Illinois General Assembly - Full Text of SB1844
Illinois General Assembly

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Full Text of SB1844  97th General Assembly




State of Illinois
2011 and 2012


Introduced 2/9/2011, by Sen. Iris Y. Martinez


New Act

    Creates the Illinois Automatic IRA Program Act. Provides that the Illinois Automatic IRA Program shall be administered by the State Treasurer and that the Treasurer shall adopt regulations to implement the Program. Allows employees of certain employers that have not offered a qualified retirement plan for 2 years to set aside a percentage of their wages to be deposited into an IRA trust fund administered by the State Treasurer's office. Sets minimum requirements for the operation of the Program. Sets forth duties and authority of the State Treasurer in relation to the Program. Limits State and employer liability. Contains provisions regarding audits and reports. Effective immediately.

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SB1844LRB097 06692 AEK 46779 b

1    AN ACT concerning employment.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Illinois Automatic IRA Program Act.
6    Section 5. Definitions. As used in this Act, unless the
7context requires a different meaning:
8    "Compensation" means remuneration paid to a participant
9for services rendered to his or her employer.
10    "Employee" means any individual who performs or performed
11any service on behalf of a business operating in the State of
13    "Employer" means any business operating the State of
14Illinois for whom an individual performs or performed any
15service as an employee and that has more than 10 and less than
16100 employees and that does not and has not for the previous 2
17years offered a qualified retirement plan to its employees.
18    "Enrollee" means any employee who is enrolled in the
20    "Fund" means the Illinois Automatic IRA Program Fund.
21    "IRA" means an individual retirement account under Section
22408 of the Internal Revenue Code.
23    "Participating employer" means any qualified small



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1employer 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
4State of Illinois that (i) employed at least 10 employees
5during the previous calendar year, (ii) has been in business
6for a period of at least 2 years after the enactment of this
7Act, (iii) did not offer a qualified retirement plan,
8including, but not limited to, a plan qualified under Section
9401(a), Section 401(k), Section 403(a), Section 403(b),
10Section 408(k), Section 408(p), or Section 457(b) of the
11Internal Revenue Code for the 2 years prior to the effective
12date of this Act.
13    Section 10. Establishment of Illinois Automatic IRA
14Program. There is hereby established a retirement savings
15program known as the Illinois Automatic IRA Program to be
16administered by the State Treasurer with the intent of
17promoting greater retirement savings for private sector
18employees 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
21Fund to finance the program created by this Act. The assets of
22the Fund shall be administered by the State Treasurer's office
23as trust funds and shall be used exclusively for the purposes
24of administering the Program, including the design and



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1qualification of the Program, supporting the administrative
2cost of establishing the Program and providing information
3about the Program.
4    (b) The Fund shall include the individual accounts of
5enrollees, which shall be accounted for as individual accounts.
6    (c) Moneys in the Fund shall consist of moneys received
7from enrollees and participating employers pursuant to
8automatic payroll deductions and contributions to savings made
9under this Act, grants from the United States government and
10its agencies and instrumentalities, and any other available
11sources of funds, public or private. Interest and income earned
12from the investment of such funds shall remain in the Fund and
13be credited to it.
14    Section 20. Operation of Program.
15    (a) The Program shall be administered by the State
16Treasurer, or his or her designee, and prior to accepting any
17enrollees or funds the State Treasurer shall design a plan of
18operation for the Program, which plan of operation shall be
19approved by the Internal Revenue Service to offer the Program
20to enrollees on a tax-qualified basis. The Program shall
21include an option for enrollees to roll pre-tax contributions
22into an individual retirement account or other eligible
23retirement plan after ceasing participation in the Program.
24    (b) In designing the plan of operation for the Program, the
25State Treasurer shall consult with employers, workers, private



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1sector retirement plan administrators and providers, and any
2other persons that the State Treasurer determines relevant to
3the development of an effective and efficient method of
4operating the Program.
5    (c) The plan of operation for the Program shall include, at
6a 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
19State Treasurer shall have the authority and responsibility to
20carry 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
15small employers shall automatically enroll their employees in
16the Program and provide payroll deductions for such employees.
17    Section 35. Regulations. The State Treasurer shall adopt
18such regulations and procedures as may be necessary to
19implement the Program. As part of the regulation development
20process, the State Treasurer shall consult with employers,
21workers, private sector retirement plan administrators and
22providers, and any other individuals or entities that it
23determines relevant to the development of an effective and
24efficient method for operating the Program. Regulations shall



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1be adopted, including, at a minimum, requirements of
2enrollment, contribution and investment requirements, as
3necessary to implement and administer the Program.
4    Section 40. Liability. Neither the State of Illinois nor
5any State board, commission, or agency, or any officer,
6employee, or member of the same shall be liable for any loss or
7deficiency resulting from investment selected by an enrollee.
8An employer shall not be liable for any loss or deficiency
9resulting from making default payroll deductions or default
10investment decisions on behalf of an employee.
11    Section 45. Audits and reports. The accounts and records of
12the State Treasurer showing the receipt and disbursement of
13funds, from whatever source derived, in connection with the
14Program be available for audit on as frequent a basis as
15prescribed by regulations enacted under this Act. The State
16Treasurer shall issue an annual report on the status of the
17Program prior to December 1 of each year.
18    Section 99. Effective date. This Act takes effect upon
19becoming law.