Small businesses in Illinois with more than 25 employees face a deadline to implement a retirement savings plan or face automatic enrollment into a state plan.
Small businesses in Illinois with more than 25 employees face a Nov. 1 deadline to implement a qualified retirement savings plan or face automatic enrollment into the Illinois Secure Choice Retirement Savings Program.
“It’s an automatic opt-in, so that’s a bit of a burden on the employer,” said NFIB’s Illinois State Director Mark Grant. “For all those employees who don’t opt-out, businesses are going to have to arrange for an automatic deduction out of their paycheck.”
The program requires business owners to withhold 5 percent of each workers’ pay and then to transfer it to a retirement account. Business owners are required to inform their employees about the withholding.
“There will be employees for whom this will be a surprise,” said Grant. “And they’re going to wonder why their employer is taking another 5 percent out of their paycheck. I think there’s going to be some problems with many employers getting some blowback from employees who may not be aware they have to opt-out.”
“A lot of low-wage workers don’t do that because they don’t have the extra income to do it,” said Grant. “It’s a lot harder for them if they’re living paycheck-to-paycheck. Automatically withdrawing 5 percent of their paycheck every month could be quite a bit of a burden for them.”
NFIB opposed the original legislation that created the program due to the burden it places on small business owners and workers living paycheck-to-paycheck. “Now, however, it’s about making sure members are aware of the law. And to remind business owners that they can go to a private financial broker of their choice to set up their own compliant retirement program.”
Employers who fail to comply with the law are subject to fines up to $250 per employee who failed to enroll or opt-out of the program by Nov. 1.
