Bill Text: IL SB1787 | 2019-2020 | 101st General Assembly | Chaptered


Bill Title: Amends the Illinois Secure Choice Savings Program Act. Provides that an investment option may be a conservative fund rather than a conservative principal protection fund. Provides that the Illinois Secure Choice Savings Board may establish deadlines for payment of payroll deductions to the Fund and enter agreements to permit residents of other states to participate in the program. Includes a traditional IRA within the definition of the term "IRA". Provides for audits on a fiscal year basis rather than a calendar year basis and report by the following January rather than July. Requires the Treasurer to prepare annual reports on benefits provided by the Program and post the report on the Program website. Effective immediately.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Passed) 2019-08-09 - Public Act . . . . . . . . . 101-0353 [SB1787 Detail]

Download: Illinois-2019-SB1787-Chaptered.html



Public Act 101-0353
SB1787 EnrolledLRB101 08060 JLS 53122 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, 45, 65, and 80 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 fewer than 25
employees in the State, (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 provides a payroll deposit
retirement savings arrangement as provided for by this Act for
its employees who are enrollees in the Program.
"Payroll deposit retirement savings arrangement" means an
arrangement by which a participating employer facilitates
allows enrollees to remit 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 25 employees 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. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)
(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.
(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.
(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. 99-571, eff. 7-15-16; 100-6, eff. 6-30-17.)
(820 ILCS 80/45)
Sec. 45. Investment options.
(a) The Board shall establish as an investment option a
life-cycle fund with a target date based upon the age of the
enrollee. This shall be the default investment option for
enrollees who fail to elect an investment option unless and
until the Board designates by rule a new investment option as
the default as described in subsection (c) of this Section.
(b) The Board may also establish any or all of the
following additional investment options:
(1) a conservative principal protection fund;
(2) a growth fund;
(3) a secure return fund whose primary objective is the
preservation of the safety of principal and the provision
of a stable and low-risk rate of return; if the Board
elects to establish a secure return fund, the Board may
procure any insurance, annuity, or other product to insure
the value of individuals' accounts and guarantee a rate of
return; the cost of such funding mechanism shall be paid
out of the Fund; under no circumstances shall the Board,
Program, Fund, the State, or any participating employer
assume any liability for investment or actuarial risk; the
Board shall determine whether to establish such investment
options based upon an analysis of their cost, risk profile,
benefit level, feasibility, and ease of implementation;
(4) an annuity fund.
The Board shall determine whether to establish any of the
additional investment options based upon an analysis of its
cost, risk profile, benefit level, feasibility, and ease of
implementation.
(c) If the Board elects to establish a secure return fund,
the Board shall then determine whether such option shall
replace the target date or life-cycle fund as the default
investment option for enrollees who do not elect an investment
option. In making such determination, the Board shall consider
the cost, risk profile, benefit level, and ease of enrollment
in the secure return fund. The Board may at any time thereafter
revisit this question and, based upon an analysis of these
criteria, establish either the secure return fund or the
life-cycle fund as the default for enrollees who do not elect
an investment option.
(Source: P.A. 98-1150, eff. 6-1-15.)
(820 ILCS 80/65)
Sec. 65. Payments. Employee contributions deducted by the
participating employer through payroll deduction shall be paid
by the participating employer to the Fund using one or more
payroll deposit retirement savings arrangements established by
the Board under subsection (h) of Section 30 of this Act,
either:
(1) on or before the last day of the month following
the month in which the compensation otherwise would have
been payable to the employee in cash; or
(2) by a before such later deadline prescribed by the
Board for making such payments, but not later than the due
date for the deposit of tax required to be deducted and
withheld relating to collection of income tax at source on
wages or for the deposit of tax required to be paid under
the unemployment insurance system for the payroll period to
which such payments relate.
(Source: P.A. 98-1150, eff. 6-1-15.)
(820 ILCS 80/80)
Sec. 80. Audit and reports.
(a) The Board shall annually submit an audited financial
report, prepared in accordance with generally accepted
accounting principles, on the operations of the Program during
each fiscal calendar year by January July 1 of the following
year to the Governor, the Comptroller, the State Treasurer, and
the General Assembly and shall be provided electronically to
any member of the General Assembly upon request. The annual
audit shall be made by an independent certified public
accountant and shall include, but is not limited to, direct and
indirect costs attributable to the use of outside consultants,
independent contractors, and any other persons who are not
State employees for the administration of the Program.
(b) In addition to any other statements or reports required
by law, the Board shall provide periodic reports at least
annually to participating employers, reporting the names of
each enrollee employed by the participating employer and the
amounts of contributions made by the participating employer on
behalf of each employee during the reporting period, as well as
to enrollees, reporting contributions and investment income
allocated to, withdrawals from, and balances in their Program
accounts for the reporting period. Such reports may include any
other information regarding the Program as the Board may
determine.
(c) The State Treasurer shall annually prepare a report in
consultation with the Board that includes a summary of the
benefits provided by the Program each fiscal year, including
the number of enrollees in the Program, the percentage and
amounts of investment options and rates of return, and such
other information that is relevant to make a full, fair, and
effective disclosure of the operations of the Program and the
Fund. The report shall be made available on the Program website
by January of the following year.
(Source: P.A. 98-1150, eff. 6-1-15; 99-464, eff. 8-26-15.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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