Bill Text: IL SB1844 | 2011-2012 | 97th General Assembly | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Creates the Illinois Automatic IRA Program Act. Provides that the Illinois Automatic IRA Program shall be administered by the State Treasurer and that the Treasurer shall adopt regulations to implement the Program. Allows employees of certain employers that have not offered a qualified retirement plan for 2 years to set aside a percentage of their wages to be deposited into an IRA trust fund administered by the State Treasurer's office. Sets minimum requirements for the operation of the Program. Sets forth duties and authority of the State Treasurer in relation to the Program. Limits State and employer liability. Contains provisions regarding audits and reports. Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Failed) 2013-01-08 - Session Sine Die [SB1844 Detail]

Download: Illinois-2011-SB1844-Introduced.html

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97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 SB1844 Introduced 2/9/2011, by Sen. Iris Y. Martinez SYNOPSIS AS INTRODUCED:
New Act
Creates the Illinois Automatic IRA Program Act. Provides that the Illinois Automatic IRA Program shall be administered by the State Treasurer and that the Treasurer shall adopt regulations to implement the Program. Allows employees of certain employers that have not offered a qualified retirement plan for 2 years to set aside a percentage of their wages to be deposited into an IRA trust fund administered by the State Treasurer's office. Sets minimum requirements for the operation of the Program. Sets forth duties and authority of the State Treasurer in relation to the Program. Limits State and employer liability. Contains provisions regarding audits and reports. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning employment.
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 Automatic IRA Program Act.
Section 5. Definitions. As used in this Act, unless the
context requires a different meaning:
"Compensation" means remuneration paid to a participant
for services rendered to his or her employer.
"Employee" means any individual who performs or performed
any service on behalf of a business operating in the State of
Illinois.
"Employer" means any business operating the State of
Illinois for whom an individual performs or performed any
service as an employee and that has more than 10 and less than
100 employees and that does not and has not for the previous 2
years offered a qualified retirement plan to its employees.
"Enrollee" means any employee who is enrolled in the
Program.
"Fund" means the Illinois Automatic IRA Program Fund.
"IRA" means an individual retirement account under Section
408 of the Internal Revenue Code.
"Participating employer" means any qualified small

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employer with employees that are enrolled in the Program.
"Program" means the Illinois Automatic IRA Program.
"Qualified small employer" means an employer located in the
State of Illinois that (i) employed at least 10 employees
during the previous calendar year, (ii) has been in business
for a period of at least 2 years after the enactment of this
Act, (iii) did not offer 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 for the 2 years prior to the effective
date of this Act.
Section 10. Establishment of Illinois Automatic IRA
Program. There is hereby established a retirement savings
program known as the Illinois Automatic IRA Program to be
administered by the State Treasurer with the intent of
promoting greater retirement savings for private sector
employees in a convenient, low-cost, and portable manner.
Section 15. Illinois Automatic IRA Program Fund.
(a) There is established the Illinois Automatic IRA Program
Fund to finance the program created by this Act. The assets of
the Fund shall be administered by the State Treasurer's office
as trust funds and shall be used exclusively for the purposes
of administering the Program, including the design and

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qualification of the Program, supporting the administrative
cost of establishing the Program and providing information
about the Program.
(b) The Fund shall include the individual accounts of
enrollees, which shall be accounted for as individual accounts.
(c) 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, grants from the United States government and
its agencies and instrumentalities, and any other available
sources of funds, public or private. Interest and income earned
from the investment of such funds shall remain in the Fund and
be credited to it.
Section 20. Operation of Program.
(a) The Program shall be administered by the State
Treasurer, or his or her designee, and prior to accepting any
enrollees or funds the State Treasurer shall design a plan of
operation for the Program, which plan of operation shall be
approved by the Internal Revenue Service to offer the Program
to enrollees on a tax-qualified basis. The Program shall
include an option for enrollees to roll pre-tax contributions
into an individual retirement account or other eligible
retirement plan after ceasing participation in the Program.
(b) In designing the plan of operation for the Program, the
State Treasurer shall consult with employers, workers, private

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sector retirement plan administrators and providers, and any
other persons that the State Treasurer determines relevant to
the development of an effective and efficient method of
operating the Program.
(c) The plan of operation for the Program shall include, at
a minimum, the following elements:
(1) a payroll deduction IRA arrangement for employees
of qualified small employers wherein a qualified small
employer shall deduct a default amount of 2% from an
employee's salary, or such other percentage as an employee
has elected, and deposit it into the Fund;
(2) the ability for the State Treasurer to enter into
an administrative service arrangement that will allow
participating employers to achieve economies of scale for
pension or retirement savings arrangements relating to
accounting, investment, payroll processing employee
communication, or investor education;
(3) the ability for each enrolled employee to
periodically elect to contribute up to a set percentage of
his or her compensation or a dollar amount to the Fund;
provided, however, if an election is not made the Program
administrator shall select a default contribution option
on behalf of the employee;
(4) the ability for each enrolled employee to direct
the investment of such enrollee's contribution and be
entitled to make investment choices within available

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categories of investments provided through the Program;
provided, however, that if an enrollee does not select an
investment option then the Program administrator shall
select a default investment option on behalf of the
employee;
(5) the ability for the State Treasurer to contract,
after an open bid process, with a third-party administrator
for the management of the Fund and any other assets of the
Program and whose fees shall be reasonable and shall be
paid from the Fund and the Program's assets;
(6) a requirement that each retirement plan or account
shall pay a proportionate share of the expenses incurred to
implement, maintain, and administer the Program; and
(7) a provision that the State Treasurer, his or her
designee, any other employees or agents of the Program, or
any investment manager shall not have any liability with
respect to investment returns under any retirement plan.
Section 25. Duties and authority of State Treasurer. The
State Treasurer shall have the authority and responsibility to
carry out the following duties:
(1) administer the Fund and the Program, including the
authority to invest moneys in the Fund in any instruments,
obligations, securities, or property deemed appropriate by
the State Treasurer;
(2) apply for, accept, and expend gifts, grants, or

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other donations from public or private sources to enable it
to carry out the objectives of the Program;
(3) enter into contractual agreements, including
contracts for legal, actuarial, financial and consulting
services;
(4) develop strategies to inform the public of the
availability and desirability of the Program, including
education about the need to accumulate financial resources
for retirement, available options for financing
retirement, and basic information about investing
strategies; and
(5) engage in such other activities are necessary to
implement and administer the Program.
Section 30. Duties of qualified small employers. Qualified
small employers shall automatically enroll their employees in
the Program and provide payroll deductions for such employees.
Section 35. Regulations. The State Treasurer shall adopt
such regulations and procedures as may be necessary to
implement the Program. As part of the regulation development
process, the State Treasurer shall consult with employers,
workers, private sector retirement plan administrators and
providers, and any other individuals or entities that it
determines relevant to the development of an effective and
efficient method for operating the Program. Regulations shall

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be adopted, including, at a minimum, requirements of
enrollment, contribution and investment requirements, as
necessary to implement and administer the Program.
Section 40. Liability. Neither the State of Illinois nor
any State board, commission, or agency, or any officer,
employee, or member of the same shall be liable for any loss or
deficiency resulting from investment selected by an enrollee.
An employer shall not be liable for any loss or deficiency
resulting from making default payroll deductions or default
investment decisions on behalf of an employee.
Section 45. Audits and reports. The accounts and records of
the State Treasurer showing the receipt and disbursement of
funds, from whatever source derived, in connection with the
Program be available for audit on as frequent a basis as
prescribed by regulations enacted under this Act. The State
Treasurer shall issue an annual report on the status of the
Program prior to December 1 of each year.
Section 99. Effective date. This Act takes effect upon
becoming law.