make and enter into contracts necessary for the | 17 | | administration of the Program and Fund;
| 18 | | (4) cause moneys in the Fund to be held and invested as | 19 | | pooled investments with a view to achieving cost savings | 20 | | through efficiencies and economies of scale;
| 21 | | (5) evaluate and establish the process by which an enrollee | 22 | | is able to contribute a portion of his or her wages to the | 23 | | Program for automatic deposit of those contributions and the | 24 | | process by which the participating employer provides a payroll | 25 | | deposit retirement savings arrangement to forward those | 26 | | contributions and related information to the Program, |
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| 1 | | including, but not limited to, contracting with financial | 2 | | service companies and third-party administrators with the | 3 | | capability to receive and process employee information and | 4 | | contributions for payroll deposit retirement savings | 5 | | arrangements or similar arrangements;
| 6 | | (6) design and establish the process for enrollment;
| 7 | | (7) evaluate and establish the process by which an | 8 | | individual or an employee of a non-participating employer may | 9 | | voluntarily enroll in and make contributions to the Program;
| 10 | | (8) accept any grants, gifts, appropriations, and other | 11 | | moneys from the State, any unit of federal, State, or local | 12 | | government, or any other person, firm, partnership, or | 13 | | corporation for deposit into the Fund, whether for investment | 14 | | or administrative purposes;
| 15 | | (9) hire a Program Administrator and staff, the cost of | 16 | | which shall be paid out of the Fund as an administrative cost, | 17 | | and determine the compensation for and duties of the Program | 18 | | Administrator and staff as necessary for the administration of | 19 | | the Program;
| 20 | | (10) employ staff;
| 21 | | (11) make provisions for the payment of costs and expenses | 22 | | for the administration and operation of the Program;
| 23 | | (12) retain and contract with investment managers, private | 24 | | financial institutions, other financial and service providers, | 25 | | consultants, actuaries, counsel, auditors, third-party | 26 | | administrators, and other professionals as necessary;
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| 1 | | (13) procure insurance against any and all loss in | 2 | | connection with the property, assets, or activities of the | 3 | | Program, and to indemnify each member of the Board from | 4 | | personal loss or liability resulting from a member's action or | 5 | | inaction as a member of the Board;
| 6 | | (14) set minimum and maximum investment levels in | 7 | | accordance with contribution limits set for IRAs by the | 8 | | Internal Revenue Code of 1986;
| 9 | | (15) maximize education and outreach to eligible employers | 10 | | and eligible employees, including, but not limited to, | 11 | | dissemination of (i) employee information packets, (ii) | 12 | | information concerning saving and planning for retirement, and | 13 | | (iii) information concerning any tax credits that may be | 14 | | available to small business owners for the establishment of new | 15 | | retirement plans and the federal Retirement Savings | 16 | | Contribution Credit (Saver's Credit) available to lower and | 17 | | moderate income households for certain qualified savings | 18 | | contributions;
| 19 | | (16) facilitate compliance by the Program with all | 20 | | applicable requirements for the Program under the Internal | 21 | | Revenue Code of 1986, including tax qualification requirements | 22 | | or any other applicable law and accounting requirements;
| 23 | | (17) submit progress and status reports to participating | 24 | | employers and enrollees;
| 25 | | (18) carry out the duties and obligations of the Program in | 26 | | an effective, efficient, and low-cost manner; and
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| 1 | | (19) exercise any and all other powers reasonably necessary | 2 | | for the effectuation of the purposes, objectives, and | 3 | | provisions of this Act pertaining to the Program.
| 4 | | Section 30. Investment firms. | 5 | | (a) The Board shall engage, after an open bid process, an | 6 | | investment manager or managers to invest the Fund and any other | 7 | | assets of the Program. Moneys in the Fund may be invested or | 8 | | reinvested by the Illinois State Treasurer's Office or may be | 9 | | invested in whole or in part under contract with the State | 10 | | Board of Investment, private investment managers, or both, as | 11 | | selected by the Board. In selecting the investment manager, the | 12 | | Board shall take into consideration and give weight to the | 13 | | investment manager's fees and charges in order to reduce the | 14 | | Program's administrative expenses.
| 15 | | (b) The investment manager shall comply with any and all | 16 | | applicable federal and state laws, rules, and regulations, as | 17 | | well as any and all rules, policies, and guidelines promulgated | 18 | | by the Board with respect to the Program and the investment of | 19 | | the Fund, including, but not limited to, the investment policy.
| 20 | | (c) The investment manager shall provide such reports as | 21 | | the Board deems necessary for the Board to oversee the | 22 | | investment manager's performance and the performance of the | 23 | | Fund
| 24 | | Section 35. Investment types, contributions, and defaults. |
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| 1 | | (a) Enrollees may elect an investment option from the | 2 | | permitted investment options listed in subsection (b) of this | 3 | | Section. Enrollees may change their investment option at any | 4 | | time, subject to rules promulgated by the Board. In the event | 5 | | that an enrollee fails to elect an investment option, the | 6 | | Program Administrator shall select, as the default investment | 7 | | option, a target-date or life-cycle fund investment option on | 8 | | behalf of the enrollee, unless and until the Board designates a | 9 | | new investment option as the default investment option as | 10 | | described in subsection (d) of this Section.
| 11 | | (b) The following list represents the entire range of | 12 | | permitted investment options which shall be initially provided | 13 | | under the Program:
| 14 | | (1) a conservative principal protection fund;
| 15 | | (2) a target date or life-cycle fund with a target date | 16 | | based on the age of the enrollee, which shall be the | 17 | | default investment option for enrollees who fail to elect | 18 | | an investment option, unless and until the Board designates | 19 | | a new investment option as the default as described in | 20 | | subsection (d) of this Section; and
| 21 | | (3) an equity or growth fund.
| 22 | | (c) Enrollees shall have the ability to elect a | 23 | | contribution level into the Fund; this level may be expressed | 24 | | as a percentage of wages or as a dollar amount up to the | 25 | | maximum in effect for such taxable year under Section | 26 | | 219(b)(1)(A) of the Internal Revenue Code of 1986. Enrollees |
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| 1 | | may change their contribution level at any time, subject to | 2 | | rules promulgated by the Board. If an enrollee fails to elect a | 3 | | contribution level, then he or she shall contribute 3% percent | 4 | | of his or her wages to the Program.
| 5 | | (d) In addition to the investment options listed above, the | 6 | | Board may establish and offer one additional investment option | 7 | | under the Program.
| 8 | | (1) This investment option shall have as its primary | 9 | | objective the preservation of the safety of principal and | 10 | | the provision of a stable and low-risk rate of return. It | 11 | | shall mitigate risk by maintaining a balanced investment | 12 | | portfolio that provides assurance that no single | 13 | | investment or class of investments will have a | 14 | | disproportionate impact on the total portfolio. The Board | 15 | | may procure any insurance, annuity or other funding | 16 | | mechanism to insure the value of individuals' accounts and | 17 | | guarantee a rate of return. The cost of such funding | 18 | | mechanism shall be paid out of the Fund. Under no | 19 | | circumstances shall the Board, Program, Fund, or State | 20 | | assume any liability for investment or actuarial risk.
| 21 | | (2) Prior to establishing such additional investment | 22 | | option, the Board shall evaluate and study the cost, | 23 | | feasibility, and risk profile of all options under | 24 | | consideration. The evaluation shall consider:
| 25 | | (A) all investment costs and fees;
| 26 | | (B) the risk profile of the proposed investments;
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| 1 | | (C) the cost and feasibility of procuring an | 2 | | insurance, annuity, or other funding mechanism to | 3 | | guarantee a rate of return, as well as the actual rate | 4 | | of return, both current and future, that can be | 5 | | guaranteed;
| 6 | | (D) the ease of implementing the investment | 7 | | product, including enrollment, making contributions, | 8 | | rolling over balances from other investment funds or | 9 | | products, and the ability to convert accrued balances | 10 | | into retirement income upon maturity; and
| 11 | | (E) any other factors that may be necessary to | 12 | | determine the benefits and drawbacks of the investment | 13 | | option.
| 14 | | (3) After evaluating and studying the various | 15 | | products, the Board shall, in consultation with private | 16 | | financial institutions, other financial and service | 17 | | providers, consultants, actuaries, counsel, auditors, | 18 | | third-party administrators, employers, workers, private | 19 | | sector retirement plan administrators and providers, and | 20 | | any other persons that the Board determines relevant, | 21 | | determine whether there exists an option whose cost, | 22 | | feasibility, and risk profile are sufficiently favorable | 23 | | to merit establishment; if so, the Board shall select the | 24 | | investment option that best achieves stable investment | 25 | | return in in furtherance of the goals of this Act.
| 26 | | (4) After selecting the additional investment option |
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| 1 | | the Board shall determine whether such option shall replace | 2 | | the target date or life-cycle fund as the default | 3 | | investment option for enrollees who do not elect an | 4 | | investment option. In making such determination the Board | 5 | | shall consider:
| 6 | | (A) the cost associated with the new investment | 7 | | option;
| 8 | | (B) the risk profile of the investment option;
| 9 | | (C) the ease of enrollment in the new investment | 10 | | option, including making contributions, rolling over | 11 | | balances from other investment funds or products, and | 12 | | the ability to convert accrued balances into | 13 | | retirement income upon maturity; and
| 14 | | (D) any other factors as may be necessary to | 15 | | determine the benefits and drawbacks of the new | 16 | | investment option compared to the target date or | 17 | | life-cycle option.
| 18 | | (e) Once the additional investment option has been | 19 | | selected, the Board shall add that option to the permissible | 20 | | investment options under the Program and provide a mechanism | 21 | | for new enrollees to select that option and for existing | 22 | | enrollees to roll-over their existing accounts under the | 23 | | Program into the new investment option. | 24 | | (f) In the event that the additional investment option is | 25 | | selected as the default investment option, once such investment | 26 | | option is available, if an enrollee fails to make an investment |
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| 1 | | election, the Program Administrator shall select such | 2 | | additional investment option as the default investment option | 3 | | on behalf of the enrollee.
| 4 | | Section 40. Investment policies. The Board shall annually | 5 | | prepare and adopt a written statement of investment policy for | 6 | | the additional option offered pursuant to subsection (d) of | 7 | | Section 35 that includes a risk management and oversight | 8 | | program. This investment policy shall prohibit the Board, | 9 | | Program, and Fund from borrowing for investment purposes. The | 10 | | risk management and oversight program shall be designed to | 11 | | ensure that an effective risk management system is in place to | 12 | | monitor the risk levels of the Program and Fund portfolio, to | 13 | | ensure that the risks taken are prudent and properly managed, | 14 | | to provide an integrated process for overall risk management, | 15 | | and to assess investment returns as well as risk to determine | 16 | | if the risks taken are adequately compensated compared to | 17 | | applicable performance benchmarks and standards. The Board | 18 | | shall consider the statement of investment policy and any | 19 | | changes in the investment policy at a public hearing. | 20 | | Section 45. Payroll deduction retirement savings | 21 | | arrangements, interest, benefit amount. | 22 | | (a) The Program shall include one or more payroll deposit | 23 | | retirement savings arrangements through which participating | 24 | | employers may make deposits into the Fund on behalf of their |
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| 1 | | enrollees.
| 2 | | (b) Interest shall be allocated, pro rata, to individual | 3 | | Program accounts and shall be computed at the interest rate on | 4 | | the balance of an individual's account and shall be compounded | 5 | | daily.
| 6 | | (c) An individual's retirement savings benefit under the | 7 | | Program shall be the amount equal to the balance in the | 8 | | individual's Program account on the date that the individual's | 9 | | retirement savings benefit becomes payable.
| 10 | | Section 50. Employer contributions and retirement plan | 11 | | sponsorship. | 12 | | (a) In the event that employer contributions would be | 13 | | permitted under the Internal Revenue Code of 1986 and would not | 14 | | cause the Program to be treated as an employee benefit plan | 15 | | under the Employee Retirement Income Security Act of 1974, | 16 | | participating employers may elect to make their own | 17 | | contributions, to the extent permitted by law, to IRA accounts | 18 | | of their employees who are enrollees.
| 19 | | (b) Employers shall retain the option at all times to set | 20 | | up any type of employer-sponsored retirement plan, such as a | 21 | | defined benefit plan or 401(k), Simplified Employee Pension | 22 | | (SEP) plan, or Savings Incentive Match Plan for Employees | 23 | | (SIMPLE) plan, or to offer an automatic enrollment payroll | 24 | | deduction IRA, instead of having a payroll deduction retirement | 25 | | savings arrangement pursuant to the Program.
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| 1 | | Section 55. Duties and liability of State. The State shall | 2 | | have no duty or liability to any party for the payment of any | 3 | | retirement savings benefits accrued by any individual under the | 4 | | Program. Any financial liability for the payment of retirement | 5 | | savings benefits in excess of funds available under the Program | 6 | | shall be borne solely by the entities with whom the Board | 7 | | contracts to provide insurance to protect the value of the | 8 | | Program. | 9 | | Section 60. Duties and liability of employers. | 10 | | (a) Eligible employers shall automatically enroll their | 11 | | employees in the Program and provide payroll deduction | 12 | | retirement saving arrangements for such employees and deposit, | 13 | | on behalf of such employees, these funds into the Program.
| 14 | | (b) Eligible employers and participating employers shall | 15 | | not have any liability for an employee's decision to | 16 | | participate in, or opt-out of, the Program or for the | 17 | | investment decisions of enrollees.
| 18 | | Section 65. Enrollee information packet. | 19 | | (a) Prior to the opening of the Program for enrollment, the | 20 | | Board shall design and disseminate to eligible employers | 21 | | through the Department an employee information packet, which | 22 | | shall include background information on the Program and | 23 | | appropriate disclosures.
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| 1 | | (b) The disclosures required pursuant to this Section shall | 2 | | include, but are not limited to:
| 3 | | (1) the benefits and risks associated with making | 4 | | contributions to the Program;
| 5 | | (2) the mechanisms for making contributions to the | 6 | | Program and Fund;
| 7 | | (3) the mechanism for opting out of the Program; and
| 8 | | (4) the mechanism for withdrawal and distribution of | 9 | | retirement savings, including any a description of | 10 | | applicable penalties for early withdrawal as promulgated | 11 | | by the Internal Revenue Service applicable to IRAs.
| 12 | | (c) The disclosure form shall clearly articulate the | 13 | | following:
| 14 | | (1) that employees seeking financial advice should | 15 | | contact financial advisors and that employers are not | 16 | | required to provide financial advice and are not liable for | 17 | | any investment or other decisions employees make with | 18 | | respect to their participation in the Program;
| 19 | | (2) that the Program is not an employer sponsored | 20 | | retirement plan as defined under the Employee Retirement | 21 | | Security Investment Act; and
| 22 | | (3) the Fund is not guaranteed by the State of | 23 | | Illinois.
| 24 | | (d) The disclosure form shall include a signature line for | 25 | | employees to sign and date acknowledging that the employee has | 26 | | read and understands all of the disclosures.
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| 1 | | (e) The employee information packet shall also include an | 2 | | opt-out form for an eligible employee to note his or her | 3 | | decision to opt out of the Program. The opt-out form shall | 4 | | include a statement that the employee acknowledges and | 5 | | understands that he or she is electing not to participate in | 6 | | automatic payroll deductions for retirement savings as part of | 7 | | the Program.
| 8 | | (f) Employers shall supply the employee information packet | 9 | | to eligible employees upon launch of the Program and employees | 10 | | shall review the packet and sign and date the disclosure form | 11 | | and, if appropriate, the opt-out form at that time. Employers | 12 | | shall supply the employee information packet to new eligible | 13 | | employees at the time of hiring, and new employees shall review | 14 | | the packet and sign and date the disclosure form and, if | 15 | | appropriate, the opt-out form at that time.
| 16 | | Section 70. Audit and report. | 17 | | (a) The Board shall submit an annual (i) audited financial | 18 | | report, prepared in accordance with generally accepted | 19 | | accounting principles, on the operations of the Program by | 20 | | January 1st of each year to the Governor, the Comptroller, the | 21 | | State Treasurer, and the General Assembly, and (ii) a report | 22 | | prepared by the Board, which shall include, but is not limited | 23 | | to, a summary of the benefits provided by the Program, | 24 | | including the number of enrollees in the Program, the | 25 | | percentage and amounts of investment options and rates of |
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| 1 | | return, and such other information that is relevant to make a | 2 | | full, fair, and effective disclosure of the operations of the | 3 | | Program and the Fund.
| 4 | | (b) The annual audit shall be made by an independent | 5 | | certified public accountant and shall include, but is not | 6 | | limited to, direct and indirect costs attributable to the use | 7 | | of outside consultants, independent contractors, and any other | 8 | | persons who are not State employees for the administration of | 9 | | the Program. | 10 | | Section 75. Penalties. | 11 | | (a) The Department is hereby authorized to exercise such | 12 | | powers as are necessary to perform its duties hereunder and | 13 | | enforce employer compliance with the Program, including, but | 14 | | not limited to, investigative, administrative, and rulemaking | 15 | | powers and the ability to impose and collect fines as set forth | 16 | | below.
| 17 | | (b) If the Department determines that an eligible employer, | 18 | | without good cause, has failed to automatically enroll any of | 19 | | its eligible employees in the Program who have not explicitly | 20 | | opted out pursuant to subsection (e) of Section 65, it shall so | 21 | | notify the employer and order the employer to comply with the | 22 | | Act.
| 23 | | (c) If after affording the employer due process and an | 24 | | opportunity for a hearing, the Department determines that an | 25 | | eligible employer, without good cause, has failed to come into |
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| 1 | | compliance with this Act within 90 days after receiving notice | 2 | | of non-compliance, it may impose a civil penalty of $250 per | 3 | | eligible employee on the employer. If such non-compliance with | 4 | | this Act extends 180 days after receiving notice of | 5 | | non-compliance, the Department may increase the civil penalty | 6 | | to $500 per eligible employee of the employer.
| 7 | | (d) Administrative actions and civil penalties under this | 8 | | Section are subject to review pursuant to the Administrative | 9 | | Review Law.
| 10 | | (e) Civil penalties collected under this Act and fees | 11 | | collected pursuant to subsection (f) shall be deposited into | 12 | | the Department of Employment Security Administrative | 13 | | Enforcement Fund, a special fund hereby created in the State | 14 | | treasury. The Department may, subject to appropriation, use | 15 | | moneys in the fund to cover expenses it incurs in the | 16 | | performance of its duties under this Act.
Interest attributable | 17 | | to moneys in the Department of Employment Security | 18 | | Administrative Enforcement Fund shall be credited to the | 19 | | Department of Employment Security Administrative Enforcement | 20 | | Fund. | 21 | | (f) The Department may charge the Board a reasonable fee | 22 | | for its costs in performing its duties under this Section to | 23 | | the extent that such costs have not been recovered under | 24 | | subsection (e) of this Section.
| 25 | | (g) This Section shall become operative 6 months after the | 26 | | Board notifies the Director of the Department that the Program |
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| 1 | | has been implemented. Upon receipt of such notification from | 2 | | the Board, the Department shall immediately post on its | 3 | | Internet website a notice stating that this Section is | 4 | | operative and the date that it is first operative.
| 5 | | Section 80. Rules. The Board and the Department shall | 6 | | adopt, in accordance with the Illinois Administrative | 7 | | Procedure Act, any rules that may be necessary to implement | 8 | | this Act. | 9 | | Section 85. Program implementation. The Program shall be | 10 | | implemented, and open for enrollment of eligible employees | 11 | | shall begin, within 12 months after the effective date of this | 12 | | Act. | 13 | | Section 90. The State Finance Act is amended by adding | 14 | | Sections 5.829 and 5.830 as follows: | 15 | | (30 ILCS 105/5.829 new) | 16 | | Sec. 5.829. The Automatic IRA Program Fund. | 17 | | (30 ILCS 105/5.830 new) | 18 | | Sec. 5.830. The Department of Employment Security | 19 | | Administrative Enforcement Fund.
| 20 | | Section 99. Effective date. This Act takes effect upon | 21 | | becoming law.
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