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
 


SB1844LRB097 06692 AEK 46779 b



1 AN ACT concerning employment.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 1. Short title. This Act may be cited as the 
5Illinois Automatic IRA Program Act.

6 Section 5. Definitions. As used in this Act, unless the 
7context requires a different meaning:
8 "Compensation" means remuneration paid to a participant 
9for services rendered to his or her employer.
10 "Employee" means any individual who performs or performed 
11any service on behalf of a business operating in the State of 
12Illinois. 
13 "Employer" means any business operating the State of 
14Illinois for whom an individual performs or performed any 
15service as an employee and that has more than 10 and less than 
16100 employees and that does not and has not for the previous 2 
17years offered a qualified retirement plan to its employees.
18 "Enrollee" means any employee who is enrolled in the 
19Program.
20 "Fund" means the Illinois Automatic IRA Program Fund.
21 "IRA" means an individual retirement account under Section 
22408 of the Internal Revenue Code.
23 "Participating employer" means any qualified small 
 
 
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1employer with employees that are enrolled in the Program.
2 "Program" means the Illinois Automatic IRA Program.
3 "Qualified small employer" means an employer located in the 
4State of Illinois that (i) employed at least 10 employees 
5during the previous calendar year, (ii) has been in business 
6for a period of at least 2 years after the enactment of this 
7Act, (iii) did not offer a qualified retirement plan, 
8including, but not limited to, a plan qualified under Section 
9401(a), Section 401(k), Section 403(a), Section 403(b), 
10Section 408(k), Section 408(p), or Section 457(b) of the 
11Internal Revenue Code for the 2 years prior to the effective 
12date of this Act.

13 Section 10. Establishment of Illinois Automatic IRA 
14Program. There is hereby established a retirement savings 
15program known as the Illinois Automatic IRA Program to be 
16administered by the State Treasurer with the intent of 
17promoting greater retirement savings for private sector 
18employees in a convenient, low-cost, and portable manner.

19 Section 15. Illinois Automatic IRA Program Fund.
20 (a) There is established the Illinois Automatic IRA Program 
21Fund to finance the program created by this Act. The assets of 
22the Fund shall be administered by the State Treasurer's office 
23as trust funds and shall be used exclusively for the purposes 
24of administering the Program, including the design and 
 
 
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1qualification of the Program, supporting the administrative 
2cost of establishing the Program and providing information 
3about the Program.
4 (b) The Fund shall include the individual accounts of 
5enrollees, which shall be accounted for as individual accounts.
6 (c) Moneys in the Fund shall consist of moneys received 
7from enrollees and participating employers pursuant to 
8automatic payroll deductions and contributions to savings made 
9under this Act, grants from the United States government and 
10its agencies and instrumentalities, and any other available 
11sources of funds, public or private. Interest and income earned 
12from the investment of such funds shall remain in the Fund and 
13be credited to it.

14 Section 20. Operation of Program.
15 (a) The Program shall be administered by the State 
16Treasurer, or his or her designee, and prior to accepting any 
17enrollees or funds the State Treasurer shall design a plan of 
18operation for the Program, which plan of operation shall be 
19approved by the Internal Revenue Service to offer the Program 
20to enrollees on a tax-qualified basis. The Program shall 
21include an option for enrollees to roll pre-tax contributions 
22into an individual retirement account or other eligible 
23retirement plan after ceasing participation in the Program.
24 (b) In designing the plan of operation for the Program, the 
25State Treasurer shall consult with employers, workers, private 
 
 
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1sector retirement plan administrators and providers, and any 
2other persons that the State Treasurer determines relevant to 
3the development of an effective and efficient method of 
4operating the Program.
5 (c) The plan of operation for the Program shall include, at 
6a minimum, the following elements:
7  (1) a payroll deduction IRA arrangement for employees 
8 of qualified small employers wherein a qualified small 
9 employer shall deduct a default amount of 2% from an 
10 employee's salary, or such other percentage as an employee 
11 has elected, and deposit it into the Fund;
12  (2) the ability for the State Treasurer to enter into 
13 an administrative service arrangement that will allow 
14 participating employers to achieve economies of scale for 
15 pension or retirement savings arrangements relating to 
16 accounting, investment, payroll processing employee 
17 communication, or investor education;
18  (3) the ability for each enrolled employee to 
19 periodically elect to contribute up to a set percentage of 
20 his or her compensation or a dollar amount to the Fund; 
21 provided, however, if an election is not made the Program 
22 administrator shall select a default contribution option 
23 on behalf of the employee;
24  (4) the ability for each enrolled employee to direct 
25 the investment of such enrollee's contribution and be 
26 entitled to make investment choices within available 
 
 
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1 categories of investments provided through the Program; 
2 provided, however, that if an enrollee does not select an 
3 investment option then the Program administrator shall 
4 select a default investment option on behalf of the 
5 employee;
6  (5) the ability for the State Treasurer to contract, 
7 after an open bid process, with a third-party administrator 
8 for the management of the Fund and any other assets of the 
9 Program and whose fees shall be reasonable and shall be 
10 paid from the Fund and the Program's assets;
11  (6) a requirement that each retirement plan or account 
12 shall pay a proportionate share of the expenses incurred to 
13 implement, maintain, and administer the Program; and
14  (7) a provision that the State Treasurer, his or her 
15 designee, any other employees or agents of the Program, or 
16 any investment manager shall not have any liability with 
17 respect to investment returns under any retirement plan.

18 Section 25. Duties and authority of State Treasurer. The 
19State Treasurer shall have the authority and responsibility to 
20carry out the following duties:
21  (1) administer the Fund and the Program, including the 
22 authority to invest moneys in the Fund in any instruments, 
23 obligations, securities, or property deemed appropriate by 
24 the State Treasurer;
25  (2) apply for, accept, and expend gifts, grants, or 
 
 
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1 other donations from public or private sources to enable it 
2 to carry out the objectives of the Program;
3  (3) enter into contractual agreements, including 
4 contracts for legal, actuarial, financial and consulting 
5 services;
6  (4) develop strategies to inform the public of the 
7 availability and desirability of the Program, including 
8 education about the need to accumulate financial resources 
9 for retirement, available options for financing 
10 retirement, and basic information about investing 
11 strategies; and
12  (5) engage in such other activities are necessary to 
13 implement and administer the Program.

14 Section 30. Duties of qualified small employers. Qualified 
15small employers shall automatically enroll their employees in 
16the Program and provide payroll deductions for such employees.

17 Section 35. Regulations. The State Treasurer shall adopt 
18such regulations and procedures as may be necessary to 
19implement the Program. As part of the regulation development 
20process, the State Treasurer shall consult with employers, 
21workers, private sector retirement plan administrators and 
22providers, and any other individuals or entities that it 
23determines relevant to the development of an effective and 
24efficient method for operating the Program. Regulations shall 
 
 
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1be adopted, including, at a minimum, requirements of 
2enrollment, contribution and investment requirements, as 
3necessary to implement and administer the Program.

4 Section 40. Liability. Neither the State of Illinois nor 
5any State board, commission, or agency, or any officer, 
6employee, or member of the same shall be liable for any loss or 
7deficiency resulting from investment selected by an enrollee. 
8An employer shall not be liable for any loss or deficiency 
9resulting from making default payroll deductions or default 
10investment decisions on behalf of an employee.

11 Section 45. Audits and reports. The accounts and records of 
12the State Treasurer showing the receipt and disbursement of 
13funds, from whatever source derived, in connection with the 
14Program be available for audit on as frequent a basis as 
15prescribed by regulations enacted under this Act. The State 
16Treasurer shall issue an annual report on the status of the 
17Program prior to December 1 of each year.


18 Section 99. Effective date. This Act takes effect upon 
19becoming law.