Sen. Iris Y. Martinez
Filed: 3/2/2012
 
 


 




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1
AMENDMENT TO SENATE BILL 1844




2 AMENDMENT NO. ______. Amend Senate Bill 1844 by replacing 
3everything after the enacting clause with the following:


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 in the State of 
14Illinois for whom an individual performs or performed any 
15service as an employee.
16 "Enrollee" means any employee who is enrolled in the 
 
 
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1Program.
2 "Fund" means the Illinois Automatic IRA Program Fund.
3 "IRA" means an individual retirement account under Section 
4408 of the Internal Revenue Code.
5 "Participating employer" means any qualified small 
6employer with employees that are enrolled in the Program.
7 "Program" means the Illinois Automatic IRA Program.
8 "Qualified small employer" means an employer located in the 
9State of Illinois that (i) employed at least 10, but fewer than 
10100, employees during the previous calendar year, (ii) has been 
11in business for a period of at least 2 years after the 
12enactment of this Act, (iii) did not offer a qualified 
13retirement plan, including, but not limited to, a plan 
14qualified under Section 401(a), Section 401(k), Section 
15403(a), Section 403(b), Section 408(k), Section 408(p), or 
16Section 457(b) of the Internal Revenue Code for the 2 years 
17prior to the effective date of this Act.

18 Section 10. Establishment of Illinois Automatic IRA 
19Program. There is hereby established a retirement savings 
20program known as the Illinois Automatic IRA Program to be 
21administered by the State Treasurer with the intent of 
22promoting greater retirement savings for private sector 
23employees in a convenient, low-cost, and portable manner.

24 Section 15. Illinois Automatic IRA Program Fund.
 
 
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1 (a) There is established the Illinois Automatic IRA Program 
2Fund to finance the program created by this Act. The assets of 
3the Fund shall be administered by the State Treasurer's office 
4as trust funds and shall be used exclusively for the purposes 
5of administering the Program, including the design and 
6qualification of the Program, supporting the administrative 
7cost of establishing the Program and providing information 
8about the Program.
9 (b) The Fund shall include the individual accounts of 
10enrollees, which shall be accounted for as individual accounts.
11 (c) Moneys in the Fund shall consist of moneys received 
12from enrollees and participating employers pursuant to 
13automatic payroll deductions and contributions to savings made 
14under this Act, grants from the United States government and 
15its agencies and instrumentalities, and any other available 
16sources of funds, public or private. Interest and income earned 
17from the investment of such funds shall remain in the Fund and 
18be credited to it.

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

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

23 Section 30. Duties of qualified small employers. Qualified 
24small employers shall automatically enroll their employees in 
 
 
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1the Program and provide payroll deductions for such employees.

2 Section 35. Regulations. The State Treasurer shall adopt 
3such regulations and procedures as may be necessary to 
4implement the Program. As part of the regulation development 
5process, the State Treasurer shall consult with employers, 
6workers, private sector retirement plan administrators and 
7providers, and any other individuals or entities that it 
8determines relevant to the development of an effective and 
9efficient method for operating the Program. Regulations shall 
10be adopted, including, at a minimum, requirements of 
11enrollment, contribution and investment requirements, as 
12necessary to implement and administer the Program.

13 Section 40. Liability. Neither the State of Illinois nor 
14any State board, commission, or agency, or any officer, 
15employee, or member of the same shall be liable for any loss or 
16deficiency resulting from investment selected by an enrollee. 
17An employer shall not be liable for any loss or deficiency 
18resulting from making default payroll deductions or default 
19investment decisions on behalf of an employee.

20 Section 45. Audits and reports. The accounts and records of 
21the State Treasurer showing the receipt and disbursement of 
22funds, from whatever source derived, in connection with the 
23Program be available for audit on as frequent a basis as 
 
 
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1prescribed by regulations enacted under this Act. The State 
2Treasurer shall issue an annual report on the status of the 
3Program prior to December 1 of each year.


4 Section 99. Effective date. This Act takes effect upon 
5becoming law.".