Key Points Summary
- Mandatory for qualifying employers: All Illinois employers with 5+ employees for at least 2 years must offer a qualified retirement plan OR facilitate Illinois Secure Choice enrollment
- Automatic enrollment: Workers are automatically enrolled at 5% contribution rate but can opt out, adjust contributions, or change investments anytime
- Roth IRA structure: After-tax contributions mean tax-free withdrawals in retirement; annual limits of $6,000 (or $7,000 if age 50+)
- Employer-friendly: No employer fees, no employer contributions required, minimal administrative responsibilities
- Strong participation: 158,318 workers with funded accounts, averaging $135/month savings, with $269.8 million in assets under management (as of July 2025)
- Investment options: Money market fund for first 90 days, then auto-moved to target date funds unless employee chooses conservative, growth, or capital preservation funds
- Enforcement: $250-$500 annual fines per employee for non-compliant employers, handled by Illinois Department of Revenue
- 38% opt-out rate: Main reasons include financial constraints, existing retirement coverage, and debt obligations
- Annual fee: 0.75% on assets for program administration and management
- Alternative compliance: Employers can offer 401(k), SIMPLE IRA, or other qualified plans instead of Secure Choice
Bottom Line Up Front: Illinois Secure Choice is Illinois’ state-mandated retirement savings program requiring employers with 5+ employees to either offer their own qualified retirement plan or automatically enroll workers in this Roth IRA program. Since launching in 2018, it has helped over 158,000 Illinois workers start saving for retirement.
What is Illinois Secure Choice? Understanding Illinois’ Retirement Mandate
Illinois Secure Choice is a state-facilitated retirement savings program designed to address the retirement crisis facing Illinois workers. Nearly half of Illinois workers lack access to employer-sponsored retirement plans, creating a significant retirement savings gap. The Illinois Secure Choice Savings Program Act (820 ILCS 80/) was enacted to ensure more Illinois residents have access to retirement savings through their workplace.
The program operates as a Roth IRA with automatic payroll deduction, administered by Ascensus and overseen by the Illinois Secure Choice Savings Board. Illinois was among the first states to implement such a program, launching in 2018 and expanding requirements to smaller employers in recent years.
Illinois Secure Choice Employer Requirements: Who Must Participate?
Mandatory Participation Criteria
Illinois law requires specific employers to participate in the Illinois Secure Choice program or offer an alternative qualified retirement plan. Employers must comply if they:
- Employee count: Have 5 or more employees in every quarter of the previous calendar year
- Business tenure: Have been in business for at least two years
- No existing plan: Do not currently offer a qualified retirement plan (401(k), 403(b), etc.)
- Business type: Are private-sector employers (government entities exempt)
Illinois Secure Choice Deadlines and Registration
Employer registration deadlines are based on company size, but the Illinois State Treasurer’s office encourages early registration. The Illinois Department of Revenue determines employee counts through quarterly filings, and covered employers receive direct communication about their obligations.
Important: Employers who already offer qualified retirement plans must register for exemption status to avoid penalty assessments.
How Illinois Secure Choice Works: Employee and Employer Processes
For Illinois Employees
Automatic Enrollment Process:
- Eligible employees are automatically enrolled at 5% contribution rate
- First 90 days: contributions invested in money market fund
- After 90 days: funds moved to age-appropriate target date fund
- Employees can opt out, adjust contributions, or change investments anytime
Illinois Secure Choice Investment Options:
- Target date funds (default after initial period)
- Capital preservation fund (conservative, lower risk)
- Conservative fund (moderate risk)
- Growth fund (higher risk, higher potential return)
Contribution Limits:
- Annual maximum: $6,000 for most workers
- Age 50+: $7,000 annual maximum
- Roth IRA structure means after-tax contributions, tax-free retirement withdrawals
For Illinois Employers
Employer Responsibilities:
- Register with Illinois Secure Choice by required deadlines
- Set up payroll deduction systems
- Submit employee roster and maintain current information
- Process payroll deductions each pay period
- Notify employees about the program
What Employers DON’T Handle:
- Investment advice or account management
- Employee questions about investments
- Distribution processing
- Program fees (no cost to employers)
- Employee contributions (employers cannot contribute)
Illinois Secure Choice Performance and Statistics 2025
As of July 2025, Illinois Secure Choice has achieved significant milestones:
Program Growth Metrics
- 7,726 employers actively submitting payroll deductions
- 158,318 workers with funded accounts
- $269.8 million in total assets under management
- $135 average monthly savings per participating worker
- $1,100+ average account balance per participant
Participation Rates
Illinois Secure Choice maintains a 62% participation rate, with 38% of eligible workers choosing to opt out. This participation rate compares favorably with other automatic enrollment retirement programs nationwide.
Why Do Workers Opt Out of Illinois Secure Choice?
Understanding opt-out reasons helps employers and policymakers improve the program:
Primary Opt-Out Reasons
- Financial constraints (29%): Immediate cash flow needs
- Existing retirement coverage (14%): Coverage through spouse or secondary job
- Debt repayment (12%): Prioritizing debt elimination
- Emergency savings (8%): Building emergency funds first
- Program confusion: Particularly among Black and Hispanic workers
Demographics and Opt-Out Patterns
- Older workers (55+): More likely to have existing retirement coverage
- Married workers: Often covered by spouse’s plan
- Higher education levels: More likely to have alternative retirement plans
- Workers of color: More likely to cite program confusion as barrier
Illinois Secure Choice Penalties and Enforcement
The Illinois Department of Revenue handles enforcement of the Illinois Secure Choice mandate in coordination with the program administrators.
Penalty Structure
- Initial non-compliance: $250 per eligible employee annually (after 90+ days)
- Extended non-compliance: $500 per eligible employee annually (after 1+ year)
- Assessment process: Illinois Department of Revenue issues penalty notices
- Employee count determination: Based on quarterly filings with Illinois Department of Revenue
Compliance Timeline
Employers receive notices before penalty assessments begin, providing opportunities to come into compliance. The enforcement process includes multiple communications before penalties are imposed.
Alternatives to Illinois Secure Choice: Other Qualified Plans
Employers seeking alternatives to Illinois Secure Choice can satisfy the mandate by offering other qualified retirement plans:
Popular Alternatives
401(k) Plans
- Higher contribution limits ($23,000 in 2024)
- Potential employer matching
- Tax deduction benefits for businesses
- More investment options
SIMPLE IRA Plans
- Employer contribution options
- Lower administrative burden than 401(k)
- Higher contribution limits than Roth IRA
- Potential tax credits for small businesses
SEP IRA Plans
- Ideal for self-employed and small businesses
- High contribution limits
- Simple administration
- Flexible employer contributions
Plan Comparison Considerations
- Contribution limits: Traditional retirement plans often allow higher contributions
- Employer matching: Illinois Secure Choice prohibits employer contributions
- Tax benefits: Other plans may provide business tax advantages
- Administrative complexity: Illinois Secure Choice minimizes employer responsibilities
Illinois Secure Choice Costs and Fees
Program Fee Structure
Illinois Secure Choice charges an annual fee of approximately 0.75% on program assets. This fee covers:
- Program administration by Ascensus
- Investment management
- Customer service and support
- Regulatory compliance and oversight
- Technology platform maintenance
Cost Comparison
The 0.75% annual fee is competitive with many retail IRAs and significantly lower than some high-fee retirement products. The program is designed to become financially self-sufficient through these asset-based fees.
Frequently Asked Questions About Illinois Secure Choice
Yes, employees can opt out at any time without penalties. They can also re-enroll later if their circumstances change.
Employees keep their Illinois Secure Choice account when they leave Illinois. They can continue contributing through payroll deduction if their new employer participates, or make direct contributions.
No, Illinois law prohibits employer contributions to Illinois Secure Choice accounts. Employees fund accounts through payroll deduction only.
As a Roth IRA, contributions are made with after-tax dollars, and qualified withdrawals in retirement are tax-free. Participants should consult tax professionals for personal tax implications.
Like all investments, Illinois Secure Choice account balances will fluctuate with market conditions. Investments are not guaranteed by Illinois, the federal government, or any other entity.
Illinois Secure Choice vs National Retirement Trends
Illinois Secure Choice is part of a growing national movement to address retirement security:
Multi-State Movement
- Operating programs: Oregon, California, Connecticut, Maryland, Colorado, Virginia, Maine
- Authorized programs: Delaware, Hawaii, Minnesota, Nevada, New Jersey, New York, Vermont, Washington
- Program variations: States customize features while maintaining core automatic enrollment concept
National Retirement Crisis Context
- Coverage gap: Approximately 57 million American workers lack workplace retirement plan access
- State solutions: Auto-IRA programs aim to bridge coverage gaps
- Bipartisan support: Programs have received support across political spectrums
Best Practices for Illinois Employers
Compliance Strategies
- Register early: Don’t wait for deadline pressure
- Communicate clearly: Provide employees clear program information
- Integrate systems: Work with payroll providers for smooth implementation
- Consider alternatives: Evaluate whether other retirement plans better serve your workforce
- Stay informed: Monitor program updates and regulatory changes
Employee Communication Tips
- Use provided educational materials
- Host information sessions
- Address common employee questions
- Emphasize voluntary nature and opt-out flexibility
- Connect employees directly to program resources
Future of Illinois Secure Choice and Retirement Security
The Illinois Secure Choice program continues evolving to better serve Illinois workers and employers:
Ongoing Improvements
- Enhanced educational resources
- Simplified enrollment processes
- Expanded investment options consideration
- Technology platform updates
- Compliance assistance for employers
Long-term Impact Goals
- Increase retirement savings rates among Illinois workers
- Reduce future retirement poverty
- Provide model for other states
- Support economic security for aging population
Conclusion: Illinois Secure Choice’s Role in Retirement Security
Illinois Secure Choice represents a significant step toward addressing Illinois’ retirement savings crisis. While not perfect for every worker or employer, the program provides crucial access to retirement savings for hundreds of thousands of Illinois workers who previously had no workplace retirement option.
For Illinois Employers: Understanding your obligations and options is crucial. Whether you choose Illinois Secure Choice or an alternative qualified plan, compliance with Illinois retirement savings laws is mandatory for qualifying businesses.
For Illinois Employees: Take advantage of the opportunity to save for retirement, even if starting small. The automatic enrollment and professional management make Illinois Secure Choice an accessible way to begin building retirement security.
Key Action Items:
- Employers: Register for Illinois Secure Choice or exemption status immediately
- Employees: Review your enrollment status and consider your retirement savings goals
- Both: Consult with financial professionals for personalized retirement planning advice
Illinois Secure Choice may not solve the retirement crisis overnight, but it provides a meaningful foundation for retirement security that didn’t exist before. Understanding and properly utilizing this program is an important step in building a more financially secure future for Illinois workers.
Need Help? Visit ilsecurechoice.com for official program information, or consult with qualified financial advisors about your specific retirement planning needs.
Compliance Questions? Contact the Illinois Department of Revenue or Illinois Secure Choice customer service for guidance on meeting your legal obligations under Illinois law.