Illinois General Assembly - Full Text of SB2758
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Full Text of SB2758  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,
3represented in the General Assembly:
4    Section 1. Short title. This Act may be cited as the
5Illinois Secure Choice Savings Program Act.
6    Section 5. Definitions. Unless the context requires a
7different meaning or as expressly provided in this Section, all
8terms shall have the same meaning as when used in a comparable
9context in the Internal Revenue Code. As used in this Act:
10    "Board" means the Illinois Secure Choice Savings Board
11established 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
15older, who is employed by an employer, and who has wages that
16are allocable to Illinois during a calendar year under the
17provisions of Section 304(a)(2)(B) of the Illinois Income Tax
19    "Employer" means a person or entity engaged in a business,
20industry, profession, trade, or other enterprise in Illinois,
21whether for profit or not for profit, that (i) has at no time
22during the previous calendar year employed fewer than 25
23employees in the State, (ii) has been in business at least 2



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1years, and (iii) has not offered a qualified retirement plan,
2including, but not limited to, a plan qualified under Section
3401(a), Section 401(k), Section 403(a), Section 403(b),
4Section 408(k), Section 408(p), or Section 457(b) of the
5Internal Revenue Code of 1986 in the preceding 2 years.
6    "Enrollee" means any employee who is enrolled in the
8    "Fund" means the Illinois Secure Choice Savings Program
10    "Internal Revenue Code" means Internal Revenue Code of
111986, or any successor law, in effect for the calendar year.
12    "IRA" means a Roth IRA (individual retirement account)
13under Section 408A of the Internal Revenue Code.
14    "Participating employer" means an employer or small
15employer that provides a payroll deposit retirement savings
16arrangement as provided for by this Act for its employees who
17are enrollees in the Program.
18    "Payroll deposit retirement savings arrangement" means an
19arrangement by which a participating employer allows enrollees
20to remit payroll deduction contributions to the Program.
21    "Program" means the Illinois Secure Choice Savings
23    "Small employer" means a person or entity engaged in a
24business, industry, profession, trade, or other enterprise in
25Illinois, whether for profit or not for profit, that (i)
26employed less than 25 employees at any one time in the State



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1throughout the previous calendar year, or (ii) has been in
2business less than 2 years, or both items (i) and (ii), but
3that notifies the Department that it is interested in being a
4participating employer.
5    "Wages" means any compensation within the meaning of
6Section 219(f)(1) of the Internal Revenue Code that is received
7by an enrollee from a participating employer during the
8calendar year.
9    Section 10. Establishment of Illinois Secure Choice
10Savings Program. A retirement savings program in the form of an
11automatic enrollment payroll deduction IRA, known as the
12Illinois Secure Choice Savings Program, is hereby established
13and shall be administered by the Board for the purpose of
14promoting greater retirement savings for private-sector
15employees 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
18hereby established as a trust outside of the State treasury,
19with the Board created in Section 20 as its trustee. The Fund
20shall include the individual retirement accounts of enrollees,
21which shall be accounted for as individual accounts. Moneys in
22the Fund shall consist of moneys received from enrollees and
23participating employers pursuant to automatic payroll
24deductions and contributions to savings made under this Act.



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1The Fund shall be operated in a manner determined by the Board,
2provided that the Fund is operated so that the accounts of
3enrollees established under the Program meet the requirements
4for IRAs under the Internal Revenue Code.
5    (b) The amounts deposited in the Fund shall not constitute
6property of the State and the Fund shall not be construed to be
7a department, institution, or agency of the State. Amounts on
8deposit in the Fund shall not be commingled with State funds
9and the State shall have no claim to or against, or interest
10in, such funds.
11    Section 16. Illinois Secure Choice Administrative Fund.
12The Illinois Secure Choice Administrative Fund
13("Administrative Fund") is created as a nonappropriated
14separate and apart trust fund in the State Treasury. The Board
15shall use moneys in the Administrative Fund to pay for
16administrative expenses it incurs in the performance of its
17duties under this Act. The Board shall use moneys in the
18Administrative Fund to cover start-up administrative expenses
19it incurs in the performance of its duties under this Act. The
20Administrative Fund may receive any grants or other moneys
21designated for administrative purposes from the State, or any
22unit of federal or local government, or any other person, firm,
23partnership, or corporation. Any interest earnings that are
24attributable to moneys in the Administrative Fund must be
25deposited into the Administrative Fund.



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1    Section 20. Composition of the Board. There is created the
2Illinois 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
17but may be reimbursed for necessary travel expenses incurred in
18connection with their Board duties from funds appropriated for
19the purpose.
20    (c) The initial appointments for the Governor's appointees
21shall be as follows: one public representative for 4 years; one
22public representative for 2 years; the representative of
23participating employers for 3 years; and the representative of
24enrollees for 1 year. Thereafter, all of the Governor's
25appointees shall be for terms of 4 years.



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1    (d) A vacancy in the term of an appointed Board member
2shall be filled for the balance of the unexpired term in the
3same manner as the original appointment.
4    (e) Each appointment by the Governor shall be subject to
5approval by the State Treasurer, who, upon approval, shall
6certify his or her approval to the Secretary of State. Each
7appointment by the Governor shall also be subject to the advice
8and consent of the Senate. In case of a vacancy during a recess
9of the Senate, the Governor shall make a temporary appointment
10until the next meeting of the Senate, at which time the
11Governor shall appoint some person to fill the office. If the
12State Treasurer does not approve or disapprove the appointment
13by the Governor within 60 session days after receipt thereof,
14the person shall be deemed to have been approved by the State
15Treasurer. Any appointment that has not been acted upon by the
16Senate within 60 session days after the receipt thereof shall
17be deemed to have received the advice and consent of the
19    (f) Each Board member, prior to assuming office, shall take
20an oath that he or she will diligently and honestly administer
21the affairs of the Board and that he or she will not knowingly
22violate or willingly permit to be violated any of the
23provisions of law applicable to the Program. The oath shall be
24certified by the officer before whom it is taken and
25immediately filed in the office of the Secretary of State.



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1    Section 25. Fiduciary Duty. The Board, the individual
2members of the Board, the trustee appointed under subsection
3(b) of Section 30, any other agents appointed or engaged by the
4Board, and all persons serving as Program staff shall discharge
5their duties with respect to the Program solely in the interest
6of 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
21duties and responsibilities stated in this Act, the Board
23    (a) Cause the Program to be designed, established and
24operated 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
13Section 408 of the Internal Revenue Code.
14    (c) Explore and establish investment options, subject to
15Section 45 of this Act, that offer employees returns on
16contributions and the conversion of individual retirement
17savings account balances to secure retirement income without
18incurring debt or liabilities to the State.
19    (d) Establish the process by which interest, investment
20earnings, and investment losses are allocated to individual
21program accounts on a pro rata basis and are computed at the
22interest rate on the balance of an individual's account.
23    (e) Make and enter into contracts necessary for the
24administration of the Program and Fund, including, but not
25limited to, retaining and contracting with investment
26managers, private financial institutions, other financial and



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1service providers, consultants, actuaries, counsel, auditors,
2third-party administrators, and other professionals as
4    (e-5) Conduct a review of the performance of any investment
5vendors every 4 years, including, but not limited to, a review
6of returns, fees, and customer service. A copy of reviews
7conducted under this subsection (e-5) shall be posted to the
8Board's Internet website.
9    (f) Determine the number and duties of staff members needed
10to administer the Program and assemble such a staff, including,
11as needed, employing staff, appointing a Program
12administrator, and entering into contracts with the State
13Treasurer to make employees of the State Treasurer's Office
14available to administer the Program.
15    (g) Cause moneys in the Fund to be held and invested as
16pooled investments described in Section 45 of this Act, with a
17view to achieving cost savings through efficiencies and
18economies of scale.
19    (h) Evaluate and establish the process by which an enrollee
20is able to contribute a portion of his or her wages to the
21Program for automatic deposit of those contributions and the
22process by which the participating employer provides a payroll
23deposit retirement savings arrangement to forward those
24contributions and related information to the Program,
25including, but not limited to, contracting with financial
26service companies and third-party administrators with the



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1capability to receive and process employee information and
2contributions for payroll deposit retirement savings
3arrangements or similar arrangements.
4    (i) Design and establish the process for enrollment under
5Section 60 of this Act, including the process by which an
6employee can opt not to participate in the Program, select a
7contribution level, select an investment option, and terminate
8participation in the Program.
9    (j) Evaluate and establish the process by which an
10individual may voluntarily enroll in and make contributions to
11the Program.
12    (k) Accept any grants, appropriations, or other moneys from
13the State, any unit of federal, State, or local government, or
14any other person, firm, partnership, or corporation solely for
15deposit into the Fund, whether for investment or administrative
17    (l) Evaluate the need for, and procure as needed, insurance
18against any and all loss in connection with the property,
19assets, or activities of the Program, and indemnify as needed
20each member of the Board from personal loss or liability
21resulting from a member's action or inaction as a member of the
23    (m) Make provisions for the payment of administrative costs
24and expenses for the creation, management, and operation of the
25Program, including the costs associated with subsection (b) of
26Section 20 of this Act, subsections (e), (f), (h), and (l) of



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1this Section, subsection (b) of Section 45 of this Act,
2subsection (a) of Section 80 of this Act, and subsection (n) of
3Section 85 of this Act. Subject to appropriation, the State may
4pay administrative costs associated with the creation and
5management of the Program until sufficient assets are available
6in the Fund for that purpose. Thereafter, all administrative
7costs of the Fund, including repayment of any start-up funds
8provided by the State, shall be paid only out of moneys on
9deposit therein. However, private funds or federal funding
10received under subsection (k) of Section 30 of this Act in
11order to implement the Program until the Fund is
12self-sustaining shall not be repaid unless those funds were
13offered contingent upon the promise of such repayment. The
14Board shall keep annual administrative expenses as low as
15possible, but in no event shall they exceed 0.75% of the total
16trust balance.
17    (n) Allocate administrative fees to individual retirement
18accounts in the Program on a pro rata basis.
19    (o) Set minimum and maximum contribution levels in
20accordance with limits established for IRAs by the Internal
21Revenue Code.
22    (p) Facilitate education and outreach to employers and
24    (q) Facilitate compliance by the Program with all
25applicable requirements for the Program under the Internal
26Revenue Code, including tax qualification requirements or any



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1other applicable law and accounting requirements.
2    (r) Carry out the duties and obligations of the Program in
3an effective, efficient, and low-cost manner.
4    (s) Exercise any and all other powers reasonably necessary
5for the effectuation of the purposes, objectives, and
6provisions of this Act pertaining to the Program.
7    (t) Deposit into the Illinois Secure Choice Administrative
8Fund all grants, gifts, donations, fees, and earnings from
9investments from the Illinois Secure Choice Savings Program
10Fund that are used to recover administrative costs. All
11expenses of the Board shall be paid from the Illinois Secure
12Choice Administrative Fund.
13    Section 35. Risk Management. The Board shall annually
14prepare and adopt a written statement of investment policy that
15includes a risk management and oversight program. This
16investment policy shall prohibit the Board, Program, and Fund
17from borrowing for investment purposes. The risk management and
18oversight program shall be designed to ensure that an effective
19risk management system is in place to monitor the risk levels
20of the Program and Fund portfolio, to ensure that the risks
21taken are prudent and properly managed, to provide an
22integrated process for overall risk management, and to assess
23investment returns as well as risk to determine if the risks
24taken are adequately compensated compared to applicable
25performance benchmarks and standards. The Board shall consider



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1the statement of investment policy and any changes in the
2investment policy at a public hearing.
3    Section 40. Investment firms.
4    (a) The Board shall engage, after an open bid process, an
5investment manager or managers to invest the Fund and any other
6assets of the Program. Moneys in the Fund may be invested or
7reinvested by the State Treasurer's Office or may be invested
8in whole or in part under contract with the State Board of
9Investment, private investment managers, or both, as selected
10by the Board. In selecting the investment manager or managers,
11the Board shall take into consideration and give weight to the
12investment manager's fees and charges in order to reduce the
13Program's administrative expenses.
14    (b) The investment manager or managers shall comply with
15any and all applicable federal and state laws, rules, and
16regulations, as well as any and all rules, policies, and
17guidelines promulgated by the Board with respect to the Program
18and the investment of the Fund, including, but not limited to,
19the investment policy.
20    (c) The investment manager or managers shall provide such
21reports as the Board deems necessary for the Board to oversee
22each investment manager's performance and the performance of
23the Fund.
24    Section 45. Investment options.



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1    (a) The Board shall establish as an investment option a
2life-cycle fund with a target date based upon the age of the
3enrollee. This shall be the default investment option for
4enrollees who fail to elect an investment option unless and
5until the Board designates by rule a new investment option as
6the default as described in subsection (c) of this Section.
7    (b) The Board may also establish any or all of the
8following 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,
26the Board shall then determine whether such option shall



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1replace the target date or life-cycle fund as the default
2investment option for enrollees who do not elect an investment
3option. In making such determination, the Board shall consider
4the cost, risk profile, benefit level, and ease of enrollment
5in the secure return fund. The Board may at any time thereafter
6revisit this question and, based upon an analysis of these
7criteria, establish either the secure return fund or the
8life-cycle fund as the default for enrollees who do not elect
9an investment option.
10    Section 50. Benefits. Interest, investment earnings, and
11investment losses shall be allocated to individual Program
12accounts as established by the Board under subsection (d) of
13Section 30 of this Act. An individual's retirement savings
14benefit under the Program shall be an amount equal to the
15balance in the individual's Program account on the date the
16retirement savings benefit becomes payable. The State shall
17have no liability for the payment of any benefit to any
18participant in the Program.
19    Section 55. Employer and employee information packets and
20disclosure forms.
21    (a) Prior to the opening of the Program for enrollment, the
22Board shall design and disseminate to all employers an employer
23information packet and an employee information packet, which
24shall include background information on the Program,



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1appropriate disclosures for employees, and information
2regarding 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
5employee information packet and the employer information
7    (c) The employee information packet shall include a
8disclosure form. The disclosure form shall explain, but not be
9limited 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
4form for an employee to note his or her decision to opt out of
5participation in the Program or elect to participate with a
6level of employee contributions other than 3%.
7    (e) Participating employers shall supply the employee
8information packet to employees upon launch of the Program.
9Participating employers shall supply the employee information
10packet to new employees at the time of hiring, and new
11employees may opt out of participation in the Program or elect
12to participate with a level of employee contributions other
13than 3% at that time.
14    Section 60. Program implementation and enrollment. Except
15as otherwise provided in Section 93 of this Act, the Program
16shall be implemented, and enrollment of employees shall begin,
17within 24 months after the effective date of this Act. The
18provisions of this Section shall be in force after the Board
19opens the Program for enrollment.
20    (a) Each employer shall establish a payroll deposit
21retirement savings arrangement to allow each employee to
22participate in the Program at most nine months after the Board
23opens the Program for enrollment.
24    (b) Employers shall automatically enroll in the Program
25each of their employees who has not opted out of participation



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1in the Program using the form described in subsection (c) of
2Section 55 of this Act and shall provide payroll deduction
3retirement savings arrangements for such employees and
4deposit, on behalf of such employees, these funds into the
5Program. Small employers may, but are not required to, provide
6payroll deduction retirement savings arrangements for each
7employee who elects to participate in the Program.
8    (c) Enrollees shall have the ability to select a
9contribution level into the Fund. This level may be expressed
10as a percentage of wages or as a dollar amount up to the
11deductible amount for the enrollee's taxable year under Section
12219(b)(1)(A) of the Internal Revenue Code. Enrollees may change
13their contribution level at any time, subject to rules
14promulgated by the Board. If an enrollee fails to select a
15contribution level using the form described in subsection (c)
16of Section 55 of this Act, then he or she shall contribute 3%
17of his or her wages to the Program, provided that such
18contributions shall not cause the enrollee's total
19contributions to IRAs for the year to exceed the deductible
20amount for the enrollee's taxable year under Section
21219(b)(1)(A) of the Internal Revenue Code.
22    (d) Enrollees may select an investment option from the
23permitted investment options listed in Section 45 of this Act.
24Enrollees may change their investment option at any time,
25subject to rules promulgated by the Board. In the event that an
26enrollee fails to select an investment option, that enrollee



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1shall be placed in the investment option selected by the Board
2as the default under subsection (c) of Section 45 of this Act.
3If the Board has not selected a default investment option under
4subsection (c) of Section 45 of this Act, then an enrollee who
5fails to select an investment option shall be placed in the
6life-cycle fund investment option.
7    (e) Following initial implementation of the Program
8pursuant to this Section, at least once every year,
9participating employers shall designate an open enrollment
10period during which employees who previously opted out of the
11Program may enroll in the Program.
12    (f) An employee who opts out of the Program who
13subsequently wants to participate through the participating
14employer's payroll deposit retirement savings arrangement may
15only enroll during the participating employer's designated
16open enrollment period or if permitted by the participating
17employer at an earlier time.
18    (g) Employers shall retain the option at all times to set
19up any type of employer-sponsored retirement plan, such as a
20defined 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
23deduction IRA, instead of having a payroll deposit retirement
24savings arrangement to allow employee participation in the
26    (h) An employee may terminate his or her participation in



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1the Program at any time in a manner prescribed by the Board.
2    (i) The Board shall establish and maintain an Internet
3website designed to assist employers in identifying private
4sector providers of retirement arrangements that can be set up
5by the employer rather than allowing employee participation in
6the Program under this Act; however, the Board shall only
7establish and maintain an Internet website under this
8subsection if there is sufficient interest in such an Internet
9website by private sector providers and if the private sector
10providers furnish the funding necessary to establish and
11maintain the Internet website. The Board must provide public
12notice of the availability of and the process for inclusion on
13the Internet website before it becomes publicly available. This
14Internet website must be available to the public before the
15Board opens the Program for enrollment, and the Internet
16website address must be included on any Internet website
17posting or other materials regarding the Program offered to the
18public by the Board.
19    Section 65. Payments. Employee contributions deducted by
20the participating employer through payroll deduction shall be
21paid by the participating employer to the Fund using one or
22more payroll deposit retirement savings arrangements
23established by the Board under subsection (h) of Section 30 of
24this 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
12for the payment of any retirement savings benefits accrued by
13any individual under the Program. Any financial liability for
14the payment of retirement savings benefits in excess of funds
15available under the Program shall be borne solely by the
16entities with whom the Board contracts to provide insurance to
17protect the value of the Program.
18    (b) No State board, commission, or agency, or any officer,
19employee, or member thereof is liable for any loss or
20deficiency resulting from particular investments selected
21under this Act, except for any liability that arises out of a
22breach 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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1for an employee's decision to participate in, or opt out of,
2the Program or for the investment decisions of the Board or of
3any enrollee.
4    (b) A participating employer shall not be a fiduciary, or
5considered to be a fiduciary, over the Program. A participating
6employer shall not bear responsibility for the administration,
7investment, or investment performance of the Program. A
8participating employer shall not be liable with regard to
9investment returns, Program design, and benefits paid to
10Program 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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1The annual audit shall be made by an independent certified
2public accountant and shall include, but is not limited to,
3direct and indirect costs attributable to the use of outside
4consultants, independent contractors, and any other persons
5who are not State employees for the administration of the
7    (b) In addition to any other statements or reports required
8by law, the Board shall provide periodic reports at least
9annually to participating employers, reporting the names of
10each enrollee employed by the participating employer and the
11amounts of contributions made by the participating employer on
12behalf of each employee during the reporting period, as well as
13to enrollees, reporting contributions and investment income
14allocated to, withdrawals from, and balances in their Program
15accounts for the reporting period. Such reports may include any
16other information regarding the Program as the Board may
18    Section 85. Penalties.
19    (a) An employer who fails without reasonable cause to
20enroll an employee in the Program within the time prescribed
21under Section 60 of this Act shall be subject to a penalty
22equal 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
8penalty under this Section for a calendar year, the Department
9shall issue a notice of proposed assessment to such employer,
10stating the number of employees for which the penalty is
11proposed under item (1) of subsection (a) of this Section and
12the number of employees for which the penalty is proposed under
13item (2) of subsection (a) of this Section for such calendar
14year, and the total amount of penalties proposed.
15    Upon the expiration of 90 days after the date on which a
16notice of proposed assessment was issued, the penalties
17specified therein shall be deemed assessed, unless the employer
18had filed a protest with the Department under subsection (c) of
19this Section.
20    If, within 90 days after the date on which it was issued, a
21protest of a notice of proposed assessment is filed under
22subsection (c) of this Section, the penalties specified therein
23shall be deemed assessed upon the date when the decision of the
24Department with respect to the protest becomes final.
25    (c) A written protest against the proposed assessment shall
26be filed with the Department in such form as the Department may



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1by rule prescribe, setting forth the grounds on which such
2protest is based. If such a protest is filed within 90 days
3after the date the notice of proposed assessment is issued, the
4Department shall reconsider the proposed assessment and shall
5grant the employer a hearing. As soon as practicable after such
6reconsideration and hearing, the Department shall issue a
7notice of decision to the employer, setting forth the
8Department's findings of fact and the basis of decision. The
9decision 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
20a notice of proposed assessment are deemed assessed, the
21Department shall give notice to the employer liable for any
22unpaid portion of such assessment, stating the amount due and
23demanding payment. If an employer neglects or refuses to pay
24the entire liability shown on the notice and demand within 10
25days after the notice and demand is issued, the unpaid amount
26of the liability shall be a lien in favor of the State of



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1Illinois upon all property and rights to property, whether real
2or personal, belonging to the employer, and the provisions in
3the Illinois Income Tax Act regarding liens, levies and
4collection actions with regard to assessed and unpaid
5liabilities under that Act, including the periods for taking
6any action, shall apply.
7    (e) An employer who has overpaid a penalty assessed under
8this Section may file a claim for refund with the Department. A
9claim shall be in writing in such form as the Department may by
10rule prescribe and shall state the specific grounds upon which
11it is founded. As soon as practicable after a claim for refund
12is filed, the Department shall examine it and either issue a
13refund or issue a notice of denial. If such a protest is filed,
14the Department shall reconsider the denial and grant the
15employer a hearing. As soon as practicable after such
16reconsideration and hearing, the Department shall issue a
17notice of decision to the employer. The notice shall set forth
18briefly the Department's findings of fact and the basis of
19decision in each case decided in whole or in part adversely to
20the employer. A denial of a claim for refund becomes final 90
21days after the date of issuance of the notice of the denial
22except for such amounts denied as to which the employer has
23filed a protest with the Department. If a protest has been
24timely filed, the decision of the Department shall become
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
10respect to a calendar year after June 30 of the fourth
11subsequent calendar year. No claim for refund may be filed more
12than 1 year after the date of payment of the amount to be
14    (g) The provisions of the Administrative Review Law and the
15rules adopted pursuant to it shall apply to and govern all
16proceedings for the judicial review of final decisions of the
17Department in response to a protest filed by the employer under
18subsections (c) and (e) of this Section. Final decisions of the
19Department shall constitute "administrative decisions" as
20defined in Section 3-101 of the Code of Civil Procedure.
21    (h) Whenever notice is required by this Section, it may be
22given or issued by mailing it by first-class mail addressed to
23the person concerned at his or her last known address.
24    (i) All books and records and other papers and documents
25relevant to the determination of any penalty due under this
26Section shall, at all times during business hours of the day,



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1be subject to inspection by the Department or its duly
2authorized agents and employees.
3    (j) The Department may require employers to report
4information relevant to their compliance with this Act on
5returns otherwise due from the employers under Section 704A of
6the Illinois Income Tax Act and failure to provide the
7requested information on a return shall cause such return to be
8treated as unprocessable.
9    (k) For purposes of any provision of State law allowing the
10Department or any other agency of this State to offset an
11amount owed to a taxpayer against a tax liability of that
12taxpayer or allowing the Department to offset an overpayment of
13tax against any liability owed to the State, a penalty assessed
14under this Section shall be deemed to be a tax liability of the
15employer and any refund due to an employer shall be deemed to
16be an overpayment of tax of the employer.
17    (l) Except as provided in this subsection, all information
18received by the Department from returns filed by an employer or
19from any investigation conducted under the provisions of this
20Act shall be confidential, except for official purposes within
21the Department or pursuant to official procedures for
22collection of penalties assessed under this Act. Nothing
23contained in this subsection shall prevent the Director from
24publishing or making available to the public reasonable
25statistics concerning the operation of this Act wherein the
26contents of returns are grouped into aggregates in such a way



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1that the specific information of any employer shall not be
2disclosed. Nothing contained in this subsection shall prevent
3the Director from divulging information to an authorized
4representative of the employer or to any person pursuant to a
5request or authorization made by the employer or by an
6authorized representative of the employer.
7    (m) Civil penalties collected under this Act and fees
8collected pursuant to subsection (n) of this Section shall be
9deposited into the Tax Compliance and Administration Fund. The
10Department may, subject to appropriation, use moneys in the
11fund to cover expenses it incurs in the performance of its
12duties under this Act. Interest attributable to moneys in the
13Tax Compliance and Administration Fund shall be credited to the
14Tax Compliance and Administration Fund.
15    (n) The Department may charge the Board a reasonable fee
16for its costs in performing its duties under this Section to
17the extent that such costs have not been recovered from
18penalties imposed under this Section.
19    (o) This Section shall become operative 9 months after the
20Board notifies the Director that the Program has been
21implemented. Upon receipt of such notification from the Board,
22the Department shall immediately post on its Internet website a
23notice stating that this Section is operative and the date that
24it is first operative. This notice shall include a statement
25that rather than enrolling employees in the Program under this
26Act, employers may sponsor an alternative arrangement,



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1including, but not limited to, a defined benefit plan, 401(k)
2plan, a Simplified Employee Pension (SEP) plan, a Savings
3Incentive Match Plan for Employees (SIMPLE) plan, or an
4automatic payroll deduction IRA offered through a private
5provider. The Board shall provide a link to the vendor Internet
6website described in subsection (i) of Section 60 of this Act.
7    Section 90. Rules. The Board and the Department shall
8adopt, in accordance with the Illinois Administrative
9Procedure Act, any rules that may be necessary to implement
10this Act.
11    Section 93. Delayed implementation. If the Board does not
12obtain adequate funds to implement the Program within the time
13frame set forth under Section 60 of this Act, the Board may
14delay the implementation of the Program.
15    Section 95. Federal considerations. The Board shall
16request in writing an opinion or ruling from the appropriate
17entity with jurisdiction over the federal Employee Retirement
18Income Security Act regarding the applicability of the federal
19Employee Retirement Income Security Act to the Program. The
20Board may not implement the Program if the IRA arrangements
21offered under the Program fail to qualify for the favorable
22federal income tax treatment ordinarily accorded to IRAs under
23the Internal Revenue Code or if it is determined that the



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1Program is an employee benefit plan and State or employer
2liability is established under the federal Employee Retirement
3Income Security Act.
4    Section 500. The State Finance Act is amended by adding
5Section 5.855 as follows:
6    (30 ILCS 105/5.855 new)
7    Sec. 5.855. The Illinois Secure Choice Administrative