Full Text of SB2758 98th General Assembly
SB2758enr 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning State government.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 1. Short title. This Act may be cited as the | 5 | | Illinois Secure Choice Savings Program Act. | 6 | | Section 5. Definitions. Unless the context requires a | 7 | | different meaning or as expressly provided in this Section, all | 8 | | terms shall have the same meaning as when used in a comparable | 9 | | context in the Internal Revenue Code. As used in this Act: | 10 | | "Board" means the Illinois Secure Choice Savings Board | 11 | | established under this Act. | 12 | | "Department" means the Department of Revenue. | 13 | | "Director" means the Director of Revenue. | 14 | | "Employee" means any individual who is 18 years of age or | 15 | | older, who is employed by an employer, and who has wages that | 16 | | are allocable to Illinois during a calendar year under the | 17 | | provisions of Section 304(a)(2)(B) of the Illinois Income Tax | 18 | | Act. | 19 | | "Employer" means a person or entity engaged in a business, | 20 | | industry, profession, trade, or other enterprise in Illinois, | 21 | | whether for profit or not for profit, that (i) has at no time | 22 | | during the previous calendar year employed fewer than 25 | 23 | | employees in the State, (ii) has been in business at least 2 |
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| 1 | | years, and (iii) has not offered a qualified retirement plan, | 2 | | including, but not limited to, a plan qualified under Section | 3 | | 401(a), Section 401(k), Section 403(a), Section 403(b), | 4 | | Section 408(k), Section 408(p), or Section 457(b) of the | 5 | | Internal Revenue Code of 1986 in the preceding 2 years. | 6 | | "Enrollee" means any employee who is enrolled in the | 7 | | Program.
| 8 | | "Fund" means the Illinois Secure Choice Savings Program | 9 | | Fund.
| 10 | | "Internal Revenue Code" means Internal Revenue Code of | 11 | | 1986, or any successor law, in effect for the calendar year.
| 12 | | "IRA" means a Roth IRA (individual retirement account) | 13 | | under Section 408A of the Internal Revenue Code.
| 14 | | "Participating employer" means an employer or small | 15 | | employer that provides a payroll deposit retirement savings | 16 | | arrangement as provided for by this Act for its employees who | 17 | | are enrollees in the Program. | 18 | | "Payroll deposit retirement savings arrangement" means an | 19 | | arrangement by which a participating employer allows enrollees | 20 | | to remit payroll deduction contributions to the Program. | 21 | | "Program" means the Illinois Secure Choice Savings | 22 | | Program.
| 23 | | "Small employer" means a person or entity engaged in a | 24 | | business, industry, profession, trade, or other enterprise in | 25 | | Illinois, whether for profit or not for profit, that (i) | 26 | | employed less than 25 employees at any one time in the State |
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| 1 | | throughout the previous calendar year, or (ii) has been in | 2 | | business less than 2 years, or both items (i) and (ii), but | 3 | | that notifies the Department that it is interested in being a | 4 | | participating employer. | 5 | | "Wages" means any compensation within the meaning of | 6 | | Section 219(f)(1) of the Internal Revenue Code that is received | 7 | | by an enrollee from a participating employer during the | 8 | | calendar year.
| 9 | | Section 10. Establishment of Illinois Secure Choice | 10 | | Savings Program. A retirement savings program in the form of an | 11 | | automatic enrollment payroll deduction IRA, known as the | 12 | | Illinois Secure Choice Savings Program, is hereby established | 13 | | and shall be administered by the Board for the purpose of | 14 | | promoting greater retirement savings for private-sector | 15 | | employees in a convenient, low-cost, and portable manner. | 16 | | Section 15. Illinois Secure Choice Savings Program Fund. | 17 | | (a) The Illinois Secure Choice Savings Program Fund is | 18 | | hereby established as a trust outside of the State treasury, | 19 | | with the Board created in Section 20 as its trustee. The Fund | 20 | | shall include the individual retirement accounts of enrollees, | 21 | | which shall be accounted for as individual accounts. Moneys in | 22 | | the Fund shall consist of moneys received from enrollees and | 23 | | participating employers pursuant to automatic payroll | 24 | | deductions and contributions to savings made under this Act. |
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| 1 | | The Fund shall be operated in a manner determined by the Board, | 2 | | provided that the Fund is operated so that the accounts of | 3 | | enrollees established under the Program meet the requirements | 4 | | for IRAs under the Internal Revenue Code. | 5 | | (b) The amounts deposited in the Fund shall not constitute | 6 | | property of the State and the Fund shall not be construed to be | 7 | | a department, institution, or agency of the State. Amounts on | 8 | | deposit in the Fund shall not be commingled with State funds | 9 | | and the State shall have no claim to or against, or interest | 10 | | in, such funds. | 11 | | Section 16. Illinois Secure Choice Administrative Fund. | 12 | | The Illinois Secure Choice Administrative Fund | 13 | | ("Administrative Fund") is created as a nonappropriated | 14 | | separate and apart trust fund in the State Treasury. The Board | 15 | | shall use moneys in the Administrative Fund to pay for | 16 | | administrative expenses it incurs in the performance of its | 17 | | duties under this Act. The Board shall use moneys in the | 18 | | Administrative Fund to cover start-up administrative expenses | 19 | | it incurs in the performance of its duties under this Act. The | 20 | | Administrative Fund may receive any grants or other moneys | 21 | | designated for administrative purposes from the State, or any | 22 | | unit of federal or local government, or any other person, firm, | 23 | | partnership, or corporation. Any interest earnings that are | 24 | | attributable to moneys in the Administrative Fund must be | 25 | | deposited into the Administrative Fund. |
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| 1 | | Section 20. Composition of the Board. There is created the | 2 | | Illinois Secure Choice Savings Board.
| 3 | | (a) The Board shall consist of the following 7 members: | 4 | | (1) the State Treasurer, or his or her designee, who | 5 | | shall serve as chair;
| 6 | | (2) the State Comptroller, or his or her designee;
| 7 | | (3) the Director of the Governor's Office of Management | 8 | | and Budget, or his or her designee;
| 9 | | (4) two public representatives with expertise in | 10 | | retirement savings plan administration or investment, or | 11 | | both, appointed by the Governor;
| 12 | | (5) a representative of participating employers, | 13 | | appointed by the Governor; and
| 14 | | (6) a representative of enrollees, appointed by the | 15 | | Governor.
| 16 | | (b) Members of the Board shall serve without compensation | 17 | | but may be reimbursed for necessary travel expenses incurred in | 18 | | connection with their Board duties from funds appropriated for | 19 | | the purpose. | 20 | | (c) The initial appointments for the Governor's appointees | 21 | | shall be as follows: one public representative for 4 years; one | 22 | | public representative for 2 years; the representative of | 23 | | participating employers for 3 years; and the representative of | 24 | | enrollees for 1 year. Thereafter, all of the Governor's | 25 | | appointees shall be for terms of 4 years. |
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| 1 | | (d) A vacancy in the term of an appointed Board member | 2 | | shall be filled for the balance of the unexpired term in the | 3 | | same manner as the original appointment. | 4 | | (e) Each appointment by the Governor shall be subject to | 5 | | approval by the State Treasurer, who, upon approval, shall | 6 | | certify his or her approval to the Secretary of State. Each | 7 | | appointment by the Governor shall also be subject to the advice | 8 | | and consent of the Senate. In case of a vacancy during a recess | 9 | | of the Senate, the Governor shall make a temporary appointment | 10 | | until the next meeting of the Senate, at which time the | 11 | | Governor shall appoint some person to fill the office. If the | 12 | | State Treasurer does not approve or disapprove the appointment | 13 | | by the Governor within 60 session days after receipt thereof, | 14 | | the person shall be deemed to have been approved by the State | 15 | | Treasurer. Any appointment that has not been acted upon by the | 16 | | Senate within 60 session days after the receipt thereof shall | 17 | | be deemed to have received the advice and consent of the | 18 | | Senate. | 19 | | (f) Each Board member, prior to assuming office, shall take | 20 | | an oath that he or she will diligently and honestly administer | 21 | | the affairs of the Board and that he or she will not knowingly | 22 | | violate or willingly permit to be violated any of the | 23 | | provisions of law applicable to the Program. The oath shall be | 24 | | certified by the officer before whom it is taken and | 25 | | immediately filed in the office of the Secretary of State.
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| 1 | | Section 25. Fiduciary Duty. The Board, the individual | 2 | | members of the Board, the trustee appointed under subsection | 3 | | (b) of Section 30, any other agents appointed or engaged by the | 4 | | Board, and all persons serving as Program staff shall discharge | 5 | | their duties with respect to the Program solely in the interest | 6 | | of the Program's enrollees and beneficiaries as follows:
| 7 | | (1) for the exclusive purposes of providing benefits to | 8 | | enrollees and beneficiaries and defraying reasonable | 9 | | expenses of administering the Program;
| 10 | | (2) by investing with the care, skill, prudence, and | 11 | | diligence under the prevailing circumstances that a | 12 | | prudent person acting in a like capacity and familiar with | 13 | | those matters would use in the conduct of an enterprise of | 14 | | a like character and with like aims; and
| 15 | | (3) by using any contributions paid by employees and | 16 | | employers into the trust exclusively for the purpose of | 17 | | paying benefits to the enrollees of the Program, for the | 18 | | cost of administration of the Program, and for investments | 19 | | made for the benefit of the Program.
| 20 | | Section 30. Duties of the Board. In addition to the other | 21 | | duties and responsibilities stated in this Act, the Board | 22 | | shall:
| 23 | | (a) Cause the Program to be designed, established and | 24 | | operated in a manner that:
| 25 | | (1) accords with best practices for retirement savings |
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| 1 | | vehicles;
| 2 | | (2) maximizes participation, savings, and sound | 3 | | investment practices; | 4 | | (3) maximizes simplicity, including ease of | 5 | | administration for participating employers and enrollees; | 6 | | (4) provides an efficient product to enrollees by | 7 | | pooling investment funds;
| 8 | | (5) ensures the portability of benefits; and
| 9 | | (6) provides for the deaccumulation of enrollee assets | 10 | | in a manner that maximizes financial security in | 11 | | retirement.
| 12 | | (b) Appoint a trustee to the IRA Fund in compliance with | 13 | | Section 408 of the Internal Revenue Code. | 14 | | (c) Explore and establish investment options, subject to | 15 | | Section 45 of this Act, that offer employees returns on | 16 | | contributions and the conversion of individual retirement | 17 | | savings account balances to secure retirement income without | 18 | | incurring debt or liabilities to the State.
| 19 | | (d) Establish the process by which interest, investment | 20 | | earnings, and investment losses are allocated to individual | 21 | | program accounts on a pro rata basis and are computed at the | 22 | | interest rate on the balance of an individual's account.
| 23 | | (e) Make and enter into contracts necessary for the | 24 | | administration of the Program and Fund, including, but not | 25 | | limited to, retaining and contracting with investment | 26 | | managers, private financial institutions, other financial and |
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| 1 | | service providers, consultants, actuaries, counsel, auditors, | 2 | | third-party administrators, and other professionals as | 3 | | necessary.
| 4 | | (e-5) Conduct a review of the performance of any investment | 5 | | vendors every 4 years, including, but not limited to, a review | 6 | | of returns, fees, and customer service. A copy of reviews | 7 | | conducted under this subsection (e-5) shall be posted to the | 8 | | Board's Internet website. | 9 | | (f) Determine the number and duties of staff members needed | 10 | | to administer the Program and assemble such a staff, including, | 11 | | as needed, employing staff, appointing a Program | 12 | | administrator, and entering into contracts with the State | 13 | | Treasurer to make employees of the State Treasurer's Office | 14 | | available to administer the Program.
| 15 | | (g) Cause moneys in the Fund to be held and invested as | 16 | | pooled investments described in Section 45 of this Act, with a | 17 | | view to achieving cost savings through efficiencies and | 18 | | economies of scale.
| 19 | | (h) Evaluate and establish the process by which an enrollee | 20 | | is able to contribute a portion of his or her wages to the | 21 | | Program for automatic deposit of those contributions and the | 22 | | process by which the participating employer provides a payroll | 23 | | deposit retirement savings arrangement to forward those | 24 | | contributions and related information to the Program, | 25 | | including, but not limited to, contracting with financial | 26 | | service companies and third-party administrators with the |
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| 1 | | capability to receive and process employee information and | 2 | | contributions for payroll deposit retirement savings | 3 | | arrangements or similar arrangements.
| 4 | | (i) Design and establish the process for enrollment under | 5 | | Section 60 of this Act, including the process by which an | 6 | | employee can opt not to participate in the Program, select a | 7 | | contribution level, select an investment option, and terminate | 8 | | participation in the Program.
| 9 | | (j) Evaluate and establish the process by which an | 10 | | individual may voluntarily enroll in and make contributions to | 11 | | the Program.
| 12 | | (k) Accept any grants, appropriations, or other moneys from | 13 | | the State, any unit of federal, State, or local government, or | 14 | | any other person, firm, partnership, or corporation solely for | 15 | | deposit into the Fund, whether for investment or administrative | 16 | | purposes.
| 17 | | (l) Evaluate the need for, and procure as needed, insurance | 18 | | against any and all loss in connection with the property, | 19 | | assets, or activities of the Program, and indemnify as needed | 20 | | each member of the Board from personal loss or liability | 21 | | resulting from a member's action or inaction as a member of the | 22 | | Board.
| 23 | | (m) Make provisions for the payment of administrative costs | 24 | | and expenses for the creation, management, and operation of the | 25 | | Program, including the costs associated with subsection (b) of | 26 | | Section 20 of this Act, subsections (e), (f), (h), and (l) of |
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| 1 | | this Section, subsection (b) of Section 45 of this Act, | 2 | | subsection (a) of Section 80 of this Act, and subsection (n) of | 3 | | Section 85 of this Act. Subject to appropriation, the State may | 4 | | pay administrative costs associated with the creation and | 5 | | management of the Program until sufficient assets are available | 6 | | in the Fund for that purpose. Thereafter, all administrative | 7 | | costs of the Fund, including repayment of any start-up funds | 8 | | provided by the State, shall be paid only out of moneys on | 9 | | deposit therein. However, private funds or federal funding | 10 | | received under subsection (k) of Section 30 of this Act in | 11 | | order to implement the Program until the Fund is | 12 | | self-sustaining shall not be repaid unless those funds were | 13 | | offered contingent upon the promise of such repayment. The | 14 | | Board shall keep annual administrative expenses as low as | 15 | | possible, but in no event shall they exceed 0.75% of the total | 16 | | trust balance.
| 17 | | (n) Allocate administrative fees to individual retirement | 18 | | accounts in the Program on a pro rata basis.
| 19 | | (o) Set minimum and maximum contribution levels in | 20 | | accordance with limits established for IRAs by the Internal | 21 | | Revenue Code.
| 22 | | (p) Facilitate education and outreach to employers and | 23 | | employees.
| 24 | | (q) Facilitate compliance by the Program with all | 25 | | applicable requirements for the Program under the Internal | 26 | | Revenue Code, including tax qualification requirements or any |
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| 1 | | other applicable law and accounting requirements.
| 2 | | (r) Carry out the duties and obligations of the Program in | 3 | | an effective, efficient, and low-cost manner.
| 4 | | (s) Exercise any and all other powers reasonably necessary | 5 | | for the effectuation of the purposes, objectives, and | 6 | | provisions of this Act pertaining to the Program.
| 7 | | (t) Deposit into the Illinois Secure Choice Administrative | 8 | | Fund all grants, gifts, donations, fees, and earnings from | 9 | | investments from the Illinois Secure Choice Savings Program | 10 | | Fund that are used to recover administrative costs. All | 11 | | expenses of the Board shall be paid from the Illinois Secure | 12 | | Choice Administrative Fund. | 13 | | Section 35. Risk Management. The Board shall annually | 14 | | prepare and adopt a written statement of investment policy that | 15 | | includes a risk management and oversight program. This | 16 | | investment policy shall prohibit the Board, Program, and Fund | 17 | | from borrowing for investment purposes. The risk management and | 18 | | oversight program shall be designed to ensure that an effective | 19 | | risk management system is in place to monitor the risk levels | 20 | | of the Program and Fund portfolio, to ensure that the risks | 21 | | taken are prudent and properly managed, to provide an | 22 | | integrated process for overall risk management, and to assess | 23 | | investment returns as well as risk to determine if the risks | 24 | | taken are adequately compensated compared to applicable | 25 | | performance benchmarks and standards. The Board shall consider |
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| 1 | | the statement of investment policy and any changes in the | 2 | | investment policy at a public hearing. | 3 | | Section 40. Investment firms.
| 4 | | (a) The Board shall engage, after an open bid process, an | 5 | | investment manager or managers to invest the Fund and any other | 6 | | assets of the Program. Moneys in the Fund may be invested or | 7 | | reinvested by the State Treasurer's Office or may be invested | 8 | | in whole or in part under contract with the State Board of | 9 | | Investment, private investment managers, or both, as selected | 10 | | by the Board. In selecting the investment manager or managers, | 11 | | the Board shall take into consideration and give weight to the | 12 | | investment manager's fees and charges in order to reduce the | 13 | | Program's administrative expenses.
| 14 | | (b) The investment manager or managers shall comply with | 15 | | any and all applicable federal and state laws, rules, and | 16 | | regulations, as well as any and all rules, policies, and | 17 | | guidelines promulgated by the Board with respect to the Program | 18 | | and the investment of the Fund, including, but not limited to, | 19 | | the investment policy.
| 20 | | (c) The investment manager or managers shall provide such | 21 | | reports as the Board deems necessary for the Board to oversee | 22 | | each investment manager's performance and the performance of | 23 | | the Fund. | 24 | | Section 45. Investment options.
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| 1 | | (a) The Board shall establish as an investment option a | 2 | | life-cycle fund with a target date based upon the age of the | 3 | | enrollee. This shall be the default investment option for | 4 | | enrollees who fail to elect an investment option unless and | 5 | | until the Board designates by rule a new investment option as | 6 | | the default as described in subsection (c) of this Section.
| 7 | | (b) The Board may also establish any or all of the | 8 | | following additional investment options:
| 9 | | (1) a conservative principal protection fund;
| 10 | | (2) a growth fund; | 11 | | (3) a secure return fund whose primary objective is the | 12 | | preservation of the safety of principal and the provision | 13 | | of a stable and low-risk rate of return; if the Board | 14 | | elects to establish a secure return fund, the Board may | 15 | | procure any insurance, annuity, or other product to insure | 16 | | the value of individuals' accounts and guarantee a rate of | 17 | | return; the cost of such funding mechanism shall be paid | 18 | | out of the Fund; under no circumstances shall the Board, | 19 | | Program, Fund, the State, or any participating employer | 20 | | assume any liability for investment or actuarial risk;
the | 21 | | Board shall determine whether to establish such investment | 22 | | options based upon an analysis of their cost, risk profile, | 23 | | benefit level, feasibility, and ease of implementation;
| 24 | | (4) an annuity fund. | 25 | | (c) If the Board elects to establish a secure return fund, | 26 | | the Board shall then determine whether such option shall |
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| 1 | | replace the target date or life-cycle fund as the default | 2 | | investment option for enrollees who do not elect an investment | 3 | | option. In making such determination, the Board shall consider | 4 | | the cost, risk profile, benefit level, and ease of enrollment | 5 | | in the secure return fund. The Board may at any time thereafter | 6 | | revisit this question and, based upon an analysis of these | 7 | | criteria, establish either the secure return fund or the | 8 | | life-cycle fund as the default for enrollees who do not elect | 9 | | an investment option.
| 10 | | Section 50. Benefits. Interest, investment earnings, and | 11 | | investment losses shall be allocated to individual Program | 12 | | accounts as established by the Board under subsection (d) of | 13 | | Section 30 of this Act. An individual's retirement savings | 14 | | benefit under the Program shall be an amount equal to the | 15 | | balance in the individual's Program account on the date the | 16 | | retirement savings benefit becomes payable. The State shall | 17 | | have no liability for the payment of any benefit to any | 18 | | participant in the Program.
| 19 | | Section 55. Employer and employee information packets and | 20 | | disclosure forms.
| 21 | | (a) Prior to the opening of the Program for enrollment, the | 22 | | Board shall design and disseminate to all employers an employer | 23 | | information packet and an employee information packet, which | 24 | | shall include background information on the Program, |
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| 1 | | appropriate disclosures for employees, and information | 2 | | regarding the vendor Internet website described in subsection | 3 | | (i) of Section 60 of this Act. | 4 | | (b) The Board shall provide for the contents of both the | 5 | | employee information packet and the employer information | 6 | | packet. | 7 | | (c) The employee information packet shall include a | 8 | | disclosure form. The disclosure form shall explain, but not be | 9 | | limited to, all of the following:
| 10 | | (1) the benefits and risks associated with making | 11 | | contributions to the Program; | 12 | | (2) the mechanics of how to make contributions to the | 13 | | Program;
| 14 | | (3) how to opt out of the Program;
| 15 | | (4) how to participate in the Program with a level of | 16 | | employee contributions other than 3%;
| 17 | | (5) the process for withdrawal of retirement savings;
| 18 | | (6) how to obtain additional information about the | 19 | | Program;
| 20 | | (7) that employees seeking financial advice should | 21 | | contact financial advisors, that participating employers | 22 | | are not in a position to provide financial advice, and that | 23 | | participating employers are not liable for decisions | 24 | | employees make pursuant to this Act;
| 25 | | (8) that the Program is not an employer-sponsored | 26 | | retirement plan; and
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| 1 | | (9) that the Program Fund is not guaranteed by the | 2 | | State.
| 3 | | (d) The employee information packet shall also include a | 4 | | form for an employee to note his or her decision to opt out of | 5 | | participation in the Program or elect to participate with a | 6 | | level of employee contributions other than 3%.
| 7 | | (e) Participating employers shall supply the employee | 8 | | information packet to employees upon launch of the Program. | 9 | | Participating employers shall supply the employee information | 10 | | packet to new employees at the time of hiring, and new | 11 | | employees may opt out of participation in the Program or elect | 12 | | to participate with a level of employee contributions other | 13 | | than 3% at that time.
| 14 | | Section 60. Program implementation and enrollment. Except | 15 | | as otherwise provided in Section 93 of this Act, the Program | 16 | | shall be implemented, and enrollment of employees shall begin, | 17 | | within 24 months after the effective date of this Act. The | 18 | | provisions of this Section shall be in force after the Board | 19 | | opens the Program for enrollment.
| 20 | | (a) Each employer shall establish a payroll deposit | 21 | | retirement savings arrangement to allow each employee to | 22 | | participate in the Program at most nine months after the Board | 23 | | opens the Program for enrollment.
| 24 | | (b) Employers shall automatically enroll in the Program | 25 | | each of their employees who has not opted out of participation |
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| 1 | | in the Program using the form described in subsection (c) of | 2 | | Section 55 of this Act and shall provide payroll deduction | 3 | | retirement savings arrangements for such employees and | 4 | | deposit, on behalf of such employees, these funds into the | 5 | | Program. Small employers may, but are not required to, provide | 6 | | payroll deduction retirement savings arrangements for each | 7 | | employee who elects to participate in the Program. | 8 | | (c) Enrollees shall have the ability to select a | 9 | | contribution level into the Fund. This level may be expressed | 10 | | as a percentage of wages or as a dollar amount up to the | 11 | | deductible amount for the enrollee's taxable year under Section | 12 | | 219(b)(1)(A) of the Internal Revenue Code. Enrollees may change | 13 | | their contribution level at any time, subject to rules | 14 | | promulgated by the Board. If an enrollee fails to select a | 15 | | contribution level using the form described in subsection (c) | 16 | | of Section 55 of this Act, then he or she shall contribute 3% | 17 | | of his or her wages to the Program, provided that such | 18 | | contributions shall not cause the enrollee's total | 19 | | contributions to IRAs for the year to exceed the deductible | 20 | | amount for the enrollee's taxable year under Section | 21 | | 219(b)(1)(A) of the Internal Revenue Code.
| 22 | | (d) Enrollees may select an investment option from the | 23 | | permitted investment options listed in Section 45 of this Act. | 24 | | Enrollees may change their investment option at any time, | 25 | | subject to rules promulgated by the Board. In the event that an | 26 | | enrollee fails to select an investment option, that enrollee |
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| 1 | | shall be placed in the investment option selected by the Board | 2 | | as the default under subsection (c) of Section 45 of this Act. | 3 | | If the Board has not selected a default investment option under | 4 | | subsection (c) of Section 45 of this Act, then an enrollee who | 5 | | fails to select an investment option shall be placed in the | 6 | | life-cycle fund investment option.
| 7 | | (e) Following initial implementation of the Program | 8 | | pursuant to this Section, at least once every year, | 9 | | participating employers shall designate an open enrollment | 10 | | period during which employees who previously opted out of the | 11 | | Program may enroll in the Program.
| 12 | | (f) An employee who opts out of the Program who | 13 | | subsequently wants to participate through the participating | 14 | | employer's payroll deposit retirement savings arrangement may | 15 | | only enroll during the participating employer's designated | 16 | | open enrollment period or if permitted by the participating | 17 | | employer at an earlier time.
| 18 | | (g) Employers shall retain the option at all times to set | 19 | | up any type of employer-sponsored retirement plan, such as a | 20 | | defined benefit plan or a 401(k), Simplified Employee Pension | 21 | | (SEP) plan, or Savings Incentive Match Plan for Employees | 22 | | (SIMPLE) plan, or to offer an automatic enrollment payroll | 23 | | deduction IRA, instead of having a payroll deposit retirement | 24 | | savings arrangement to allow employee participation in the | 25 | | Program.
| 26 | | (h) An employee may terminate his or her participation in |
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| 1 | | the Program at any time in a manner prescribed by the Board.
| 2 | | (i) The Board shall establish and maintain an Internet | 3 | | website designed to assist employers in identifying private | 4 | | sector providers of retirement arrangements that can be set up | 5 | | by the employer rather than allowing employee participation in | 6 | | the Program under this Act; however, the Board shall only | 7 | | establish and maintain an Internet website under this | 8 | | subsection if there is sufficient interest in such an Internet | 9 | | website by private sector providers and if the private sector | 10 | | providers furnish the funding necessary to establish and | 11 | | maintain the Internet website. The Board must provide public | 12 | | notice of the availability of and the process for inclusion on | 13 | | the Internet website before it becomes publicly available. This | 14 | | Internet website must be available to the public before the | 15 | | Board opens the Program for enrollment, and the Internet | 16 | | website address must be included on any Internet website | 17 | | posting or other materials regarding the Program offered to the | 18 | | public by the Board. | 19 | | Section 65. Payments. Employee contributions deducted by | 20 | | the participating employer through payroll deduction shall be | 21 | | paid by the participating employer to the Fund using one or | 22 | | more payroll deposit retirement savings arrangements | 23 | | established by the Board under subsection (h) of Section 30 of | 24 | | this Act, either:
| 25 | | (1) on or before the last day of the month following |
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| 1 | | the month in which the compensation otherwise would have | 2 | | been payable to the employee in cash; or | 3 | | (2) before such later deadline prescribed by the Board | 4 | | for making such payments, but not later than the due date | 5 | | for the deposit of tax required to be deducted and withheld | 6 | | relating to collection of income tax at source on wages or | 7 | | for the deposit of tax required to be paid under the | 8 | | unemployment insurance system for the payroll period to | 9 | | which such payments relate.
| 10 | | Section 70. Duty and liability of the State.
| 11 | | (a) The State shall have no duty or liability to any party | 12 | | for the payment of any retirement savings benefits accrued by | 13 | | any individual under the Program. Any financial liability for | 14 | | the payment of retirement savings benefits in excess of funds | 15 | | available under the Program shall be borne solely by the | 16 | | entities with whom the Board contracts to provide insurance to | 17 | | protect the value of the Program.
| 18 | | (b) No State board, commission, or agency, or any officer, | 19 | | employee, or member thereof is liable for any loss or | 20 | | deficiency resulting from particular investments selected | 21 | | under this Act, except for any liability that arises out of a | 22 | | breach of fiduciary duty under Section 25 of this Act.
| 23 | | Section 75. Duty and liability of participating employers.
| 24 | | (a) Participating employers shall not have any liability |
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| 1 | | for an employee's decision to participate in, or opt out of, | 2 | | the Program or for the investment decisions of the Board or of | 3 | | any enrollee.
| 4 | | (b) A participating employer shall not be a fiduciary, or | 5 | | considered to be a fiduciary, over the Program. A participating | 6 | | employer shall not bear responsibility for the administration, | 7 | | investment, or investment performance of the Program. A | 8 | | participating employer shall not be liable with regard to | 9 | | investment returns, Program design, and benefits paid to | 10 | | Program participants.
| 11 | | Section 80. Audit and reports.
| 12 | | (a) The Board shall annually submit: | 13 | | (1) an audited financial report, prepared in | 14 | | accordance with generally accepted accounting principles, | 15 | | on the operations of the Program during each calendar year | 16 | | by July 1 of the following year to the Governor, the | 17 | | Comptroller, the State Treasurer, and the General | 18 | | Assembly; and
| 19 | | (2) a report prepared by the Board, which shall | 20 | | include, but is not limited to, a summary of the benefits | 21 | | provided by the Program, including the number of enrollees | 22 | | in the Program, the percentage and amounts of investment | 23 | | options and rates of return, and such other information | 24 | | that is relevant to make a full, fair, and effective | 25 | | disclosure of the operations of the Program and the Fund. |
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| 1 | | The annual audit shall be made by an independent certified | 2 | | public accountant and shall include, but is not limited to, | 3 | | direct and indirect costs attributable to the use of outside | 4 | | consultants, independent contractors, and any other persons | 5 | | who are not State employees for the administration of the | 6 | | Program.
| 7 | | (b) In addition to any other statements or reports required | 8 | | by law, the Board shall provide periodic reports at least | 9 | | annually to participating employers, reporting the names of | 10 | | each enrollee employed by the participating employer and the | 11 | | amounts of contributions made by the participating employer on | 12 | | behalf of each employee during the reporting period, as well as | 13 | | to enrollees, reporting contributions and investment income | 14 | | allocated to, withdrawals from, and balances in their Program | 15 | | accounts for the reporting period. Such reports may include any | 16 | | other information regarding the Program as the Board may | 17 | | determine.
| 18 | | Section 85. Penalties.
| 19 | | (a) An employer who fails without reasonable cause to | 20 | | enroll an employee in the Program within the time prescribed | 21 | | under Section 60 of this Act shall be subject to a penalty | 22 | | equal to:
| 23 | | (1) $250 for each employee for each calendar year or | 24 | | portion of a calendar year during which the employee | 25 | | neither was enrolled in the Program nor had elected out of |
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| 1 | | participation in the Program; or
| 2 | | (2) for each calendar year beginning after the date a | 3 | | penalty has been assessed with respect to an employee, $500 | 4 | | for any portion of that calendar year during which such | 5 | | employee continues to be unenrolled without electing out of | 6 | | participation in the Program.
| 7 | | (b) After determining that an employer is subject to | 8 | | penalty under this Section for a calendar year, the Department | 9 | | shall issue a notice of proposed assessment to such employer, | 10 | | stating the number of employees for which the penalty is | 11 | | proposed under item (1) of subsection (a) of this Section and | 12 | | the number of employees for which the penalty is proposed under | 13 | | item (2) of subsection (a) of this Section for such calendar | 14 | | year, and the total amount of penalties proposed.
| 15 | | Upon the expiration of 90 days after the date on which a | 16 | | notice of proposed assessment was issued, the penalties | 17 | | specified therein shall be deemed assessed, unless the employer | 18 | | had filed a protest with the Department under subsection (c) of | 19 | | this Section.
| 20 | | If, within 90 days after the date on which it was issued, a | 21 | | protest of a notice of proposed assessment is filed under | 22 | | subsection (c) of this Section, the penalties specified therein | 23 | | shall be deemed assessed upon the date when the decision of the | 24 | | Department with respect to the protest becomes final. | 25 | | (c) A written protest against the proposed assessment shall | 26 | | be filed with the Department in such form as the Department may |
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| 1 | | by rule prescribe, setting forth the grounds on which such | 2 | | protest is based. If such a protest is filed within 90 days | 3 | | after the date the notice of proposed assessment is issued, the | 4 | | Department shall reconsider the proposed assessment and shall | 5 | | grant the employer a hearing. As soon as practicable after such | 6 | | reconsideration and hearing, the Department shall issue a | 7 | | notice of decision to the employer, setting forth the | 8 | | Department's findings of fact and the basis of decision. The | 9 | | decision of the Department shall become final: | 10 | | (1) if no action for review of the decision is | 11 | | commenced under the Administrative Review Law, on the date | 12 | | on which the time for commencement of such review has | 13 | | expired; or
| 14 | | (2) if a timely action for review of the decision is | 15 | | commenced under the Administrative Review Law, on the date | 16 | | all proceedings in court for the review of such assessment | 17 | | have terminated or the time for the taking thereof has | 18 | | expired without such proceedings being instituted.
| 19 | | (d) As soon as practicable after the penalties specified in | 20 | | a notice of proposed assessment are deemed assessed, the | 21 | | Department shall give notice to the employer liable for any | 22 | | unpaid portion of such assessment, stating the amount due and | 23 | | demanding payment. If an employer neglects or refuses to pay | 24 | | the entire liability shown on the notice and demand within 10 | 25 | | days after the notice and demand is issued, the unpaid amount | 26 | | of the liability shall be a lien in favor of the State of |
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| 1 | | Illinois upon all property and rights to property, whether real | 2 | | or personal,
belonging to the employer, and the provisions in | 3 | | the Illinois Income Tax Act regarding liens, levies and | 4 | | collection actions with regard to assessed and unpaid | 5 | | liabilities under that Act, including the periods for taking | 6 | | any action, shall apply.
| 7 | | (e) An employer who has overpaid a penalty assessed under | 8 | | this Section may file a claim for refund with the Department. A | 9 | | claim shall be in writing in such form as the Department may by | 10 | | rule prescribe and shall state the specific grounds upon which | 11 | | it is founded. As soon as practicable after a claim for refund | 12 | | is filed, the Department shall examine it and either issue a | 13 | | refund or issue a notice of denial. If such a protest is filed, | 14 | | the Department shall reconsider the denial and grant the | 15 | | employer a hearing. As soon as practicable after such | 16 | | reconsideration and hearing, the Department shall issue a | 17 | | notice of decision to the employer. The notice shall set forth | 18 | | briefly the Department's findings of fact and the basis of | 19 | | decision in each case decided in whole or in part adversely to | 20 | | the employer. A denial of a claim for refund becomes final 90 | 21 | | days after the date of issuance of the notice of the denial | 22 | | except for such amounts denied as to which the employer has | 23 | | filed a protest with the Department. If a protest has been | 24 | | timely filed, the decision of the Department shall become | 25 | | final:
| 26 | | (1) if no action for review of the decision is |
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| 1 | | commenced under the Administrative Review Law, on the date | 2 | | on which the time for commencement of such review has | 3 | | expired; or
| 4 | | (2) if a timely action for review of the decision is | 5 | | commenced under the Administrative Review Law, on the date | 6 | | all proceedings in court for the review of such assessment | 7 | | have terminated or the time for the taking thereof has | 8 | | expired without such proceedings being instituted.
| 9 | | (f) No notice of proposed assessment may be issued with | 10 | | respect to a calendar year after June 30 of the fourth | 11 | | subsequent calendar year. No claim for refund may be filed more | 12 | | than 1 year after the date of payment of the amount to be | 13 | | refunded.
| 14 | | (g) The provisions of the Administrative Review Law and the | 15 | | rules adopted pursuant to it shall apply to and govern all | 16 | | proceedings for the judicial review of final decisions of the | 17 | | Department in response to a protest filed by the employer under | 18 | | subsections (c) and (e) of this Section. Final decisions of the | 19 | | Department shall constitute "administrative decisions" as | 20 | | defined in Section 3-101 of the Code of Civil Procedure.
| 21 | | (h) Whenever notice is required by this Section, it may be | 22 | | given or issued by mailing it by first-class mail addressed to | 23 | | the person concerned at his or her last known address.
| 24 | | (i) All books and records and other papers and documents | 25 | | relevant to the determination of any penalty due under this | 26 | | Section shall, at all times during business hours of the day, |
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| 1 | | be subject to inspection by the Department or its duly | 2 | | authorized agents and employees.
| 3 | | (j) The Department may require employers to report | 4 | | information relevant to their compliance with this Act on | 5 | | returns otherwise due from the employers under Section 704A of | 6 | | the Illinois Income Tax Act and failure to provide the | 7 | | requested information on a return shall cause such return to be | 8 | | treated as unprocessable.
| 9 | | (k) For purposes of any provision of State law allowing the | 10 | | Department or any other agency of this State to offset an | 11 | | amount owed to a taxpayer against a tax liability of that | 12 | | taxpayer or allowing the Department to offset an overpayment of | 13 | | tax against any liability owed to the State, a penalty assessed | 14 | | under this Section shall be deemed to be a tax liability of the | 15 | | employer and any refund due to an employer shall be deemed to | 16 | | be an overpayment of tax of the employer.
| 17 | | (l) Except as provided in this subsection, all information | 18 | | received by the Department from returns filed by an employer or | 19 | | from any investigation conducted under the provisions of this | 20 | | Act shall be confidential, except for official purposes within | 21 | | the Department or pursuant to official procedures for | 22 | | collection of penalties assessed under this Act. Nothing | 23 | | contained in this subsection shall prevent the Director from | 24 | | publishing or making available to the public reasonable | 25 | | statistics concerning the operation of this Act wherein the | 26 | | contents of returns are grouped into aggregates in such a way |
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| 1 | | that the specific information of any employer shall not be | 2 | | disclosed. Nothing contained in this subsection shall prevent | 3 | | the Director from divulging information to an authorized | 4 | | representative of the employer or to any person pursuant to a | 5 | | request or authorization made by the employer or by an | 6 | | authorized representative of the employer.
| 7 | | (m) Civil penalties collected under this Act and fees | 8 | | collected pursuant to subsection (n) of this Section shall be | 9 | | deposited into the Tax Compliance and Administration Fund. The | 10 | | Department may, subject to appropriation, use moneys in the | 11 | | fund to cover expenses it incurs in the performance of its | 12 | | duties under this Act. Interest attributable to moneys in the | 13 | | Tax Compliance and Administration Fund shall be credited to the | 14 | | Tax Compliance and Administration Fund. | 15 | | (n) The Department may charge the Board a reasonable fee | 16 | | for its costs in performing its duties under this Section to | 17 | | the extent that such costs have not been recovered from | 18 | | penalties imposed under this Section.
| 19 | | (o) This Section shall become operative 9 months after the | 20 | | Board notifies the Director that the Program has been | 21 | | implemented. Upon receipt of such notification from the Board, | 22 | | the Department shall immediately post on its Internet website a | 23 | | notice stating that this Section is operative and the date that | 24 | | it is first operative.
This notice shall include a statement | 25 | | that rather than enrolling employees in the Program under this | 26 | | Act, employers may sponsor an alternative arrangement, |
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| 1 | | including, but not limited to, a defined benefit plan, 401(k) | 2 | | plan, a Simplified Employee Pension (SEP) plan, a Savings | 3 | | Incentive Match Plan for Employees (SIMPLE) plan, or an | 4 | | automatic payroll deduction IRA offered through a private | 5 | | provider. The Board shall provide a link to the vendor Internet | 6 | | website described in subsection (i) of Section 60 of this Act. | 7 | | Section 90. Rules. The Board and the Department shall | 8 | | adopt, in accordance with the Illinois Administrative | 9 | | Procedure Act, any rules that may be necessary to implement | 10 | | this Act. | 11 | | Section 93. Delayed implementation. If the Board does not | 12 | | obtain adequate funds to implement the Program within the time | 13 | | frame set forth under Section 60 of this Act, the Board may | 14 | | delay the implementation of the Program. | 15 | | Section 95. Federal considerations. The Board shall | 16 | | request in writing an opinion or ruling from the appropriate | 17 | | entity with jurisdiction over the federal Employee Retirement | 18 | | Income Security Act regarding the applicability of the federal | 19 | | Employee Retirement Income Security Act to the Program. The | 20 | | Board may not implement the Program if the IRA arrangements | 21 | | offered under the Program fail to qualify for the favorable | 22 | | federal income tax treatment ordinarily accorded to IRAs under | 23 | | the Internal Revenue Code or if it is determined that the |
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| 1 | | Program is an employee benefit plan and State or employer | 2 | | liability is established under the federal Employee Retirement | 3 | | Income Security Act. | 4 | | Section 500. The State Finance Act is amended by adding | 5 | | Section 5.855 as follows: | 6 | | (30 ILCS 105/5.855 new) | 7 | | Sec. 5.855. The Illinois Secure Choice Administrative | 8 | | Fund.
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