Secure choice savings program act

Public Act 1150 98TH GENERAL ASSEMBLY

 Public Act 098-1150  
SB2758 EnrolledLRB098 17555 OMW 54519 b
  AN ACT concerning State government.  Be it enacted by the People of the State of Illinois, represented in the General Assembly:  Section 1. Short title. This Act may be cited as the Illinois Secure Choice Savings Program Act.  Section 5. Definitions. Unless the context requires a different meaning or as expressly provided in this Section, all terms shall have the same meaning as when used in a comparable context in the Internal Revenue Code. As used in this Act: "Board" means the Illinois Secure Choice Savings Board established under this Act. "Department" means the Department of Revenue. "Director" means the Director of Revenue. "Employee" means any individual who is 18 years of age or older, who is employed by an employer, and who has wages that are allocable to Illinois during a calendar year under the provisions of Section 304(a)(2)(B) of the Illinois Income Tax Act. "Employer" means a person or entity engaged in a business, industry, profession, trade, or other enterprise in Illinois, whether for profit or not for profit, that (i) has at no time during the previous calendar year employed fewer than 25 employees in the State, (ii) has been in business at least 2  
years, and (iii) has not offered a qualified retirement plan, 
including, but not limited to, a plan qualified under Section 
401(a), Section 401(k), Section 403(a), Section 403(b), 
Section 408(k), Section 408(p), or Section 457(b) of the 
Internal Revenue Code of 1986 in the preceding 2 years.
 "Enrollee" means any employee who is enrolled in the 
Program. 
 "Fund" means the Illinois Secure Choice Savings Program 
Fund. 
 "Internal Revenue Code" means Internal Revenue Code of 
1986, or any successor law, in effect for the calendar year. 
 "IRA" means a Roth IRA (individual retirement account) 
under Section 408A of the Internal Revenue Code. 
 "Participating employer" means an employer or small 
employer that provides a payroll deposit retirement savings 
arrangement as provided for by this Act for its employees who 
are enrollees in the Program.
 "Payroll deposit retirement savings arrangement" means an 
arrangement by which a participating employer allows enrollees 
to remit payroll deduction contributions to the Program.
 "Program" means the Illinois Secure Choice Savings 
Program. 
 "Small employer" means a person or entity engaged in a 
business, industry, profession, trade, or other enterprise in 
Illinois, whether for profit or not for profit, that (i) 
employed less than 25 employees at any one time in the State 
 
throughout the previous calendar year, or (ii) has been in 
business less than 2 years, or both items (i) and (ii), but 
that notifies the Department that it is interested in being a 
participating employer.
 "Wages" means any compensation within the meaning of 
Section 219(f)(1) of the Internal Revenue Code that is received 
by an enrollee from a participating employer during the 
calendar year. 
 Section 10. Establishment of Illinois Secure Choice 
Savings Program. A retirement savings program in the form of an 
automatic enrollment payroll deduction IRA, known as the 
Illinois Secure Choice Savings Program, is hereby established 
and shall be administered by the Board for the purpose of 
promoting greater retirement savings for private-sector 
employees in a convenient, low-cost, and portable manner. 
 Section 15. Illinois Secure Choice Savings Program Fund. 
 (a) The Illinois Secure Choice Savings Program Fund is 
hereby established as a trust outside of the State treasury, 
with the Board created in Section 20 as its trustee. The Fund 
shall include the individual retirement accounts of enrollees, 
which shall be accounted for as individual accounts. Moneys in 
the Fund shall consist of moneys received from enrollees and 
participating employers pursuant to automatic payroll 
deductions and contributions to savings made under this Act. 
 
The Fund shall be operated in a manner determined by the Board, 
provided that the Fund is operated so that the accounts of 
enrollees established under the Program meet the requirements 
for IRAs under the Internal Revenue Code. 
 (b) The amounts deposited in the Fund shall not constitute 
property of the State and the Fund shall not be construed to be 
a department, institution, or agency of the State. Amounts on 
deposit in the Fund shall not be commingled with State funds 
and the State shall have no claim to or against, or interest 
in, such funds. 
 Section 16. Illinois Secure Choice Administrative Fund. 
The Illinois Secure Choice Administrative Fund 
("Administrative Fund") is created as a nonappropriated 
separate and apart trust fund in the State Treasury. The Board 
shall use moneys in the Administrative Fund to pay for 
administrative expenses it incurs in the performance of its 
duties under this Act. The Board shall use moneys in the 
Administrative Fund to cover start-up administrative expenses 
it incurs in the performance of its duties under this Act. The 
Administrative Fund may receive any grants or other moneys 
designated for administrative purposes from the State, or any 
unit of federal or local government, or any other person, firm, 
partnership, or corporation. Any interest earnings that are 
attributable to moneys in the Administrative Fund must be 
deposited into the Administrative Fund. 
 
 Section 20. Composition of the Board. There is created the 
Illinois Secure Choice Savings Board. 
 (a) The Board shall consist of the following 7 members:
 (1) the State Treasurer, or his or her designee, who 
 shall serve as chair; 
 (2) the State Comptroller, or his or her designee; 
 (3) the Director of the Governor's Office of Management 
 and Budget, or his or her designee; 
 (4) two public representatives with expertise in 
 retirement savings plan administration or investment, or 
 both, appointed by the Governor; 
 (5) a representative of participating employers, 
 appointed by the Governor; and 
 (6) a representative of enrollees, appointed by the 
 Governor. 
 (b) Members of the Board shall serve without compensation 
but may be reimbursed for necessary travel expenses incurred in 
connection with their Board duties from funds appropriated for 
the purpose.
 (c) The initial appointments for the Governor's appointees 
shall be as follows: one public representative for 4 years; one 
public representative for 2 years; the representative of 
participating employers for 3 years; and the representative of 
enrollees for 1 year. Thereafter, all of the Governor's 
appointees shall be for terms of 4 years.
 
 (d) A vacancy in the term of an appointed Board member 
shall be filled for the balance of the unexpired term in the 
same manner as the original appointment.
 (e) Each appointment by the Governor shall be subject to 
approval by the State Treasurer, who, upon approval, shall 
certify his or her approval to the Secretary of State. Each 
appointment by the Governor shall also be subject to the advice 
and consent of the Senate. In case of a vacancy during a recess 
of the Senate, the Governor shall make a temporary appointment 
until the next meeting of the Senate, at which time the 
Governor shall appoint some person to fill the office. If the 
State Treasurer does not approve or disapprove the appointment 
by the Governor within 60 session days after receipt thereof, 
the person shall be deemed to have been approved by the State 
Treasurer. Any appointment that has not been acted upon by the 
Senate within 60 session days after the receipt thereof shall 
be deemed to have received the advice and consent of the 
Senate.
 (f) Each Board member, prior to assuming office, shall take 
an oath that he or she will diligently and honestly administer 
the affairs of the Board and that he or she will not knowingly 
violate or willingly permit to be violated any of the 
provisions of law applicable to the Program. The oath shall be 
certified by the officer before whom it is taken and 
immediately filed in the office of the Secretary of State. 
 
 Section 25. Fiduciary Duty. The Board, the individual 
members of the Board, the trustee appointed under subsection 
(b) of Section 30, any other agents appointed or engaged by the 
Board, and all persons serving as Program staff shall discharge 
their duties with respect to the Program solely in the interest 
of the Program's enrollees and beneficiaries as follows: 
 (1) for the exclusive purposes of providing benefits to 
 enrollees and beneficiaries and defraying reasonable 
 expenses of administering the Program; 
 (2) by investing with the care, skill, prudence, and 
 diligence under the prevailing circumstances that a 
 prudent person acting in a like capacity and familiar with 
 those matters would use in the conduct of an enterprise of 
 a like character and with like aims; and 
 (3) by using any contributions paid by employees and 
 employers into the trust exclusively for the purpose of 
 paying benefits to the enrollees of the Program, for the 
 cost of administration of the Program, and for investments 
 made for the benefit of the Program. 
 Section 30. Duties of the Board. In addition to the other 
duties and responsibilities stated in this Act, the Board 
shall: 
 (a) Cause the Program to be designed, established and 
operated in a manner that: 
 (1) accords with best practices for retirement savings 
 
 vehicles; 
 (2) maximizes participation, savings, and sound 
 investment practices;
 (3) maximizes simplicity, including ease of 
 administration for participating employers and enrollees;
 (4) provides an efficient product to enrollees by 
 pooling investment funds; 
 (5) ensures the portability of benefits; and 
 (6) provides for the deaccumulation of enrollee assets 
 in a manner that maximizes financial security in 
 retirement. 
 (b) Appoint a trustee to the IRA Fund in compliance with 
Section 408 of the Internal Revenue Code.
 (c) Explore and establish investment options, subject to 
Section 45 of this Act, that offer employees returns on 
contributions and the conversion of individual retirement 
savings account balances to secure retirement income without 
incurring debt or liabilities to the State. 
 (d) Establish the process by which interest, investment 
earnings, and investment losses are allocated to individual 
program accounts on a pro rata basis and are computed at the 
interest rate on the balance of an individual's account. 
 (e) Make and enter into contracts necessary for the 
administration of the Program and Fund, including, but not 
limited to, retaining and contracting with investment 
managers, private financial institutions, other financial and 
 
service providers, consultants, actuaries, counsel, auditors, 
third-party administrators, and other professionals as 
necessary. 
 (e-5) Conduct a review of the performance of any investment 
vendors every 4 years, including, but not limited to, a review 
of returns, fees, and customer service. A copy of reviews 
conducted under this subsection (e-5) shall be posted to the 
Board's Internet website.
 (f) Determine the number and duties of staff members needed 
to administer the Program and assemble such a staff, including, 
as needed, employing staff, appointing a Program 
administrator, and entering into contracts with the State 
Treasurer to make employees of the State Treasurer's Office 
available to administer the Program. 
 (g) Cause moneys in the Fund to be held and invested as 
pooled investments described in Section 45 of this Act, with a 
view to achieving cost savings through efficiencies and 
economies of scale. 
 (h) Evaluate and establish the process by which an enrollee 
is able to contribute a portion of his or her wages to the 
Program for automatic deposit of those contributions and the 
process by which the participating employer provides a payroll 
deposit retirement savings arrangement to forward those 
contributions and related information to the Program, 
including, but not limited to, contracting with financial 
service companies and third-party administrators with the 
 
capability to receive and process employee information and 
contributions for payroll deposit retirement savings 
arrangements or similar arrangements. 
 (i) Design and establish the process for enrollment under 
Section 60 of this Act, including the process by which an 
employee can opt not to participate in the Program, select a 
contribution level, select an investment option, and terminate 
participation in the Program. 
 (j) Evaluate and establish the process by which an 
individual may voluntarily enroll in and make contributions to 
the Program. 
 (k) Accept any grants, appropriations, or other moneys from 
the State, any unit of federal, State, or local government, or 
any other person, firm, partnership, or corporation solely for 
deposit into the Fund, whether for investment or administrative 
purposes. 
 (l) Evaluate the need for, and procure as needed, insurance 
against any and all loss in connection with the property, 
assets, or activities of the Program, and indemnify as needed 
each member of the Board from personal loss or liability 
resulting from a member's action or inaction as a member of the 
Board. 
 (m) Make provisions for the payment of administrative costs 
and expenses for the creation, management, and operation of the 
Program, including the costs associated with subsection (b) of 
Section 20 of this Act, subsections (e), (f), (h), and (l) of 
 
this Section, subsection (b) of Section 45 of this Act, 
subsection (a) of Section 80 of this Act, and subsection (n) of 
Section 85 of this Act. Subject to appropriation, the State may 
pay administrative costs associated with the creation and 
management of the Program until sufficient assets are available 
in the Fund for that purpose. Thereafter, all administrative 
costs of the Fund, including repayment of any start-up funds 
provided by the State, shall be paid only out of moneys on 
deposit therein. However, private funds or federal funding 
received under subsection (k) of Section 30 of this Act in 
order to implement the Program until the Fund is 
self-sustaining shall not be repaid unless those funds were 
offered contingent upon the promise of such repayment. The 
Board shall keep annual administrative expenses as low as 
possible, but in no event shall they exceed 0.75% of the total 
trust balance. 
 (n) Allocate administrative fees to individual retirement 
accounts in the Program on a pro rata basis. 
 (o) Set minimum and maximum contribution levels in 
accordance with limits established for IRAs by the Internal 
Revenue Code. 
 (p) Facilitate education and outreach to employers and 
employees. 
 (q) Facilitate compliance by the Program with all 
applicable requirements for the Program under the Internal 
Revenue Code, including tax qualification requirements or any 
 
other applicable law and accounting requirements. 
 (r) Carry out the duties and obligations of the Program in 
an effective, efficient, and low-cost manner. 
 (s) Exercise any and all other powers reasonably necessary 
for the effectuation of the purposes, objectives, and 
provisions of this Act pertaining to the Program. 
 (t) Deposit into the Illinois Secure Choice Administrative 
Fund all grants, gifts, donations, fees, and earnings from 
investments from the Illinois Secure Choice Savings Program 
Fund that are used to recover administrative costs. All 
expenses of the Board shall be paid from the Illinois Secure 
Choice Administrative Fund. 
 Section 35. Risk Management. The Board shall annually 
prepare and adopt a written statement of investment policy that 
includes a risk management and oversight program. This 
investment policy shall prohibit the Board, Program, and Fund 
from borrowing for investment purposes. The risk management and 
oversight program shall be designed to ensure that an effective 
risk management system is in place to monitor the risk levels 
of the Program and Fund portfolio, to ensure that the risks 
taken are prudent and properly managed, to provide an 
integrated process for overall risk management, and to assess 
investment returns as well as risk to determine if the risks 
taken are adequately compensated compared to applicable 
performance benchmarks and standards. The Board shall consider 
 
the statement of investment policy and any changes in the 
investment policy at a public hearing. 
 Section 40. Investment firms. 
 (a) The Board shall engage, after an open bid process, an 
investment manager or managers to invest the Fund and any other 
assets of the Program. Moneys in the Fund may be invested or 
reinvested by the State Treasurer's Office or may be invested 
in whole or in part under contract with the State Board of 
Investment, private investment managers, or both, as selected 
by the Board. In selecting the investment manager or managers, 
the Board shall take into consideration and give weight to the 
investment manager's fees and charges in order to reduce the 
Program's administrative expenses. 
 (b) The investment manager or managers shall comply with 
any and all applicable federal and state laws, rules, and 
regulations, as well as any and all rules, policies, and 
guidelines promulgated by the Board with respect to the Program 
and the investment of the Fund, including, but not limited to, 
the investment policy. 
 (c) The investment manager or managers shall provide such 
reports as the Board deems necessary for the Board to oversee 
each investment manager's performance and the performance of 
the Fund. 
 Section 45. Investment options. 
 
 (a) The Board shall establish as an investment option a 
life-cycle fund with a target date based upon the age of the 
enrollee. This shall be the default investment option for 
enrollees who fail to elect an investment option unless and 
until the Board designates by rule a new investment option as 
the default as described in subsection (c) of this Section. 
 (b) The Board may also establish any or all of the 
following additional investment options: 
 (1) a conservative principal protection fund; 
 (2) a growth fund;
 (3) a secure return fund whose primary objective is the 
 preservation of the safety of principal and the provision 
 of a stable and low-risk rate of return; if the Board 
 elects to establish a secure return fund, the Board may 
 procure any insurance, annuity, or other product to insure 
 the value of individuals' accounts and guarantee a rate of 
 return; the cost of such funding mechanism shall be paid 
 out of the Fund; under no circumstances shall the Board, 
 Program, Fund, the State, or any participating employer 
 assume any liability for investment or actuarial risk; the 
 Board shall determine whether to establish such investment 
 options based upon an analysis of their cost, risk profile, 
 benefit level, feasibility, and ease of implementation; 
 (4) an annuity fund.
 (c) If the Board elects to establish a secure return fund, 
the Board shall then determine whether such option shall 
 
replace the target date or life-cycle fund as the default 
investment option for enrollees who do not elect an investment 
option. In making such determination, the Board shall consider 
the cost, risk profile, benefit level, and ease of enrollment 
in the secure return fund. The Board may at any time thereafter 
revisit this question and, based upon an analysis of these 
criteria, establish either the secure return fund or the 
life-cycle fund as the default for enrollees who do not elect 
an investment option. 
 Section 50. Benefits. Interest, investment earnings, and 
investment losses shall be allocated to individual Program 
accounts as established by the Board under subsection (d) of 
Section 30 of this Act. An individual's retirement savings 
benefit under the Program shall be an amount equal to the 
balance in the individual's Program account on the date the 
retirement savings benefit becomes payable. The State shall 
have no liability for the payment of any benefit to any 
participant in the Program. 
 Section 55. Employer and employee information packets and 
disclosure forms. 
 (a) Prior to the opening of the Program for enrollment, the 
Board shall design and disseminate to all employers an employer 
information packet and an employee information packet, which 
shall include background information on the Program, 
 
appropriate disclosures for employees, and information 
regarding the vendor Internet website described in subsection 
(i) of Section 60 of this Act.
 (b) The Board shall provide for the contents of both the 
employee information packet and the employer information 
packet.
 (c) The employee information packet shall include a 
disclosure form. The disclosure form shall explain, but not be 
limited to, all of the following: 
 (1) the benefits and risks associated with making 
 contributions to the Program;
 (2) the mechanics of how to make contributions to the 
 Program; 
 (3) how to opt out of the Program; 
 (4) how to participate in the Program with a level of 
 employee contributions other than 3%; 
 (5) the process for withdrawal of retirement savings; 
 (6) how to obtain additional information about the 
 Program; 
 (7) that employees seeking financial advice should 
 contact financial advisors, that participating employers 
 are not in a position to provide financial advice, and that 
 participating employers are not liable for decisions 
 employees make pursuant to this Act; 
 (8) that the Program is not an employer-sponsored 
 retirement plan; and 
 
 (9) that the Program Fund is not guaranteed by the 
 State. 
 (d) The employee information packet shall also include a 
form for an employee to note his or her decision to opt out of 
participation in the Program or elect to participate with a 
level of employee contributions other than 3%. 
 (e) Participating employers shall supply the employee 
information packet to employees upon launch of the Program. 
Participating employers shall supply the employee information 
packet to new employees at the time of hiring, and new 
employees may opt out of participation in the Program or elect 
to participate with a level of employee contributions other 
than 3% at that time. 
 Section 60. Program implementation and enrollment. Except 
as otherwise provided in Section 93 of this Act, the Program 
shall be implemented, and enrollment of employees shall begin, 
within 24 months after the effective date of this Act. The 
provisions of this Section shall be in force after the Board 
opens the Program for enrollment. 
 (a) Each employer shall establish a payroll deposit 
retirement savings arrangement to allow each employee to 
participate in the Program at most nine months after the Board 
opens the Program for enrollment. 
 (b) Employers shall automatically enroll in the Program 
each of their employees who has not opted out of participation 
 
in the Program using the form described in subsection (c) of 
Section 55 of this Act and shall provide payroll deduction 
retirement savings arrangements for such employees and 
deposit, on behalf of such employees, these funds into the 
Program. Small employers may, but are not required to, provide 
payroll deduction retirement savings arrangements for each 
employee who elects to participate in the Program.
 (c) Enrollees shall have the ability to select a 
contribution level into the Fund. This level may be expressed 
as a percentage of wages or as a dollar amount up to the 
deductible amount for the enrollee's taxable year under Section 
219(b)(1)(A) of the Internal Revenue Code. Enrollees may change 
their contribution level at any time, subject to rules 
promulgated by the Board. If an enrollee fails to select a 
contribution level using the form described in subsection (c) 
of Section 55 of this Act, then he or she shall contribute 3% 
of his or her wages to the Program, provided that such 
contributions shall not cause the enrollee's total 
contributions to IRAs for the year to exceed the deductible 
amount for the enrollee's taxable year under Section 
219(b)(1)(A) of the Internal Revenue Code. 
 (d) Enrollees may select an investment option from the 
permitted investment options listed in Section 45 of this Act. 
Enrollees may change their investment option at any time, 
subject to rules promulgated by the Board. In the event that an 
enrollee fails to select an investment option, that enrollee 
 
shall be placed in the investment option selected by the Board 
as the default under subsection (c) of Section 45 of this Act. 
If the Board has not selected a default investment option under 
subsection (c) of Section 45 of this Act, then an enrollee who 
fails to select an investment option shall be placed in the 
life-cycle fund investment option. 
 (e) Following initial implementation of the Program 
pursuant to this Section, at least once every year, 
participating employers shall designate an open enrollment 
period during which employees who previously opted out of the 
Program may enroll in the Program. 
 (f) An employee who opts out of the Program who 
subsequently wants to participate through the participating 
employer's payroll deposit retirement savings arrangement may 
only enroll during the participating employer's designated 
open enrollment period or if permitted by the participating 
employer at an earlier time. 
 (g) Employers shall retain the option at all times to set 
up any type of employer-sponsored retirement plan, such as a 
defined benefit plan or a 401(k), Simplified Employee Pension 
(SEP) plan, or Savings Incentive Match Plan for Employees 
(SIMPLE) plan, or to offer an automatic enrollment payroll 
deduction IRA, instead of having a payroll deposit retirement 
savings arrangement to allow employee participation in the 
Program. 
 (h) An employee may terminate his or her participation in 
 
the Program at any time in a manner prescribed by the Board. 
 (i) The Board shall establish and maintain an Internet 
website designed to assist employers in identifying private 
sector providers of retirement arrangements that can be set up 
by the employer rather than allowing employee participation in 
the Program under this Act; however, the Board shall only 
establish and maintain an Internet website under this 
subsection if there is sufficient interest in such an Internet 
website by private sector providers and if the private sector 
providers furnish the funding necessary to establish and 
maintain the Internet website. The Board must provide public 
notice of the availability of and the process for inclusion on 
the Internet website before it becomes publicly available. This 
Internet website must be available to the public before the 
Board opens the Program for enrollment, and the Internet 
website address must be included on any Internet website 
posting or other materials regarding the Program offered to the 
public by the Board. 
 Section 65. Payments. Employee contributions deducted by 
the participating employer through payroll deduction shall be 
paid by the participating employer to the Fund using one or 
more payroll deposit retirement savings arrangements 
established by the Board under subsection (h) of Section 30 of 
this Act, either: 
 (1) on or before the last day of the month following 
 
 the month in which the compensation otherwise would have 
 been payable to the employee in cash; or
 (2) before such later deadline prescribed by the Board 
 for making such payments, but not later than the due date 
 for the deposit of tax required to be deducted and withheld 
 relating to collection of income tax at source on wages or 
 for the deposit of tax required to be paid under the 
 unemployment insurance system for the payroll period to 
 which such payments relate. 
 Section 70. Duty and liability of the State. 
 (a) The State shall have no duty or liability to any party 
for the payment of any retirement savings benefits accrued by 
any individual under the Program. Any financial liability for 
the payment of retirement savings benefits in excess of funds 
available under the Program shall be borne solely by the 
entities with whom the Board contracts to provide insurance to 
protect the value of the Program. 
 (b) No State board, commission, or agency, or any officer, 
employee, or member thereof is liable for any loss or 
deficiency resulting from particular investments selected 
under this Act, except for any liability that arises out of a 
breach of fiduciary duty under Section 25 of this Act. 
 Section 75. Duty and liability of participating employers. 
 (a) Participating employers shall not have any liability 
 
for an employee's decision to participate in, or opt out of, 
the Program or for the investment decisions of the Board or of 
any enrollee. 
 (b) A participating employer shall not be a fiduciary, or 
considered to be a fiduciary, over the Program. A participating 
employer shall not bear responsibility for the administration, 
investment, or investment performance of the Program. A 
participating employer shall not be liable with regard to 
investment returns, Program design, and benefits paid to 
Program participants. 
 Section 80. Audit and reports. 
 (a) The Board shall annually submit:
 (1) an audited financial report, prepared in 
 accordance with generally accepted accounting principles, 
 on the operations of the Program during each calendar year 
 by July 1 of the following year to the Governor, the 
 Comptroller, the State Treasurer, and the General 
 Assembly; and 
 (2) a report prepared by the Board, which shall 
 include, but is not limited to, a summary of the benefits 
 provided by the Program, including the number of enrollees 
 in the Program, the percentage and amounts of investment 
 options and rates of return, and such other information 
 that is relevant to make a full, fair, and effective 
 disclosure of the operations of the Program and the Fund.
 
The annual audit shall be made by an independent certified 
public accountant and shall include, but is not limited to, 
direct and indirect costs attributable to the use of outside 
consultants, independent contractors, and any other persons 
who are not State employees for the administration of the 
Program. 
 (b) In addition to any other statements or reports required 
by law, the Board shall provide periodic reports at least 
annually to participating employers, reporting the names of 
each enrollee employed by the participating employer and the 
amounts of contributions made by the participating employer on 
behalf of each employee during the reporting period, as well as 
to enrollees, reporting contributions and investment income 
allocated to, withdrawals from, and balances in their Program 
accounts for the reporting period. Such reports may include any 
other information regarding the Program as the Board may 
determine. 
 Section 85. Penalties. 
 (a) An employer who fails without reasonable cause to 
enroll an employee in the Program within the time prescribed 
under Section 60 of this Act shall be subject to a penalty 
equal to: 
 (1) $250 for each employee for each calendar year or 
 portion of a calendar year during which the employee 
 neither was enrolled in the Program nor had elected out of 
 
 participation in the Program; or 
 (2) for each calendar year beginning after the date a 
 penalty has been assessed with respect to an employee, $500 
 for any portion of that calendar year during which such 
 employee continues to be unenrolled without electing out of 
 participation in the Program. 
 (b) After determining that an employer is subject to 
penalty under this Section for a calendar year, the Department 
shall issue a notice of proposed assessment to such employer, 
stating the number of employees for which the penalty is 
proposed under item (1) of subsection (a) of this Section and 
the number of employees for which the penalty is proposed under 
item (2) of subsection (a) of this Section for such calendar 
year, and the total amount of penalties proposed. 
 Upon the expiration of 90 days after the date on which a 
notice of proposed assessment was issued, the penalties 
specified therein shall be deemed assessed, unless the employer 
had filed a protest with the Department under subsection (c) of 
this Section. 
 If, within 90 days after the date on which it was issued, a 
protest of a notice of proposed assessment is filed under 
subsection (c) of this Section, the penalties specified therein 
shall be deemed assessed upon the date when the decision of the 
Department with respect to the protest becomes final.
 (c) A written protest against the proposed assessment shall 
be filed with the Department in such form as the Department may 
 
by rule prescribe, setting forth the grounds on which such 
protest is based. If such a protest is filed within 90 days 
after the date the notice of proposed assessment is issued, the 
Department shall reconsider the proposed assessment and shall 
grant the employer a hearing. As soon as practicable after such 
reconsideration and hearing, the Department shall issue a 
notice of decision to the employer, setting forth the 
Department's findings of fact and the basis of decision. The 
decision of the Department shall become final:
 (1) if no action for review of the decision is 
 commenced under the Administrative Review Law, on the date 
 on which the time for commencement of such review has 
 expired; or 
 (2) if a timely action for review of the decision is 
 commenced under the Administrative Review Law, on the date 
 all proceedings in court for the review of such assessment 
 have terminated or the time for the taking thereof has 
 expired without such proceedings being instituted. 
 (d) As soon as practicable after the penalties specified in 
a notice of proposed assessment are deemed assessed, the 
Department shall give notice to the employer liable for any 
unpaid portion of such assessment, stating the amount due and 
demanding payment. If an employer neglects or refuses to pay 
the entire liability shown on the notice and demand within 10 
days after the notice and demand is issued, the unpaid amount 
of the liability shall be a lien in favor of the State of 
 
Illinois upon all property and rights to property, whether real 
or personal, belonging to the employer, and the provisions in 
the Illinois Income Tax Act regarding liens, levies and 
collection actions with regard to assessed and unpaid 
liabilities under that Act, including the periods for taking 
any action, shall apply. 
 (e) An employer who has overpaid a penalty assessed under 
this Section may file a claim for refund with the Department. A 
claim shall be in writing in such form as the Department may by 
rule prescribe and shall state the specific grounds upon which 
it is founded. As soon as practicable after a claim for refund 
is filed, the Department shall examine it and either issue a 
refund or issue a notice of denial. If such a protest is filed, 
the Department shall reconsider the denial and grant the 
employer a hearing. As soon as practicable after such 
reconsideration and hearing, the Department shall issue a 
notice of decision to the employer. The notice shall set forth 
briefly the Department's findings of fact and the basis of 
decision in each case decided in whole or in part adversely to 
the employer. A denial of a claim for refund becomes final 90 
days after the date of issuance of the notice of the denial 
except for such amounts denied as to which the employer has 
filed a protest with the Department. If a protest has been 
timely filed, the decision of the Department shall become 
final: 
 (1) if no action for review of the decision is 
 
 commenced under the Administrative Review Law, on the date 
 on which the time for commencement of such review has 
 expired; or 
 (2) if a timely action for review of the decision is 
 commenced under the Administrative Review Law, on the date 
 all proceedings in court for the review of such assessment 
 have terminated or the time for the taking thereof has 
 expired without such proceedings being instituted. 
 (f) No notice of proposed assessment may be issued with 
respect to a calendar year after June 30 of the fourth 
subsequent calendar year. No claim for refund may be filed more 
than 1 year after the date of payment of the amount to be 
refunded. 
 (g) The provisions of the Administrative Review Law and the 
rules adopted pursuant to it shall apply to and govern all 
proceedings for the judicial review of final decisions of the 
Department in response to a protest filed by the employer under 
subsections (c) and (e) of this Section. Final decisions of the 
Department shall constitute "administrative decisions" as 
defined in Section 3-101 of the Code of Civil Procedure. 
 (h) Whenever notice is required by this Section, it may be 
given or issued by mailing it by first-class mail addressed to 
the person concerned at his or her last known address. 
 (i) All books and records and other papers and documents 
relevant to the determination of any penalty due under this 
Section shall, at all times during business hours of the day, 
 
be subject to inspection by the Department or its duly 
authorized agents and employees. 
 (j) The Department may require employers to report 
information relevant to their compliance with this Act on 
returns otherwise due from the employers under Section 704A of 
the Illinois Income Tax Act and failure to provide the 
requested information on a return shall cause such return to be 
treated as unprocessable. 
 (k) For purposes of any provision of State law allowing the 
Department or any other agency of this State to offset an 
amount owed to a taxpayer against a tax liability of that 
taxpayer or allowing the Department to offset an overpayment of 
tax against any liability owed to the State, a penalty assessed 
under this Section shall be deemed to be a tax liability of the 
employer and any refund due to an employer shall be deemed to 
be an overpayment of tax of the employer. 
 (l) Except as provided in this subsection, all information 
received by the Department from returns filed by an employer or 
from any investigation conducted under the provisions of this 
Act shall be confidential, except for official purposes within 
the Department or pursuant to official procedures for 
collection of penalties assessed under this Act. Nothing 
contained in this subsection shall prevent the Director from 
publishing or making available to the public reasonable 
statistics concerning the operation of this Act wherein the 
contents of returns are grouped into aggregates in such a way 
 
that the specific information of any employer shall not be 
disclosed. Nothing contained in this subsection shall prevent 
the Director from divulging information to an authorized 
representative of the employer or to any person pursuant to a 
request or authorization made by the employer or by an 
authorized representative of the employer. 
 (m) Civil penalties collected under this Act and fees 
collected pursuant to subsection (n) of this Section shall be 
deposited into the Tax Compliance and Administration Fund. The 
Department may, subject to appropriation, use moneys in the 
fund to cover expenses it incurs in the performance of its 
duties under this Act. Interest attributable to moneys in the 
Tax Compliance and Administration Fund shall be credited to the 
Tax Compliance and Administration Fund.
 (n) The Department may charge the Board a reasonable fee 
for its costs in performing its duties under this Section to 
the extent that such costs have not been recovered from 
penalties imposed under this Section. 
 (o) This Section shall become operative 9 months after the 
Board notifies the Director that the Program has been 
implemented. Upon receipt of such notification from the Board, 
the Department shall immediately post on its Internet website a 
notice stating that this Section is operative and the date that 
it is first operative. This notice shall include a statement 
that rather than enrolling employees in the Program under this 
Act, employers may sponsor an alternative arrangement, 
 
including, but not limited to, a defined benefit plan, 401(k) 
plan, a Simplified Employee Pension (SEP) plan, a Savings 
Incentive Match Plan for Employees (SIMPLE) plan, or an 
automatic payroll deduction IRA offered through a private 
provider. The Board shall provide a link to the vendor Internet 
website described in subsection (i) of Section 60 of this Act. 
 Section 90. Rules. The Board and the Department shall 
adopt, in accordance with the Illinois Administrative 
Procedure Act, any rules that may be necessary to implement 
this Act. 
 Section 93. Delayed implementation. If the Board does not 
obtain adequate funds to implement the Program within the time 
frame set forth under Section 60 of this Act, the Board may 
delay the implementation of the Program. 
 Section 95. Federal considerations. The Board shall 
request in writing an opinion or ruling from the appropriate 
entity with jurisdiction over the federal Employee Retirement 
Income Security Act regarding the applicability of the federal 
Employee Retirement Income Security Act to the Program. The 
Board may not implement the Program if the IRA arrangements 
offered under the Program fail to qualify for the favorable 
federal income tax treatment ordinarily accorded to IRAs under 
the Internal Revenue Code or if it is determined that the 
 
Program is an employee benefit plan and State or employer 
liability is established under the federal Employee Retirement 
Income Security Act. 
 Section 500. The State Finance Act is amended by adding 
Section 5.855 as follows: 
 (30 ILCS 105/5.855 new)
 Sec. 5.855. The Illinois Secure Choice Administrative 
Fund.