What Small Business Owners Need to Know About Secure Choice
Dear Clients & Friends,
If you’re a small business owner, we understand that you have many demands on your time and resources now more than ever. As we help you plan ahead for 2022 and beyond, we want to make you aware of significant changes to the required Illinois Secure Choice Retirement Savings Program (Secure Choice), a state-administered retirement savings plan.
What Is Secure Choice?
First rolled out in 2018 with an intention to help close the retirement savings gap, Secure Choice requires small business owners in Illinois who fit certain criteria to either participate in a state-administered retirement savings plan or offer employees an employer-sponsored plan. Under the original mandate, qualifying criteria for employers include:
- Having at least 25 W-2 employees;
- Having been operating in Illinois for at least two years;
- An annual withholding of 5% of an employee’s compensation.
Key Changes to Secure Choice and Enrollment Deadlines
This summer, Governor Pritzker signed a bill that amended Secure Choice in hopes to expand access to retirement savings plans with the following revised criteria:
- Having at least 5 or more W-2 employees;
- Operating in Illinois during every quarter in the previous calendar year;
- An annual automatic increase up to a maximum of 10% to employee contribution rates.
These revisions will take effect beginning next year and will roll out in two waves. As a small business owner, it’s best to keep these important deadlines in mind:
- Wave 1: The enrollment deadline for employers with 15-25 employees will be no sooner than September 1, 2022.
- Wave 2: The enrollment deadline for employers with 5-15 employees will be no sooner than September 1, 2023.
How CJBS Can Help
For employers that meet the criteria and don’t have an employer-sponsored plan available, the Secure Choice plan is a mandate. Not enrolling in a plan by the deadline can cost employers up to $500 penalty per employee. At CJBS, we offer TPA services to help handle all your employer-sponsored benefit plan needs. So, it’s important to keep in mind the benefits of establishing an employer-sponsored plan vs. the Secure choice plan, some of which include:
- Income thresholds to participate;
- The ability for employees to take out loans;
- Employer match and whether you’d like to incentivize a more robust retirement savings plan while offering popular benefits to your employees;
- Maximize annual contributions.
- Secure Act Tax Credit to help offset plan costs; and
- Alleviating the administrative work that the Secure Choice plans require.
Of course, these aren’t the only factors to keep in mind when deciding on the best plan. If you’re curious about your specific situation and how these requirements can affect you as an employer or your employees, feel free to contact us. As ever, we are on hand to help you make the best-informed decision while walking you through your company’s obligations under the revised law.
Stay safe & healthy,
The CJBS Team