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1 | AN ACT concerning employment.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||
5 | Illinois Automatic IRA Program Act. | ||||||||||||||||||||||||
6 | Section 5. Definitions. As used in this Act, unless the | ||||||||||||||||||||||||
7 | context requires a different meaning: | ||||||||||||||||||||||||
8 | "Compensation" means remuneration paid to a participant | ||||||||||||||||||||||||
9 | for services rendered to his or her employer. | ||||||||||||||||||||||||
10 | "Employee" means any individual who performs or performed | ||||||||||||||||||||||||
11 | any service on behalf of a business operating in the State of | ||||||||||||||||||||||||
12 | Illinois. | ||||||||||||||||||||||||
13 | "Employer" means any business operating the State of | ||||||||||||||||||||||||
14 | Illinois for whom an individual performs or performed any | ||||||||||||||||||||||||
15 | service as an employee and that has more than 10 and less than | ||||||||||||||||||||||||
16 | 100 employees and that does not and has not for the previous 2 | ||||||||||||||||||||||||
17 | years offered a qualified retirement plan to its employees. | ||||||||||||||||||||||||
18 | "Enrollee" means any employee who is enrolled in the | ||||||||||||||||||||||||
19 | Program. | ||||||||||||||||||||||||
20 | "Fund" means the Illinois Automatic IRA Program Fund. | ||||||||||||||||||||||||
21 | "IRA" means an individual retirement account under Section | ||||||||||||||||||||||||
22 | 408 of the Internal Revenue Code. | ||||||||||||||||||||||||
23 | "Participating employer" means any qualified small |
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1 | employer with employees that are enrolled in the Program. | ||||||
2 | "Program" means the Illinois Automatic IRA Program. | ||||||
3 | "Qualified small employer" means an employer located in the | ||||||
4 | State of Illinois that (i) employed at least 10 employees | ||||||
5 | during the previous calendar year, (ii) has been in business | ||||||
6 | for a period of at least 2 years after the enactment of this | ||||||
7 | Act, (iii) did not offer a qualified retirement plan, | ||||||
8 | including, but not limited to, a plan qualified under Section | ||||||
9 | 401(a), Section 401(k), Section 403(a), Section 403(b), | ||||||
10 | Section 408(k), Section 408(p), or Section 457(b) of the | ||||||
11 | Internal Revenue Code for the 2 years prior to the effective | ||||||
12 | date of this Act. | ||||||
13 | Section 10. Establishment of Illinois Automatic IRA | ||||||
14 | Program. There is hereby established a retirement savings | ||||||
15 | program known as the Illinois Automatic IRA Program to be | ||||||
16 | administered by the State Treasurer with the intent of | ||||||
17 | promoting greater retirement savings for private sector | ||||||
18 | employees in a convenient, low-cost, and portable manner. | ||||||
19 | Section 15. Illinois Automatic IRA Program Fund. | ||||||
20 | (a) There is established the Illinois Automatic IRA Program | ||||||
21 | Fund to finance the program created by this Act. The assets of | ||||||
22 | the Fund shall be administered by the State Treasurer's office | ||||||
23 | as trust funds and shall be used exclusively for the purposes | ||||||
24 | of administering the Program, including the design and |
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1 | qualification of the Program, supporting the administrative | ||||||
2 | cost of establishing the Program and providing information | ||||||
3 | about the Program. | ||||||
4 | (b) The Fund shall include the individual accounts of | ||||||
5 | enrollees, which shall be accounted for as individual accounts. | ||||||
6 | (c) Moneys in the Fund shall consist of moneys received | ||||||
7 | from enrollees and participating employers pursuant to | ||||||
8 | automatic payroll deductions and contributions to savings made | ||||||
9 | under this Act, grants from the United States government and | ||||||
10 | its agencies and instrumentalities, and any other available | ||||||
11 | sources of funds, public or private. Interest and income earned | ||||||
12 | from the investment of such funds shall remain in the Fund and | ||||||
13 | be credited to it. | ||||||
14 | Section 20. Operation of Program. | ||||||
15 | (a) The Program shall be administered by the State | ||||||
16 | Treasurer, or his or her designee, and prior to accepting any | ||||||
17 | enrollees or funds the State Treasurer shall design a plan of | ||||||
18 | operation for the Program, which plan of operation shall be | ||||||
19 | approved by the Internal Revenue Service to offer the Program | ||||||
20 | to enrollees on a tax-qualified basis. The Program shall | ||||||
21 | include an option for enrollees to roll pre-tax contributions | ||||||
22 | into an individual retirement account or other eligible | ||||||
23 | retirement plan after ceasing participation in the Program. | ||||||
24 | (b) In designing the plan of operation for the Program, the | ||||||
25 | State Treasurer shall consult with employers, workers, private |
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1 | sector retirement plan administrators and providers, and any | ||||||
2 | other persons that the State Treasurer determines relevant to | ||||||
3 | the development of an effective and efficient method of | ||||||
4 | operating the Program. | ||||||
5 | (c) The plan of operation for the Program shall include, at | ||||||
6 | a minimum, the following elements: | ||||||
7 | (1) a payroll deduction IRA arrangement for employees | ||||||
8 | of qualified small employers wherein a qualified small | ||||||
9 | employer shall deduct a default amount of 2% from an | ||||||
10 | employee's salary, or such other percentage as an employee | ||||||
11 | has elected, and deposit it into the Fund; | ||||||
12 | (2) the ability for the State Treasurer to enter into | ||||||
13 | an administrative service arrangement that will allow | ||||||
14 | participating employers to achieve economies of scale for | ||||||
15 | pension or retirement savings arrangements relating to | ||||||
16 | accounting, investment, payroll processing employee | ||||||
17 | communication, or investor education; | ||||||
18 | (3) the ability for each enrolled employee to | ||||||
19 | periodically elect to contribute up to a set percentage of | ||||||
20 | his or her compensation or a dollar amount to the Fund; | ||||||
21 | provided, however, if an election is not made the Program | ||||||
22 | administrator shall select a default contribution option | ||||||
23 | on behalf of the employee; | ||||||
24 | (4) the ability for each enrolled employee to direct | ||||||
25 | the investment of such enrollee's contribution and be | ||||||
26 | entitled to make investment choices within available |
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1 | categories of investments provided through the Program; | ||||||
2 | provided, however, that if an enrollee does not select an | ||||||
3 | investment option then the Program administrator shall | ||||||
4 | select a default investment option on behalf of the | ||||||
5 | employee; | ||||||
6 | (5) the ability for the State Treasurer to contract, | ||||||
7 | after an open bid process, with a third-party administrator | ||||||
8 | for the management of the Fund and any other assets of the | ||||||
9 | Program and whose fees shall be reasonable and shall be | ||||||
10 | paid from the Fund and the Program's assets; | ||||||
11 | (6) a requirement that each retirement plan or account | ||||||
12 | shall pay a proportionate share of the expenses incurred to | ||||||
13 | implement, maintain, and administer the Program; and | ||||||
14 | (7) a provision that the State Treasurer, his or her | ||||||
15 | designee, any other employees or agents of the Program, or | ||||||
16 | any investment manager shall not have any liability with | ||||||
17 | respect to investment returns under any retirement plan. | ||||||
18 | Section 25. Duties and authority of State Treasurer. The | ||||||
19 | State Treasurer shall have the authority and responsibility to | ||||||
20 | carry out the following duties: | ||||||
21 | (1) administer the Fund and the Program, including the | ||||||
22 | authority to invest moneys in the Fund in any instruments, | ||||||
23 | obligations, securities, or property deemed appropriate by | ||||||
24 | the State Treasurer; | ||||||
25 | (2) apply for, accept, and expend gifts, grants, or |
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1 | other donations from public or private sources to enable it | ||||||
2 | to carry out the objectives of the Program; | ||||||
3 | (3) enter into contractual agreements, including | ||||||
4 | contracts for legal, actuarial, financial and consulting | ||||||
5 | services; | ||||||
6 | (4) develop strategies to inform the public of the | ||||||
7 | availability and desirability of the Program, including | ||||||
8 | education about the need to accumulate financial resources | ||||||
9 | for retirement, available options for financing | ||||||
10 | retirement, and basic information about investing | ||||||
11 | strategies; and | ||||||
12 | (5) engage in such other activities are necessary to | ||||||
13 | implement and administer the Program. | ||||||
14 | Section 30. Duties of qualified small employers. Qualified | ||||||
15 | small employers shall automatically enroll their employees in | ||||||
16 | the Program and provide payroll deductions for such employees. | ||||||
17 | Section 35. Regulations. The State Treasurer shall adopt | ||||||
18 | such regulations and procedures as may be necessary to | ||||||
19 | implement the Program. As part of the regulation development | ||||||
20 | process, the State Treasurer shall consult with employers, | ||||||
21 | workers, private sector retirement plan administrators and | ||||||
22 | providers, and any other individuals or entities that it | ||||||
23 | determines relevant to the development of an effective and | ||||||
24 | efficient method for operating the Program. Regulations shall |
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1 | be adopted, including, at a minimum, requirements of | ||||||
2 | enrollment, contribution and investment requirements, as | ||||||
3 | necessary to implement and administer the Program. | ||||||
4 | Section 40. Liability. Neither the State of Illinois nor | ||||||
5 | any State board, commission, or agency, or any officer, | ||||||
6 | employee, or member of the same shall be liable for any loss or | ||||||
7 | deficiency resulting from investment selected by an enrollee. | ||||||
8 | An employer shall not be liable for any loss or deficiency | ||||||
9 | resulting from making default payroll deductions or default | ||||||
10 | investment decisions on behalf of an employee. | ||||||
11 | Section 45. Audits and reports. The accounts and records of | ||||||
12 | the State Treasurer showing the receipt and disbursement of | ||||||
13 | funds, from whatever source derived, in connection with the | ||||||
14 | Program be available for audit on as frequent a basis as | ||||||
15 | prescribed by regulations enacted under this Act. The State | ||||||
16 | Treasurer shall issue an annual report on the status of the | ||||||
17 | Program prior to December 1 of each year.
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18 | Section 99. Effective date. This Act takes effect upon | ||||||
19 | becoming law.
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