The Illinois Secure Choice Savings Program Act established a retirement program for private-sector employees in Illinois who don’t have access to workplace plans. It’s overseen by the Illinois Secure Choice Savings Board, which includes the Illinois State Treasurer. To date, more than 7,700 employers and nearly 156,000 workers are already participating in the program.
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What is the Illinois Secure Choice Savings Program?
The Illinois Secure Choice Retirement Savings Program (aka Illinois Secure Choice) is a state-sponsored retirement program that launched in 2018. It’s mandated for Illinois businesses that have been around for at least two years, have had at least five employees throughout the previous year, and don’t already provide a qualified, employer-sponsored retirement plan. Businesses that qualify for it need to register or claim an exemption.
How does Illinois Secure Choice work?
Once an eligible Illinois employer registers using the portal and adds employee information, their employees will then receive invitations from Illinois Secure Choice to access the IRA account, or they will be able to opt out if they don’t want to participate.
The default account type is a Roth IRA. Since contributions are made with after-tax dollars, the earnings from them are not taxed when distributions are taken after age 59½. The other available account type—if an employee selects it—is a Traditional IRA. Its contributions are pre-tax, so the distributions after age 59½ are taxed as income based on when the withdrawals are made. They also don’t have income limits like Roth IRAs do.
Eligibility requirements for employees
To participate in Illinois Secure Choice, the requirements for eligible employees are pretty simple. They must be …
- 18 or older
- Employed in the state of Illinois
- Be a full-time employee, a part-time employee, or a business owner who is considered an employee.
- They must be eligible for a Roth IRA. For example, if someone’s modified adjusted gross income in 2025 is $150,000 or more if they’re filing taxes on their own, or it’s $236,000 or more for those filing joint taxes, then they may only be able to contribute a limited amount to a Roth IRA or won’t be able to contribute anything at all.
Enrollment and contribution options for employees
Employees will have 30 days to opt out of enrollment, and if they don’t, they’ll be automatically enrolled in the Roth IRA with a default contribution rate of 5% of their gross pay. In addition, the rate will automatically increase by 1% each year (up to 10%) for savers who have been in the program for at least six months, but they can opt out of that as well if they want.
At any time, employees can also choose to save as little as 1% or increase their contribution level to more than 5%, as long as contribution limits set by the Internal Revenue Service (IRS) aren’t exceeded. That amount is the same for 2025 as it was for 2024: $7,000 for those age 49 and younger and $8,000 for those 50 and up, whether they’re single filers or married filing jointly. If an existing pre-tax retirement account is being rolled over into the program, consult with a tax or financial advisor first before taking any distributions.
When determining how much you can afford to put away in your retirement plan, it helps to know that when contributing to Roth or Traditional IRAs—and 401(k)s—the IRS allows those who are eligible to possibly claim a Saver’s Credit for the first $2,000 ($4,000 if married filing jointly) they put into these plans. Since the credit rate can be as much as 50% of the contribution, the maximum credit could be $1,000 for single filers or $2,000 for those who are married and filing jointly.
Understanding the investment options
Contributions first go into a 90-day holding vehicle, which is the account revocation period. It’s not a stand-alone investment option, so if another available investment option isn’t selected, the funds then go into a default retirement savings option, which is the Target Date Retirement Fund corresponding to the date of birth.
Fees associated with each investment option are outlined in the chart below. Note that the Annualized Asset-Based Fee is calculated by adding the Underlying Investment Fund Fee, the 0.05% State Fee, and the 0.25% Program Administration Fee.
These are the investment choices:
| Investment option | Invested in | Underlying investment fee | Total annualized asset-based fee |
| 90-Day Holding Vehicle | State Street Institutional U.S. Government Money Market Fund – CabreraCapital Markets Class | 0.15% | 0.45% |
| Capital Preservation Fund | State Street Institutional U.S. Government Money Market Fund – CabreraCapital Markets Class | 0.15% | 0.45% |
| Target Retirement Date Fund | BlackRock LifePath® Index Retirement Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2030 | BlackRock LifePath® Index 2030 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2035 | BlackRock LifePath® Index 2035 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2040 | BlackRock LifePath® Index 2040 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2045 | BlackRock LifePath® Index 2045 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2050 | BlackRock LifePath® Index 2050 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2055 | BlackRock LifePath® Index 2055 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2060 | BlackRock LifePath® Index 2060 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2065 | BlackRock LifePath® Index 2065 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2070 | BlackRock LifePath® Index 2070 Fund | 0.09% | 0.39% |
| Target Retirement Date Fund 2075 | BlackRock LifePath® Index 2075 Fund | 0.09% | 0.39% |
| Conservative Fund | Schwab® U.S. Aggregate Bond Index Fund | 0.04% | 0.34% |
| Growth Fund | Schwab® S&P 500 Index Fund | 0.02% | 0.32% |
For a $1,000 initial contribution with a 5% annually compounded rate of return (assuming annual asset-based fees remain around the same as they are now), this is a hypothetical illustration of how much it will approximately cost from one to 10 years, excluding what you will pay in state and federal taxes:
| Investment | 1 year | 3 years | 5 years | 10 years |
| Capital Preservation Fund | $21 | $62 | $104 | $213 |
| Target Retirement Date Funds | $20 | $60 | $101 | $206 |
| Conservative Fund | $19 | $59 | $99 | $200 |
| Growth Fund | $19 | $58 | $97 | $198 |
What employers need to know about Illinois Secure Choice
Eligibility requirements and deadlines for employers
Small business employers have enough on their plates. The good news is that meeting the criteria to set up Illinois Secure Choice is simple. Employers in the state of Illinois need to…
- Be no less than two years in business and registered in Illinois.
- Have had at least five employees, and never fewer than that during each quarter for the prior calendar year. (If you have fewer employees this year, contact client services for Illinois Secure Choice: [email protected] or (855) 650-6913.) Those employees can include:
- Seasonal employees, as long as they work for more than 60 days. That is the window for employers to enroll new hires in the program and for employees to have up to 30 days to decide if they want to participate through the automatic enrollment or opt out of the program.
- H-2A visa workers, as long as they work for more than 60 days and can be verified.
- Business owners, shareholders, and family members who are also classified and taxed as employees count toward the minimum number of employees required for eligibility.
- Not already provide a qualified, employer-sponsored retirement plan.
Employer responsibilities with Illinois Secure Choice
The program is designed to be simple for employers to facilitate, although they have no oversight over it and are not responsible for it. Employers have no fiduciary responsibility for the program, so they don’t assume liability for decisions and outcomes made in connection with it.
The Illinois Secure Choice website also offers educational webinars to assist employees. Plus, employers can contact Illinois Secure Choice to schedule a time to provide a support team to meet with your company.
Business owners can also sign up for webinars or watch recordings of them that provide an overview of why the program was created, an explanation of employer responsibilities and how to facilitate the program to remain compliant, and step-by-step instructions and guided support for how to enter employee information in the portal and upload employee rosters, in addition to how to submit employee payroll contributions for each pay period.
Overall, there are some important tasks associated with the program that need to be checked off your employer to-do list, along with some clear guidelines on what you should never do:
| Do | Don’t |
| Register your business by creating an employer account (guidance on how to do this below) | Provide tax advice, legal advice, investment advice, or financial advice, or manage employees’ personal information, including beneficiary details |
| Share key onboarding details for existing and new employees to the program administrator, which include full legal name, Social Security number or taxpayer ID number, date of birth, address, and email address | Promise a return on savings or any type of additional benefit |
| Update your participating employees’ contribution rates within your payroll once a 30-day period to opt out after enrollment has passed | Tell employees whether or not they should contribute to the program, or share opinions about it and the IRAs maintained by it |
| Set up payroll deductions and remit employees’ contributions quickly to the program administrator | Contribute money to the program or match employee contributions |
| Maintain employee records, and keep your employees’ payroll contributions and staff list up to date for compliant recordkeeping | Offer assistance for determining eligibility for a Roth IRA or a Traditional IRA |
Non-compliance penalties
If your business has five or more employees, and you haven’t claimed an exemption because you already offer a qualified retirement plan, you must register to administer Illinois Secure Choice. If you don’t enroll your employees, there are steep penalties:
| First calendar year penalty for noncompliance | $250 fine per employee |
| Any subsequent year penalty for noncompliance | $500 fine per employee |
When there are violations, Illinois Secure Choice will issue notifications to employers. Within 120 days of receiving that, employers can file a written protest to obtain a hearing or remedy their violations to become fully compliant. Otherwise, the penalties will be assessed.
How to register your business for Illinois Secure Choice
When broken down into a few steps, registration is easy and fast. These are the key tasks and details:
- Go to Illinois Secure Choice to set up an employer account.
- You’ll need your access code and your employer identification number (EIN).
- Illinois Secure Choice would’ve sent it to you via email or mail when you were due to register, but if you misplaced the notification or don’t remember receiving it, you can request an access code online.
- Add contact information for the person who will facilitate Illinois Secure Choice for your business. In the program, those individuals are referred to as “Administrators/Delegates.”
- Add your roster of employees with their details, including Social Security numbers, full names, permanent US addresses, birthdates, phone numbers, and email addresses.
- Illinois Secure Choice will send messages about opting in or opting out within 30 days.
- If they opt in, then contributions can be made and managed through the program.
- If they fail to make a selection, then they’ll be automatically enrolled in a Roth IRA with the default contribution selection of 5% of gross pay after taxes have been taken out.
- You can also integrate your payroll provider, such as Gusto, with limited or full access when you add employee information or after completing registration. Select “Payroll Integration” from the Employer Dashboard, and choose your payroll software from the list.
Benefits of Illinois Secure Choice
While Illinois led the charge in implementing a retirement plan mandate, there are now more than a dozen states that have followed suit with auto-IRAs. And employees are 20 percent more likely to invest in retirement when they work in a state with auto-enrollment policies, according to Gusto’s research, which has also found that employers tend to experience increased employee retention and satisfaction when they offer retirement savings benefits.
The Georgetown University McCourt School of Public Policy’s Center for Retirement Initiatives has also discovered another surprising advantage of the state auto-IRA policies: 30,000 firms have established their own retirement plans. This new research reveals “that states that have implemented Auto IRA legislation have seen an expansion in the retirement plan market for smaller employers and a reduction in the retirement plan coverage gap among workers.”
Do businesses have to use Illinois Secure Choice?
Businesses of five or more employees don’t have to enroll in Illinois Secure Choice if they’re already providing a retirement savings plan that meets the requirements to be exempted from the state’s own program. Suitable employer-sponsored examples that could be appropriate and satisfy the standards for an exemption include:
- 401(k) plan or other 401(a) plan
- 403(a)—qualified annuity plan
- 403(b)—tax-sheltered annuity plan
- 408(k)—Simplified Employee Pension (SEP) plan
- 408(p)—Savings Incentive Match Plan for Employees (a SIMPLE IRA plan)
- 457(b)—Governmental tax-deferred compensation plan
- Taft-Hartley plan—a multiemployer plan between unions and employers
Retirement benefits made easy with Gusto
If you’d like, you can add Gusto or your preferred payroll provider to your Illinois Secure Choice retirement program to help you manage your administrative tasks for it. But if you want your employees to have a retirement savings program that offers more benefits and flexibility, consider enrolling in a 401(k) plan.
Colorado and Oregon, which have auto-IRA mandates, have actually seen an increase in 401(k) adoption amongst the smallest employers in those states, including those with at least five employees and those with one to four employees, respectively. Here are some benefits of offering a 401(k):
- Reduced cost with tax credits: Eligible businesses may be able to claim up to $16,500 in tax credits for the first 3 years of their 401(k)—potentially covering 100% of plan costs.
- Flexible and affordable plan options: Gusto’s growing list of 401(k) partners means plenty of plans to choose from at low price points to fit your budget.
- Integrated to make life easier: Gusto payroll syncs with your 401(k) plan to make automatic deductions. Employees manage their own Gusto accounts, with access to their pay stubs, W-2s, 401(k) accounts, and contribution details.
- Great benefits help you build a great team: Because 401(k) plans have higher contribution limits, employees can save more money with an employer-sponsored 401(k) than with state-mandated IRAs. Gusto’s own analysis has even found that employer-sponsored 401(k) offerings increase employee retention.
Not sure which choice would be the best fit for your business? This table lines up the features of a 401(k) versus Illinois Secure Choice to help you decide:
| Features | 401(k) | Illinois Secure Choice |
| Auto-enroll | Available | 5% |
| Auto-escalation | Available | 1% increase each year, up to 10% |
| Automated payroll deductions | Available | No |
| Investment options | A large range of funds that vary based on the provider | 14 funds |
| Employer matching and profit-sharing contributions | Available | No |
| Investment advice | Available | No |
| Taxability | Pre-tax and after-tax contributions are available | Roth after-tax contributions and pre-tax Traditional IRA contributions |
| Annual contribution limit | $23,500 for employees ($31,000 for those 50 and older; $34,750 for those ages 60 through 63), plus optional employer contributions | $7,000 for employees ($8,000 for those 50 and over) |
| Participant fees | Varies, but often ranges between 0.5% and 2% of the plan balance annually | There’s an asset-based fee that’s about 0.32% to 0.45%, which amounts to a $0.32 to $0.45 charge annually for every $100 in an account. That cost includes the fees for the underlying investment funds, ranging from 0.02% to 0.15%, the 0.05% state fee, and the program administration fee, which is 0.25%. This cost comes out of the investment returns. In addition, there is a separate and fixed yearly account fee of $16, so $4 per quarter—and it’s not charged until at least the first 90 days have passed after the initial contribution, and without charging for the quarter in which that initial contribution was made. |
If you have an existing Gusto account, learn more about our 401(k) partners here.
You can also create an account with Gusto to enroll in a 401(k) plan. Gusto’s platform makes that simple.
