A quarter of adults within the U.S. don’t have retirement financial savings. One cause? Not all staff have entry to an employer-sponsored retirement program. Seeing this looming disaster, Illinois launched the Safe Selection Retirement Financial savings Program (Illinois Safe Selection).
Like different state retirement packages, Illinois Safe Selection mandates that every one companies with 5 or extra staff should facilitate Illinois Safe Selection or provide a retirement plan.
Are you an Illinois employer? If that’s the case, learn on to be taught the ins and outs of the mandate, together with deadlines, qualifying options, and extra.
4 Questions employers might have about Illinois Safe Selection
Illinois Safe Selection is the state of Illinois’ retirement financial savings program. Workers can use a default Roth IRA to make a contribution with after-tax {dollars} by payroll deductions. Nevertheless, program individuals can go for a conventional IRA in the event that they select. Illinois companies with 5 or extra staff should facilitate Illinois Safe Selection or provide a professional retirement plan.
Employers who select to facilitate Illinois Safe Selection must confirm extra details about their taking part staff and register with this system.
For workers, the (utterly voluntary!) Illinois Safe Selection program may revolutionize the best way they save. Earlier than Safe Selection, if an worker needed to start out an IRA on their very own, they must discover a monetary establishment that provides an IRA and arrange an account with them. However with this program, staff can save at work and contribute to a plan managed on their behalf.
By default, staff are enrolled with a 5% contribution charge right into a goal date fund primarily based on their anticipated retirement age. Nevertheless, staff can select to extend or lower their charge or opt-out anytime.
1. How a lot can staff contribute?
Like a conventional Roth IRA, staff can contribute as much as $7,000 (in 2024) to their Safe Selection account.
Workers who’re 50 or over can contribute as much as $8,000 (in 2024).
2. Do I’ve to take part?
Not all Illinois employers should take part within the state-mandated retirement program. You need to facilitate Illinois Safe Selection in the event you:
- Have 5 or extra staff,
- Have been in operation for at the very least two years, AND
- Don’t provide an employer-sponsored retirement plan
However once more, Illinois employers topic to the mandate do produce other choices. If you happen to don’t need to facilitate the state program, you possibly can arrange one of many following qualifying retirement plans:
- 401(a) or 401(ok) plan
- Certified annuity plan
- Tax-sheltered annuity
- Simplified Worker Pension (SEP) plan
- SIMPLE IRA plan
- Governmental tax-deferred compensation plan
- Taft-Hartley plan
Earlier than selecting between Illinois Safe Selection and a qualifying different, think about what’s greatest for your small business.
3. Are there penalties for failing to register?
There are penalties for failing to register or provide a qualifying different. If you happen to fail to remit contributions to this system by your deadline, you might be penalized $250 per worker for the primary 12 months of noncompliance.
And in the event you’re nonetheless not compliant after the primary 12 months, your penalty will increase to $500 per worker. For extra data on penalties, try the statute.
4. How can I begin a qualifying retirement program?
If you happen to’re an Illinois employer all for establishing a 401(ok) for small enterprise as an alternative of facilitating the state program, assist is accessible.
Patriot and Vestwell have partnered to supply inexpensive retirement plans for small companies in Illinois and throughout america. Vestwell’s digital retirement platform straight integrates with Patriot’s payroll software program, making it simpler so that you can provide and administer a company-sponsored 401(ok).
Apprehensive about administration prices? You might be eligible to obtain as much as $16,500 in tax credit, which will help cancel out administration prices. You’ll be able to be taught extra about eligibility for tax credit and the way to join a 401(ok) by Vestwell right here.
This text has been up to date from its unique publication date of July 28, 2022.
This isn’t supposed as authorized recommendation; for extra data, please click on right here.
