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Public Act 102-0179


 

Public Act 0179 102ND GENERAL ASSEMBLY

  
  
  

 


 
Public Act 102-0179
 
HB0117 EnrolledLRB102 00216 BMS 10218 b

    AN ACT concerning employment.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Illinois Secure Choice Savings Program Act
is amended by changing Sections 5, 30, 60, and 85 as follows:
 
    (820 ILCS 80/5)
    Sec. 5. Definitions. Unless the context requires a
different meaning or as expressly provided in this Section,
all terms shall have the same meaning as when used in a
comparable context in the Internal Revenue Code. As used in
this Act:
    "Board" means the Illinois Secure Choice Savings Board
established under this Act.
    "Department" means the Department of Revenue.
    "Director" means the Director of Revenue.
    "Employee" means any individual who is 18 years of age or
older, who is employed by an employer, and who has wages that
are allocable to Illinois during a calendar year under the
provisions of Section 304(a)(2)(B) of the Illinois Income Tax
Act.
    "Employer" means a person or entity engaged in a business,
industry, profession, trade, or other enterprise in Illinois,
whether for profit or not for profit, that (i) has at no time
during the previous calendar year employed at least 5
employees fewer than 25 employees in the State during every
quarter of the previous calendar year, (ii) has been in
business at least 2 years, and (iii) has not offered a
qualified retirement plan, including, but not limited to, a
plan qualified under Section 401(a), Section 401(k), Section
403(a), Section 403(b), Section 408(k), Section 408(p), or
Section 457(b) of the Internal Revenue Code of 1986 in the
preceding 2 years.
    "Enrollee" means any employee who is enrolled in the
Program.
    "Fund" means the Illinois Secure Choice Savings Program
Fund.
    "Internal Revenue Code" means Internal Revenue Code of
1986, or any successor law, in effect for the calendar year.
    "IRA" means a Roth or Traditional IRA (individual
retirement account) under Section 408 or 408A of the Internal
Revenue Code.
    "Participating employer" means an employer or small
employer that facilitates a payroll deposit retirement savings
arrangement as provided for by this Act for its employees.
    "Payroll deposit retirement savings arrangement" means an
arrangement by which a participating employer facilitates
payroll deduction contributions from enrollees to the Program.
    "Program" means the Illinois Secure Choice Savings
Program.
    "Small employer" means a person or entity engaged in a
business, industry, profession, trade, or other enterprise in
Illinois, whether for profit or not for profit, that (i)
employed less than 5 25 employees during any quarter of at any
one time in the State throughout the previous calendar year,
or (ii) has been in business less than 2 years, or both items
(i) and (ii), but that notifies the Board that it is interested
in being a participating employer.
    "Wages" means any compensation within the meaning of
Section 219(f)(1) of the Internal Revenue Code that is
received by an enrollee from a participating employer during
the calendar year.
(Source: P.A. 101-353, eff. 8-9-19.)
 
    (820 ILCS 80/30)
    Sec. 30. Duties of the Board. In addition to the other
duties and responsibilities stated in this Act, the Board
shall:
        (a) Cause the Program to be designed, established and
    operated in a manner that:
            (1) accords with best practices for retirement
        savings vehicles;
            (2) maximizes participation, savings, and sound
        investment practices;
            (3) maximizes simplicity, including ease of
        administration for participating employers and
        enrollees;
            (4) provides an efficient product to enrollees by
        pooling investment funds;
            (5) ensures the portability of benefits; and
            (6) provides for the deaccumulation of enrollee
        assets in a manner that maximizes financial security
        in retirement.
        (b) Appoint a trustee to the IRA Fund in compliance
    with Section 408 of the Internal Revenue Code.
        (c) Explore and establish investment options, subject
    to Section 45 of this Act, that offer employees returns on
    contributions and the conversion of individual retirement
    savings account balances to secure retirement income
    without incurring debt or liabilities to the State.
        (d) Establish the process by which interest,
    investment earnings, and investment losses are allocated
    to individual program accounts on a pro rata basis and are
    computed at the interest rate on the balance of an
    individual's account.
        (e) Make and enter into contracts necessary for the
    administration of the Program and Fund, including, but not
    limited to, retaining and contracting with investment
    managers, private financial institutions, other financial
    and service providers, consultants, actuaries, counsel,
    auditors, third-party administrators, and other
    professionals as necessary.
        (e-5) Conduct a review of the performance of any
    investment vendors every 4 years, including, but not
    limited to, a review of returns, fees, and customer
    service. A copy of reviews conducted under this subsection
    (e-5) shall be posted to the Board's Internet website.
        (f) Determine the number and duties of staff members
    needed to administer the Program and assemble such a
    staff, including, as needed, employing staff, appointing a
    Program administrator, and entering into contracts with
    the State Treasurer to make employees of the State
    Treasurer's Office available to administer the Program.
        (g) Cause moneys in the Fund to be held and invested as
    pooled investments described in Section 45 of this Act,
    with a view to achieving cost savings through efficiencies
    and economies of scale.
        (h) Evaluate and establish the process by which an
    enrollee is able to contribute a portion of his or her
    wages to the Program for automatic deposit of those
    contributions and the process by which the participating
    employer provides a payroll deposit retirement savings
    arrangement to forward those contributions and related
    information to the Program, including, but not limited to,
    contracting with financial service companies and
    third-party administrators with the capability to receive
    and process employee information and contributions for
    payroll deposit retirement savings arrangements or similar
    arrangements.
        (i) Design and establish the process for enrollment
    under Section 60 of this Act, including the process by
    which an employee can opt not to participate in the
    Program, select a contribution level, select an investment
    option, and terminate participation in the Program.
        (j) Evaluate and establish the process by which an
    individual may voluntarily enroll in and make
    contributions to the Program.
        (k) Accept any grants, appropriations, or other moneys
    from the State, any unit of federal, State, or local
    government, or any other person, firm, partnership, or
    corporation solely for deposit into the Fund, whether for
    investment or administrative purposes.
        (l) Evaluate the need for, and procure as needed,
    insurance against any and all loss in connection with the
    property, assets, or activities of the Program, and
    indemnify as needed each member of the Board from personal
    loss or liability resulting from a member's action or
    inaction as a member of the Board.
        (m) Make provisions for the payment of administrative
    costs and expenses for the creation, management, and
    operation of the Program, including the costs associated
    with subsection (b) of Section 20 of this Act, subsections
    (e), (f), (h), and (l) of this Section, subsection (b) of
    Section 45 of this Act, subsection (a) of Section 80 of
    this Act, and subsection (n) of Section 85 of this Act.
    Subject to appropriation, the State may pay administrative
    costs associated with the creation and management of the
    Program until sufficient assets are available in the Fund
    for that purpose. Thereafter, all administrative costs of
    the Fund, including repayment of any start-up funds
    provided by the State, shall be paid only out of moneys on
    deposit therein. However, private funds or federal funding
    received under subsection (k) of Section 30 of this Act in
    order to implement the Program until the Fund is
    self-sustaining shall not be repaid unless those funds
    were offered contingent upon the promise of such
    repayment. The Board shall keep total annual expenses as
    low as possible, but in no event shall they exceed 0.75% of
    the total trust balance.
        (n) Allocate administrative fees to individual
    retirement accounts in the Program on a pro rata basis.
        (o) Set minimum and maximum contribution levels in
    accordance with limits established for IRAs by the
    Internal Revenue Code.
        (o-5) Select a default contribution rate for Program
    participants within the range of 3% to 6% of an enrollee's
    wages.
        (o-10) Establish annual, automatic increases to the
    contribution rates based upon a schedule provided for in
    rules up to a maximum of 10% of an enrollee's wages.
        (p) Facilitate education and outreach to employers and
    employees.
        (q) Facilitate compliance by the Program with all
    applicable requirements for the Program under the Internal
    Revenue Code, including tax qualification requirements or
    any other applicable law and accounting requirements.
        (q-5) Verify employee eligibility for auto-enrollment
    in accordance with the Internal Revenue Code and
    applicable Federal and State laws. The verification shall
    include the rejection of any enrollee under 18 years of
    age.
        (r) Carry out the duties and obligations of the
    Program in an effective, efficient, and low-cost manner.
        (s) Exercise any and all other powers reasonably
    necessary for the effectuation of the purposes,
    objectives, and provisions of this Act pertaining to the
    Program.
        (t) Deposit into the Illinois Secure Choice
    Administrative Fund all grants, gifts, donations, fees,
    and earnings from investments from the Illinois Secure
    Choice Savings Program Fund that are used to recover
    administrative costs. All expenses of the Board shall be
    paid from the Illinois Secure Choice Administrative Fund.
    The Board may enter into agreements with other
governmental entities, including other states or their
agencies and instrumentalities, to enable residents of other
states to participate in the Program.
(Source: P.A. 100-6, eff. 6-30-17; 101-353, eff. 8-9-19.)
 
    (820 ILCS 80/60)
    Sec. 60. Program implementation and enrollment. Except as
otherwise provided in Section 93 of this Act, the Program
shall be implemented, and enrollment of employees shall begin
in 2018. The Board shall establish an implementation timeline
under which employers shall enroll their employees in the
Program. The timeline shall include the date by which an
employer must begin enrollment of its employees in the Program
and the date by which enrollment must be complete. The Board
shall adopt the implementation timeline at a public meeting of
the Board and shall publicize the implementation timeline. The
Board shall provide advance notice to employers of their
enrollment date and the amount of time to complete enrollment.
The enrollment deadline for employers with fewer than 25
employees and more than 15 employees shall be no sooner than
September 1, 2022. The enrollment deadline for employers with
at least 5 employees but not more than 15 employees shall be no
sooner than September 1, 2023. Board's implementation timeline
shall ensure that all employees are required to be enrolled in
the Program by December 31, 2020. The provisions of this
Section shall be in force after the Board opens the Program for
enrollment.
    (a) Each employer shall establish a payroll deposit
retirement savings arrangement to allow each employee to
participate in the Program within the timeline set by the
Board after the Program opens for enrollment.
    (b) Employers shall automatically enroll in the Program
each of their employees who has not opted out of participation
in the Program using the form described in subsection (c) of
Section 55 of this Act and shall provide payroll deduction
retirement savings arrangements for such employees and
deposit, on behalf of such employees, these funds into the
Program. Small employers may, but are not required to, provide
payroll deduction retirement savings arrangements for each
employee who elects to participate in the Program. Small
employers' use of automatic enrollment for employees is
subject to final rules from the United States Department of
Labor. Utilization of automatic enrollment by small employers
may be allowed only if it does not create employer liability
under the federal Employee Retirement Income Security Act.
    (c) Enrollees shall have the ability to select a
contribution level into the Fund. This level may be expressed
as a percentage of wages or as a dollar amount up to the
deductible amount for the enrollee's taxable year under
Section 219(b)(1)(A) of the Internal Revenue Code. Enrollees
may change their contribution level at any time, subject to
rules promulgated by the Board. If an enrollee fails to select
a contribution level using the form described in subsection
(c) of Section 55 of this Act, then he or she shall contribute
the default contribution rate of his or her wages to the
Program, provided that such contributions shall not cause the
enrollee's total contributions to IRAs for the year to exceed
the deductible amount for the enrollee's taxable year under
Section 219(b)(1)(A) of the Internal Revenue Code.
    (d) Enrollees may select an investment option from the
permitted investment options listed in Section 45 of this Act.
Enrollees may change their investment option at any time,
subject to rules promulgated by the Board. In the event that an
enrollee fails to select an investment option, that enrollee
shall be placed in the investment option selected by the Board
as the default under subsection (c) of Section 45 of this Act.
If the Board has not selected a default investment option
under subsection (c) of Section 45 of this Act, then an
enrollee who fails to select an investment option shall be
placed in the life-cycle fund investment option.
    (e) Following initial implementation of the Program
pursuant to this Section, at least once every year,
participating employers shall designate an open enrollment
period during which employees who previously opted out of the
Program may enroll in the Program.
    (f) An employee who opts out of the Program who
subsequently wants to participate through the participating
employer's payroll deposit retirement savings arrangement may
only enroll during the participating employer's designated
open enrollment period or if permitted by the participating
employer at an earlier time.
    (g) Employers shall retain the option at all times to set
up any type of employer-sponsored retirement plan, such as a
defined benefit plan or a 401(k), Simplified Employee Pension
(SEP) plan, or Savings Incentive Match Plan for Employees
(SIMPLE) plan, or to offer an automatic enrollment payroll
deduction IRA, instead of having a payroll deposit retirement
savings arrangement to allow employee participation in the
Program.
    (h) An employee may terminate his or her participation in
the Program at any time in a manner prescribed by the Board.
    (i) The Board shall establish and maintain an Internet
website designed to assist employers in identifying private
sector providers of retirement arrangements that can be set up
by the employer rather than allowing employee participation in
the Program under this Act; however, the Board shall only
establish and maintain an Internet website under this
subsection if there is sufficient interest in such an Internet
website by private sector providers and if the private sector
providers furnish the funding necessary to establish and
maintain the Internet website. The Board must provide public
notice of the availability of and the process for inclusion on
the Internet website before it becomes publicly available.
This Internet website must be available to the public before
the Board opens the Program for enrollment, and the Internet
website address must be included on any Internet website
posting or other materials regarding the Program offered to
the public by the Board.
(Source: P.A. 99-571, eff. 7-15-16; 100-6, eff. 6-30-17;
100-863, eff. 8-14-18.)
 
    (820 ILCS 80/85)
    Sec. 85. Penalties.
    (a) An employer who fails without reasonable cause to
enroll an employee in the Program within the time prescribed
under Section 60 of this Act shall be subject to a penalty
equal to:
        (1) $250 per for each employee for the first each
    calendar year the employer is noncompliant or portion of a
    calendar year during which the employee neither was
    enrolled in the Program nor had elected out of
    participation in the Program; or
        (2) $500 per employee for each subsequent calendar
    year the employer is noncompliant; noncompliance does not
    need to be consecutive to qualify for the $500 penalty
    beginning after the date a penalty has been assessed with
    respect to an employee, $500 for any portion of that
    calendar year during which such employee continues to be
    unenrolled without electing out of participation in the
    Program.
    The Department shall determine total employee count using
the annual average from employer-reported quarterly data.
    (b) After determining that an employer is subject to a
penalty under this Section for a calendar year, the Department
shall issue a notice of proposed assessment to such employer,
stating the number of employees for which the penalty is
proposed under item (1) of subsection (a) of this Section or
and the number of employees for which the penalty is proposed
under item (2) of subsection (a) of this Section for such
calendar year, and the total amount of penalties proposed.
    Upon the expiration of 120 90 days after the date on which
a notice of proposed assessment was issued, the penalties
specified therein shall be deemed assessed, unless the
employer had filed a protest with the Department under
subsection (c) of this Section or come into full compliance
with the Program as required under Section 60 of this Act.
    If, within 120 90 days after the date on which it was
issued, a protest of a notice of proposed assessment is filed
under subsection (c) of this Section, the penalties specified
therein shall be deemed assessed upon the date when the
decision of the Department with respect to the protest becomes
final.
    (c) A written protest against the proposed assessment
shall be filed with the Department in such form as the
Department may by rule prescribe, setting forth the grounds on
which such protest is based. If such a protest is filed within
120 90 days after the date the notice of proposed assessment is
issued, the Department shall reconsider the proposed
assessment and shall grant the employer a hearing. As soon as
practicable after such reconsideration and hearing, the
Department shall issue a notice of decision to the employer,
setting forth the Department's findings of fact and the basis
of decision. The decision of the Department shall become
final:
        (1) if no action for review of the decision is
    commenced under the Administrative Review Law, on the date
    on which the time for commencement of such review has
    expired; or
        (2) if a timely action for review of the decision is
    commenced under the Administrative Review Law, on the date
    all proceedings in court for the review of such assessment
    have terminated or the time for the taking thereof has
    expired without such proceedings being instituted.
    (d) As soon as practicable after the penalties specified
in a notice of proposed assessment are deemed assessed, the
Department shall give notice to the employer liable for any
unpaid portion of such assessment, stating the amount due and
demanding payment. If an employer neglects or refuses to pay
the entire liability shown on the notice and demand within 10
days after the notice and demand is issued, the unpaid amount
of the liability shall be a lien in favor of the State of
Illinois upon all property and rights to property, whether
real or personal, belonging to the employer, and the
provisions in the Illinois Income Tax Act regarding liens,
levies and collection actions with regard to assessed and
unpaid liabilities under that Act, including the periods for
taking any action, shall apply.
    (e) An employer who has overpaid a penalty assessed under
this Section may file a claim for refund with the Department. A
claim shall be in writing in such form as the Department may by
rule prescribe and shall state the specific grounds upon which
it is founded. As soon as practicable after a claim for refund
is filed, the Department shall examine it and either issue a
refund or issue a notice of denial. If such a protest is filed,
the Department shall reconsider the denial and grant the
employer a hearing. As soon as practicable after such
reconsideration and hearing, the Department shall issue a
notice of decision to the employer. The notice shall set forth
briefly the Department's findings of fact and the basis of
decision in each case decided in whole or in part adversely to
the employer. A denial of a claim for refund becomes final 120
90 days after the date of issuance of the notice of the denial
except for such amounts denied as to which the employer has
filed a protest with the Department. If a protest has been
timely filed, the decision of the Department shall become
final:
        (1) if no action for review of the decision is
    commenced under the Administrative Review Law, on the date
    on which the time for commencement of such review has
    expired; or
        (2) if a timely action for review of the decision is
    commenced under the Administrative Review Law, on the date
    all proceedings in court for the review of such assessment
    have terminated or the time for the taking thereof has
    expired without such proceedings being instituted.
    (f) No notice of proposed assessment may be issued with
respect to a calendar year after June 30 of the fourth
subsequent calendar year. No claim for refund may be filed
more than 1 year after the date of payment of the amount to be
refunded.
    (g) The provisions of the Administrative Review Law and
the rules adopted pursuant to it shall apply to and govern all
proceedings for the judicial review of final decisions of the
Department in response to a protest filed by the employer
under subsections (c) and (e) of this Section. Final decisions
of the Department shall constitute "administrative decisions"
as defined in Section 3-101 of the Code of Civil Procedure. The
Department may adopt any rules necessary to carry out its
duties pursuant to this Section.
    (h) Whenever notice is required by this Section, it may be
given or issued by mailing it by first-class mail addressed to
the person concerned at his or her last known address or in an
electronic format as determined by the Department.
    (i) All books and records and other papers and documents
relevant to the determination of any penalty due under this
Section shall, at all times during business hours of the day,
be subject to inspection by the Department or its duly
authorized agents and employees.
    (j) The Department may require employers to report
information relevant to their compliance with this Act on
returns otherwise due from the employers under Section 704A of
the Illinois Income Tax Act and failure to provide the
requested information on a return shall cause such return to
be treated as unprocessable.
    (k) For purposes of any provision of State law allowing
the Department or any other agency of this State to offset an
amount owed to a taxpayer against a tax liability of that
taxpayer or allowing the Department to offset an overpayment
of tax against any liability owed to the State, a penalty
assessed under this Section shall be deemed to be a tax
liability of the employer and any refund due to an employer
shall be deemed to be an overpayment of tax of the employer.
    (l) Except as provided in this subsection, all information
received by the Department from returns filed by an employer
or from any investigation conducted under the provisions of
this Act shall be confidential, except for official purposes
within the Department or pursuant to official procedures for
collection of penalties assessed under this Act. Nothing
contained in this subsection shall prevent the Director from
publishing or making available to the public reasonable
statistics concerning the operation of this Act wherein the
contents of returns are grouped into aggregates in such a way
that the specific information of any employer shall not be
disclosed. Nothing contained in this subsection shall prevent
the Director from divulging information to an authorized
representative of the employer or to any person pursuant to a
request or authorization made by the employer or by an
authorized representative of the employer.
    (m) Civil penalties collected under this Act and fees
collected pursuant to subsection (n) of this Section shall be
deposited into the Tax Compliance and Administration Fund. The
Department may, subject to appropriation, use moneys in the
fund to cover expenses it incurs in the performance of its
duties under this Act. Interest attributable to moneys in the
Tax Compliance and Administration Fund shall be credited to
the Tax Compliance and Administration Fund.
    (n) The Department may charge the Board a reasonable fee
for its costs in performing its duties under this Section to
the extent that such costs have not been recovered from
penalties imposed under this Section.
    (o) The This Section shall become operative 9 months after
the Board notifies the Director that the Program has been
implemented. Upon receipt of such notification from the Board,
the Department shall immediately post on its Internet website
a notice stating that this Section is operative and the date
that it is first operative. This notice shall include a
statement that rather than enrolling employees in the Program
under this Act, employers may sponsor an alternative
arrangement, including, but not limited to, a defined benefit
plan, 401(k) plan, a Simplified Employee Pension (SEP) plan, a
Savings Incentive Match Plan for Employees (SIMPLE) plan, or
an automatic enrollment payroll deduction IRA offered through
a private provider. The Board shall provide a link to the
vendor Internet website described in subsection (i) of Section
60 of this Act, if applicable.
(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)

Effective Date: 1/1/2022