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Illinois Poised to Create Nation’s First State Auto-IRA Program


UPDATED DECEMBER 04, 2014


More than a dozen states are at various stages of considering some kind of “automatic IRA” proposal — but the Land of Lincoln may have just leapt to the front of the line.


The Illinois General Assembly is on the verge of sending legislation to Gov. Pat Quinn (D) that would create a state-run automatic enrollment payroll deduction IRA program for private sector employers.


The legislation includes a requirement that private employers with 25 or more employees either offer the state-run auto-IRA arrangement or be subject to a fine of $250 per employee per year. That requirement would only apply to employers that choose not to sponsor any other type of private retirement plan for their eligible employees.


The Illinois Senate initially passed the legislation in April, but the bill languished in the Illinois House for months due to opposition. However, following an extensive education and lobbying campaign by State Sen. Daniel Biss (D-9th), the lead sponsor of the bill, the Illinois House took up and passed the bill during its current special legislative session on Dec. 2, by a comfortable margin of 67-45.


The bill is not out of the woods yet, however. Since the House adopted some amendments to the version passed by the Illinois Senate, it must now go back to the Senate for a vote on the modified bill.


Even if the bill becomes law, there are other potential roadblocks that may delay or block implementation of the state-run program. For instance, the bill contains language specifying that the program cannot be implemented if the federal government determines that either:



  • the IRA arrangements offered under the program are not tax qualified; or

  • the program is an ERISA employee benefit plan (a typical consideration in a number of these state proposals).


Additionally, the amended legislation directs the “Illinois Secure Choice Board” created by the bill to implement the program within 24 months of when the bill is signed into law. However, the program may be delayed further if the Board fails “obtain adequate funds” to implement the program. It is unclear whether these funds would be raised through public or private sources, but regardless, the earliest the requirement could kick in for Illinois businesses is 2017.      


The ASPPA GAC team is closely monitoring events in Illinois and will keep you posted.


For more information on the various state initiatives, check out “The Auto IRA Game” in the Fall 2014 issue of NAPA Net the Magazine


UPDATED DECEMBER 04, 2014:



The Illinois Senate approved the House version of the bill by a 30-25 margin. Exactly 30 votes were needed, and two senators did not vote. Illinois Governor Pat Quinn — who lost his reelection bid in November — is expected to sign the bill into law.


Andrew Remo is the Congressional Affairs Manager at NAPA and ASPPA.


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