The Illinois Secure Choice retirement savings program is a state-facilitated auto-IRA initiative designed to help private-sector workers save for retirement when their employer offers no workplace plan. According to data published by the Illinois State Treasurer's Office, more than 1.5 million Illinois workers lack access to an employer-sponsored retirement plan.
That coverage gap creates a real problem: without payroll-deduction savings, many employees never build a retirement nest egg.
The program solves this by requiring most Illinois employers with 25 or more employees (and no qualifying plan) to enroll their workforce. Participation is automatic for employees, though they can opt out at any time.
This article explains how Illinois Secure Choice works, who must comply, what it costs, key deadlines, and how to take action whether you are an employer or an employee. You will also find a comparison table and answers to common edge-case questions.
What Is the Illinois Secure Choice Retirement Savings Program?
The illinois secure choice retirement savings program is a state-run Roth IRA savings vehicle established under the Illinois Secure Choice Savings Program Act, signed into law in 2015. It is administered by the Illinois State Treasurer's Office with professional investment management and recordkeeping support.
Employees contribute through automatic payroll deductions. The default contribution rate is 5% of gross pay, and contributions go into a Roth IRA. Roth contributions are made with after-tax dollars, so withdrawals in retirement are generally tax-free.
Employers do not contribute to employee accounts. The employer's role is administrative: register the business, enroll eligible employees, process payroll deductions, and remit contributions.
A key point from the official program materials: "The Illinois Secure Choice program is designed to be simple for employers to facilitate and for employees to use." That simplicity is deliberate. The program targets small and mid-sized businesses that find traditional 401(k) plans too costly or complex to administer.
The illinois secure choice retirement savings program removes those barriers by providing a turnkey solution at no employer cost.
How to apply this: If you are an employer, check whether your business meets the employee-count threshold and whether your existing plan qualifies as an exemption. If you are an employee, ask your HR department whether your company has registered.
Employer Requirements and Deadlines
Employer mandates under the illinois secure choice retirement savings program are straightforward but time-sensitive. The State Treasurer's Office has implemented the program in waves based on employer size.
The registration requirement applies to employers that have been in business for at least two years, have 25 or more employees in Illinois, and do not offer a qualifying retirement plan. Qualifying plans include 401(k), 403(b), SEP IRA, SIMPLE IRA, or a governmental plan.
Deadlines matter. The program rolled out in stages, with the largest employers required to register first. Employers that miss their registration deadline face penalties under state law.
Once registered, employers must:
- Add all eligible employees to the program within 30 days of registration
- Process payroll deductions beginning with the first payroll after enrollment
- Remit contributions by the required deadlines each pay period
- Allow employees to opt out or change contribution rates at any time
The Illinois Department of Employment Security reports employer payroll data to the Treasurer's Office to identify non-compliant businesses. So even if you do nothing, the state can find you. Understanding the illinois secure choice retirement savings program requirements now can save significant headaches later.
How to apply this: Visit the official program website to confirm your registration deadline. If you are unsure whether your business qualifies, use the employer eligibility check tool available there.
How Employee Contributions and Investments Work
Employees in the illinois secure choice retirement savings program start at a 5% default contribution rate. That money comes out of each paycheck automatically.
Contribution rates can be adjusted. Employees may increase or decrease their rate, or opt out entirely, at any time through the online portal. The program also offers an automatic escalation feature that gradually increases contributions over time.
Investment options are limited but practical. The program offers a menu of target-date funds, a capital preservation fund, and a small selection of core funds. Target-date funds automatically shift toward more conservative holdings as the participant nears retirement age.
Fees are an important consideration. According to the Illinois Secure Choice Program Disclosure, participants pay an annual asset-based fee of approximately 0.75% of account balance. This covers investment management, recordkeeping, and administrative costs.
Annual contribution limits follow IRS rules for Roth IRAs. For 2025, the IRS has set the Roth IRA contribution limit at $7,000 for those under 50, with a $1,000 catch-up for those 50 and older. Illinois Secure Choice accounts are subject to these same limits across all IRAs an individual holds.
The illinois secure choice retirement savings program mirrors these federal guidelines exactly.
How to apply this: Log into your account portal after your first contribution lands. Review the default investment option and adjust your contribution rate if 5% does not fit your budget.
Comparison: Illinois Secure Choice vs. Traditional 401(k) vs. No Plan
Understanding the differences helps employers and employees make informed decisions. The illinois secure choice retirement savings program occupies a middle ground between a full 401(k) and having no plan at all.
| Feature | Illinois Secure Choice | Traditional 401(k) | No Plan |
|---|---|---|---|
| Employer cost | Minimal administrative time | Setup and annual fees | None |
| Employer contributions | None allowed | Optional match | N/A |
| Employee contribution | 5% default, adjustable | Varies | N/A |
| Investment menu | Limited target-date and core funds | Broad fund lineup | N/A |
| Annual fee | Approximately 0.75% | Varies, often 1-2% | N/A |
| Action to take | Register if mandated | Compare provider costs | Expect state mandate |
A common scenario: a small manufacturing firm with 40 employees in Decatur compared its options. The owners found that a 401(k) would cost roughly $3,000 to $5,000 annually in administrative and recordkeeping fees. The illinois secure choice retirement savings program cost nothing to set up and required only payroll processing time.
How to apply this: If you already offer a 401(k), confirm it meets the state's definition of a qualifying plan. If you offer nothing, register for Illinois Secure Choice before your mandated deadline.
Compliance, Penalties, and Common Mistakes to Avoid
The illinois secure choice retirement savings program includes enforcement provisions that employers should take seriously. Non-compliant employers face penalties under the Illinois Secure Choice Savings Program Act.
The most common employer mistakes include:
- Assuming the program does not apply because the business is small
- Failing to register by the assigned deadline
- Registering but not enrolling employees within 30 days
- Not processing deductions after employees are enrolled
- Treating employee opt-outs as permanent without allowing re-enrollment
The Illinois State Treasurer's Office has stated that it prioritizes education and compliance assistance before pursuing penalties. However, repeated non-compliance can result in fines.
For employees, a common mistake is treating the auto-enrollment notice as junk mail. The notice explains how to opt out, adjust contributions, or select investments. Ignoring it means staying at the default 5% rate, which may or may not suit your finances.
Another pitfall: employees who opt out early may miss the annual re-enrollment opportunity. The program re-enrolls opted-out employees every year unless they opt out again. Staying informed about the illinois secure choice retirement savings program can prevent these oversights.
How to apply this: Set a calendar reminder for your registration deadline. After registering, document each step in writing so you have a compliance trail.
Frequently Asked Questions About illinois secure choice retirement savings program
Who is exempt from the illinois secure choice retirement savings program?
Employers with fewer than 25 employees, businesses operating for less than two years, and those already offering a qualifying retirement plan are exempt. A qualifying plan includes any 401(k), 403(b), SEP IRA, SIMPLE IRA, or governmental deferred compensation plan. If your business offers a plan but no employees participate, you may still be exempt because the plan exists.
Employers with under 25 workers, new businesses, and companies already offering a qualifying plan are exempt from the illinois secure choice retirement savings program.
Can self-employed individuals join the illinois secure choice retirement savings program?
No. The program is exclusively for employees of participating Illinois employers. Self-employed individuals, independent contractors, and gig workers cannot open an account directly through the illinois secure choice retirement savings program. Those individuals should consider a SEP IRA, solo 401(k), or traditional IRA through a financial institution.
What happens to an account if an employee leaves their job?
The account belongs to the employee and remains portable. When someone leaves a participating employer, the illinois secure choice retirement savings program account stays active. The individual can continue managing investments, adjust contributions if they join another participating employer, or roll the balance into another Roth IRA. There is no forced distribution.
Are employer contributions permitted under the program?
No. The illinois secure choice retirement savings program does not allow employer matching or profit-sharing contributions. The program is funded entirely by employee payroll deductions. Employers who want to contribute to employee retirement savings should consider a 401(k) with a match, a SEP IRA, or a SIMPLE IRA instead.
Does opting out affect future enrollment opportunities?
Yes, but only temporarily. Employees who opt out are automatically re-enrolled each year unless they opt out again. This design encourages participation while preserving individual choice. If you opt out in January, expect a re-enrollment notice the following January. You must actively decline again to stay out.
Conclusion
The illinois secure choice retirement savings program closes a significant retirement savings gap for Illinois workers.
Key takeaways:
- Employers with 25 or more employees and no qualifying plan must register
- Employee contributions default to 5% of gross pay into a Roth IRA
- Annual fees run approximately 0.75% of account balance
- Employees can opt out, adjust rates, or change investments at any time
- Non-compliant employers face penalties under state law
Your next step depends on your role. Employers should confirm their registration deadline and begin the enrollment process today. Employees should check their payroll deductions and log into the participant portal to review investment choices. Visit the Illinois Secure Choice official website for registration, deadlines, and account access.
