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




State of Illinois
2021 and 2022


Introduced 2/17/2021, 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. Removes all references to and the definition of "small employer". Provides that the Act applies to employers with at least one employee (rather than employers with fewer than 25 employees). Requires the Illinois Secure Choice Savings Board to (i) establish annual automatic increases to the contribution rates and (ii) verify employee eligibility for auto-enrollment in accordance with the Internal Revenue Code and applicable federal and State laws. Makes changes regarding penalties for employers who fail, without reasonable cause, to enroll an employee in the Illinois Secure Choice Savings Program (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. Removes a provision authorizing the Department to implement the penalties 9 months after the Illinois Secure Choice Savings Board notifies the Director of Revenue that the Program has been implemented.

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SB0208LRB102 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
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 one
2employee 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
12    "Fund" means the Illinois Secure Choice Savings Program
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



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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 25 employees at any one time in the State
5throughout the previous calendar year, or (ii) has been in
6business less than 2 years, or both items (i) and (ii), but
7that notifies the Board that it is interested in being a
8participating 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
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 Board's implementation timeline shall ensure that all
17employees are required to be enrolled in the Program by
18December 31, 2020. The provisions of this Section shall be in
19force after the Board opens the Program for enrollment.
20    (a) Each employer shall establish a payroll deposit
21retirement savings arrangement to allow each employee to
22participate in the Program within the timeline set by the
23Board after the Program opens for enrollment.
24    (b) Employers shall automatically enroll in the Program
25each of their employees who has not opted out of participation



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



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



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1(SIMPLE) plan, or to offer an automatic enrollment payroll
2deduction IRA, instead of having a payroll deposit retirement
3savings arrangement to allow employee participation in the
5    (h) An employee may terminate his or her participation in
6the Program at any time in a manner prescribed by the Board.
7    (i) The Board shall establish and maintain an Internet
8website designed to assist employers in identifying private
9sector providers of retirement arrangements that can be set up
10by the employer rather than allowing employee participation in
11the Program under this Act; however, the Board shall only
12establish and maintain an Internet website under this
13subsection if there is sufficient interest in such an Internet
14website by private sector providers and if the private sector
15providers furnish the funding necessary to establish and
16maintain the Internet website. The Board must provide public
17notice of the availability of and the process for inclusion on
18the Internet website before it becomes publicly available.
19This Internet website must be available to the public before
20the Board opens the Program for enrollment, and the Internet
21website address must be included on any Internet website
22posting or other materials regarding the Program offered to
23the public by the Board.
24(Source: P.A. 99-571, eff. 7-15-16; 100-6, eff. 6-30-17;
25100-863, eff. 8-14-18.)



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1    (820 ILCS 80/85)
2    Sec. 85. Penalties.
3    (a) An employer who fails without reasonable cause to
4enroll an employee in the Program within the time prescribed
5under Section 60 of this Act shall be subject to a penalty
6equal to:
7        (1) $250 per for each employee for the first each
8    calendar year the employer is noncompliant or portion of a
9    calendar year during which the employee neither was
10    enrolled in the Program nor had elected out of
11    participation in the Program; or
12        (2) $500 per employee for each subsequent calendar
13    year the employer is noncompliant; noncompliance does not
14    need to be consecutive to qualify for the $500 penalty
15    beginning after the date a penalty has been assessed with
16    respect to an employee, $500 for any portion of that
17    calendar year during which such employee continues to be
18    unenrolled without electing out of participation in the
19    Program.
20    The Department shall determine total employee count using
21the annual average from employer-reported quarterly data.
22    (b) After determining that an employer is subject to a
23penalty under this Section for a calendar year, the Department
24shall issue a notice of proposed assessment to such employer,
25stating the number of employees for which the penalty is
26proposed under item (1) of subsection (a) of this Section or



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1and the number of employees for which the penalty is proposed
2under item (2) of subsection (a) of this Section for such
3calendar year, and the total amount of penalties proposed.
4    Upon the expiration of 90 days after the date on which a
5notice of proposed assessment was issued, the penalties
6specified therein shall be deemed assessed, unless the
7employer had filed a protest with the Department under
8subsection (c) of this Section.
9    If, within 90 days after the date on which it was issued, a
10protest of a notice of proposed assessment is filed under
11subsection (c) of this Section, the penalties specified
12therein shall be deemed assessed upon the date when the
13decision of the Department with respect to the protest becomes
15    (c) A written protest against the proposed assessment
16shall be filed with the Department in such form as the
17Department may by rule prescribe, setting forth the grounds on
18which such protest is based. If such a protest is filed within
1990 days after the date the notice of proposed assessment is
20issued, the Department shall reconsider the proposed
21assessment and shall grant the employer a hearing. As soon as
22practicable after such reconsideration and hearing, the
23Department shall issue a notice of decision to the employer,
24setting forth the Department's findings of fact and the basis
25of decision. The decision of the Department shall become



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1        (1) if no action for review of the decision is
2    commenced under the Administrative Review Law, on the date
3    on which the time for commencement of such review has
4    expired; or
5        (2) if a timely action for review of the decision is
6    commenced under the Administrative Review Law, on the date
7    all proceedings in court for the review of such assessment
8    have terminated or the time for the taking thereof has
9    expired without such proceedings being instituted.
10    (d) As soon as practicable after the penalties specified
11in a notice of proposed assessment are deemed assessed, the
12Department shall give notice to the employer liable for any
13unpaid portion of such assessment, stating the amount due and
14demanding payment. If an employer neglects or refuses to pay
15the entire liability shown on the notice and demand within 10
16days after the notice and demand is issued, the unpaid amount
17of the liability shall be a lien in favor of the State of
18Illinois upon all property and rights to property, whether
19real or personal, belonging to the employer, and the
20provisions in the Illinois Income Tax Act regarding liens,
21levies and collection actions with regard to assessed and
22unpaid liabilities under that Act, including the periods for
23taking any action, shall apply.
24    (e) An employer who has overpaid a penalty assessed under
25this Section may file a claim for refund with the Department. A
26claim shall be in writing in such form as the Department may by



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1rule prescribe and shall state the specific grounds upon which
2it is founded. As soon as practicable after a claim for refund
3is filed, the Department shall examine it and either issue a
4refund or issue a notice of denial. If such a protest is filed,
5the Department shall reconsider the denial and grant the
6employer a hearing. As soon as practicable after such
7reconsideration and hearing, the Department shall issue a
8notice of decision to the employer. The notice shall set forth
9briefly the Department's findings of fact and the basis of
10decision in each case decided in whole or in part adversely to
11the employer. A denial of a claim for refund becomes final 90
12days after the date of issuance of the notice of the denial
13except for such amounts denied as to which the employer has
14filed a protest with the Department. If a protest has been
15timely filed, the decision of the Department shall become
17        (1) if no action for review of the decision is
18    commenced under the Administrative Review Law, on the date
19    on which the time for commencement of such review has
20    expired; or
21        (2) if a timely action for review of the decision is
22    commenced under the Administrative Review Law, on the date
23    all proceedings in court for the review of such assessment
24    have terminated or the time for the taking thereof has
25    expired without such proceedings being instituted.
26    (f) No notice of proposed assessment may be issued with



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1respect to a calendar year after June 30 of the fourth
2subsequent calendar year. No claim for refund may be filed
3more than 1 year after the date of payment of the amount to be
5    (g) The provisions of the Administrative Review Law and
6the rules adopted pursuant to it shall apply to and govern all
7proceedings for the judicial review of final decisions of the
8Department in response to a protest filed by the employer
9under subsections (c) and (e) of this Section. Final decisions
10of the Department shall constitute "administrative decisions"
11as defined in Section 3-101 of the Code of Civil Procedure. The
12Department may adopt any rules necessary to carry out its
13duties pursuant to this Section.
14    (h) Whenever notice is required by this Section, it may be
15given or issued by mailing it by first-class mail addressed to
16the person concerned at his or her last known address or in an
17electronic format as determined by the Department.
18    (i) All books and records and other papers and documents
19relevant to the determination of any penalty due under this
20Section shall, at all times during business hours of the day,
21be subject to inspection by the Department or its duly
22authorized agents and employees.
23    (j) The Department may require employers to report
24information relevant to their compliance with this Act on
25returns otherwise due from the employers under Section 704A of
26the Illinois Income Tax Act and failure to provide the



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1requested information on a return shall cause such return to
2be treated as unprocessable.
3    (k) For purposes of any provision of State law allowing
4the Department or any other agency of this State to offset an
5amount owed to a taxpayer against a tax liability of that
6taxpayer or allowing the Department to offset an overpayment
7of tax against any liability owed to the State, a penalty
8assessed under this Section shall be deemed to be a tax
9liability of the employer and any refund due to an employer
10shall be deemed to be an overpayment of tax of the employer.
11    (l) Except as provided in this subsection, all information
12received by the Department from returns filed by an employer
13or from any investigation conducted under the provisions of
14this Act shall be confidential, except for official purposes
15within the Department or pursuant to official procedures for
16collection of penalties assessed under this Act. Nothing
17contained in this subsection shall prevent the Director from
18publishing or making available to the public reasonable
19statistics concerning the operation of this Act wherein the
20contents of returns are grouped into aggregates in such a way
21that the specific information of any employer shall not be
22disclosed. Nothing contained in this subsection shall prevent
23the Director from divulging information to an authorized
24representative of the employer or to any person pursuant to a
25request or authorization made by the employer or by an
26authorized representative of the employer.



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1    (m) Civil penalties collected under this Act and fees
2collected pursuant to subsection (n) of this Section shall be
3deposited into the Tax Compliance and Administration Fund. The
4Department may, subject to appropriation, use moneys in the
5fund to cover expenses it incurs in the performance of its
6duties under this Act. Interest attributable to moneys in the
7Tax Compliance and Administration Fund shall be credited to
8the Tax Compliance and Administration Fund.
9    (n) The Department may charge the Board a reasonable fee
10for its costs in performing its duties under this Section to
11the extent that such costs have not been recovered from
12penalties imposed under this Section.
13    (o) The This Section shall become operative 9 months after
14the Board notifies the Director that the Program has been
15implemented. Upon receipt of such notification from the Board,
16the Department shall immediately post on its Internet website
17a notice stating that this Section is operative and the date
18that it is first operative. This notice shall include a
19statement that rather than enrolling employees in the Program
20under this Act, employers may sponsor an alternative
21arrangement, including, but not limited to, a defined benefit
22plan, 401(k) plan, a Simplified Employee Pension (SEP) plan, a
23Savings Incentive Match Plan for Employees (SIMPLE) plan, or
24an automatic enrollment payroll deduction IRA offered through
25a private provider. The Board shall provide a link to the
26vendor Internet website described in subsection (i) of Section



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160 of this Act, if applicable.
2(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)