AUTHORITY: Implementing and authorized by Section 90 of the Illinois Secure Choice Savings Program Act [820 ILCS 80].

SOURCE: Adopted at 42 Ill. Reg. 18457, effective September 25, 2018; amended at 44 Ill. Reg. 5444, effective March 12, 2020; amended at 46 Ill. Reg. 3194, effective February 8, 2022; amended at 47 Ill. Reg. 17903, effective November 16, 2023.

SUBPART A: INTRODUCTION AND PURPOSE OF PROGRAM

 

Section 721.100  Establishment of Program

 

a)         This Part governs the Illinois Secure Choice Savings Program created by the Illinois Secure Choice Savings Program Act [820 ILCS 80].

 

b)         The Illinois Secure Choice Savings Program is a retirement savings program in the form of an automatic enrollment payroll deduction IRA for the purpose of promoting greater retirement savings for private-sector employees in a convenient, low-cost, and portable manner. [820 ILCS 80/10]

 

Section 721.110  Purpose of Program

 

The purpose of the Program is to provide a workplace retirement savings option for private sector workers who do not have access to an employer-sponsored plan so they can save their own money for retirement in a safe and convenient manner.

SUBPART B: DEFINITIONS

 

Section 721.200  Definitions

 

The following definitions shall apply to this Part:

 

"Act" means the Illinois Secure Choice Savings Program Act [820 ILCS 80].

 

"Account" means the IRA of a participant established and maintained under the Program.

 

"Account Revocation Period" means the period of time starting from the date an employee's IRA is established and the employee receives the disclosure statement and ending on the earlier of:

 

90 days after the date of the employee's first Secure Choice Account contribution; or

 

the Close of Business on the Business Day that the employee makes an Alternate Contribution Election;

 

provided, however, the Account Revocation Period shall last a minimum of seven days from the date the IRA is established and the employee receives the disclosure statement.

 

"Administrative Expenses" means all expenses associated with the implementation and administration of the Program, including fees payable to third parties providing services related to the Program.

 

"Administrative Fund" means the Illinois Secure Choice Administrative Fund created in Section 5.867 of the State Finance Act [30 ILCS 105].

 

"Beneficiary" means any person or entity designated by the participant to receive the benefits of the account in the event that the participant dies.

 

"Board" means the Illinois Secure Choice Savings Board or its designee or designees, which includes the Treasurer or one or more third party service providers. [820 ILCS 80/5]

 

"Business Day" means any day on which the New York Stock Exchange is open for trading.

 

"Client Employer" means an individual or entity that has contracted with a Professional Employer Organization to supply it with, or assume responsibility for, personnel management of one or more workers who perform services on an ongoing basis, rather than under a temporary help arrangement as defined in Section 15 of the Employee Leasing Company Act [215 ILCS 113]. For purposes of this Part, an employee who is performing services for a client employer pursuant to a contract between the client employer and a PEO shall be treated as employed by the client employer.

 

"Close of Business" means the time of day that trading closes on the New York Stock Exchange, generally 4 p.m. Eastern Standard Time.

 

"Day" means any calendar day.

 

"Department" means the Illinois Department of Revenue. [820 ILCS 80/5]

 

"Employee" means any individual who is employed by an employer or client employer, and who has wages that are allocable to Illinois during a calendar year under the provisions of Section 304(a)(2)(B) of the Illinois Income Tax Act [35 ILCS 5].  "Employee" includes both part-time and full-time employees. [820 ILCS 80/5]

 

"Employer" means a person, entity or client employer engaged in a business, industry, profession, trade, or other enterprise in Illinois, whether for profit or not for profit, that:

 

has employed at least 5 employees in the State during every quarter of the previous calendar year as indicated in employer-reported quarterly data submitted to the Department;

 

has been in business at least 2 years; and

 

is not offering or contributing to a qualified retirement plan.

 

"Employer" does not include the federal government, the State, any county, any municipal corporation, or any of the State's units or instrumentalities. [820 ILCS 80/5]

 

"Fund" means the Illinois Secure Choice Savings Program Fund. [820 ILCS 80/5]

 

"Internal Revenue Code" means Internal Revenue Code of 1986 (26 U.S.C.), or any successor law, in effect for the calendar year. [820 ILCS 80/5]

 

"Investment Policy" means the Investment Policy Statement adopted by the Board, pursuant to the Act, which includes a risk management and oversight program and sets forth the policies, objectives and guidelines that govern the investment of contributions to the Program.

 

"IRA" means a Roth or Traditional IRA (individual retirement account) under section 408 or 408A of the Internal Revenue Code. [820 ILCS 80/5]

 

"IRS" means the Internal Revenue Service.

 

"Online Portal" means the electronic platform utilized by the program administrator to manage the daily operations of the Program.

 

"Participant" or "Enrollee" means any individual who has an account.

 

"Participating Employer" means an employer, small employer, or client employer that facilitates a payroll deposit retirement savings arrangement as provided for by the Act for its employees. [820 ILCS 80/5]

 

"Payroll Deposit Retirement Savings Arrangement" means an arrangement by which a participating employer facilitates payroll deduction contributions from enrollees to the Program. [820 ILCS 80/5]

 

"Professional Employer Organization" or "PEO" means an individual or entity that contracts with a client employer to supply or assume responsibility for personnel management of one or more workers who perform services for the client employer on an ongoing basis, rather than under a temporary help arrangement as defined in Section 15 of the Employee Leasing Company Act. For purposes of this Part, PEOs are not the employer of any employee who is performing services for a client employer pursuant to a contract between the client employer and a PEO.

 

"Program" means the Illinois Secure Choice Savings Program. [820 ILCS 80/5]

 

"Program Administrator" means the person or firm selected by the Board to administer the daily operations of the Program and provide marketing, recordkeeping, investment management, custodial, and other services for the Program. 

 

"Qualified Retirement Plan" includes a plan qualified under section 401(a), 401(k), 403(a), 403(b), 408(k) or 408(p) of the Internal Revenue Code.  The term also includes an eligible governmental plan under section 457(b) of the Internal Revenue Code, as well as Simplified Employee Pension (SEP) plans, Savings Incentive Match Plan for Employees (SIMPLE) plans, and Taft-Hartley plans. Payroll deduction IRA programs are not qualified retirement plans.

 

"Small Employer" means a person or entity engaged in a business, industry, profession, trade, or other enterprise in Illinois, whether for profit or not for profit, that:

 

employed fewer than 5 employees during any quarter of the previous calendar year, as indicated in employer-reported quarterly data submitted to the Department;

 

has been in business less than 2 years; or

 

meets both of these criteria,

 

but notifies the Board that it is interested in being a participating employer. [820 ILCS 80/5]

 

"Treasurer" means the duly elected Treasurer of the State of Illinois or their designee or designees.

 

"Wages" means W-2 wages, as defined in 26 CFR 1.415(c) through 2(d)(4), that are received by an enrollee from a participating employer during the calendar year. [820 ILCS 80/5]  For purposes of this Part, wages paid to employees by PEOs on behalf of a client employer shall be deemed wages paid by a client employer. [820 ILCS 80/5]

 

"Withdrawal" means a distribution of assets from an account.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

SUBPART C: ADMINISTRATION

 

Section 721.300  Responsibilities of the Board

 

The Board is responsible for the administration, management and oversight of the Program. Its responsibilities include, but are not limited to:

 

a)         designing and establishing a Program that is simple, safe, efficient, and in accordance with best practices for retirement savings vehicles;

 

b)         contracting with third party providers such as investment managers, recordkeepers, consultants, auditors, counsel, or other providers as necessary for the administration of the Program;

 

c)         establishing an investment framework and selecting investment funds;

 

d)         establishing the enrollment and contribution processes for participants, including voluntary participation;

 

e)         identifying and contacting employers required to participate in the Program;

 

f)         establishing the default investment option, default contribution rate, automatic-escalation process, and additional investment options, if any;

 

g)         monitoring, replacing and removing investment options;

 

h)         conducting outreach and education to employers and employees;

 

i)          designing and disseminating program materials and information, including employee and employer information packets;

 

j)          providing for the payment of any administrative or investment costs necessary to manage or operate the Program;

 

k)         overseeing and managing the Fund;

 

l)          preparing and adopting a written investment policy statement and risk management and oversight program; and

 

m)        preparing and submitting an annual audit of the Program to the Governor, Comptroller, Treasurer, and Illinois General Assembly.

 

(Source:  Amended at 46 Ill. Reg. 3194, effective February 8, 2022)

 

Section 721.310  Responsibilities of the Treasurer

 

The Treasurer, or his or her designee, shall serve as chair of the Board. [820 ILCS 80/20]  The Treasurer's duties include, but are not limited to, certifying to the Secretary of State, upon approval by the Treasurer, the Governor's Board appointments and preparing an annual report as specified in Section 80 of the Act.  The Treasurer's Office serves as the administering agency for the administrative fund on behalf of the Board and shall provide administrative support to the Program as requested by the Board. 

 

Section 721.320  Responsibilities of the Department

 

The Department is responsible for assessing and collecting penalties against employers who fail to enroll employees in the Program within the timelines prescribed by the Act and this Part.  The Department may exchange information with the Board, Treasurer's Office and the Department of Employment Security for the purpose of implementing, administering and enforcing the Act.

 

Section 721.330  Investment Policy and Guidelines

 

a)         The investment policy is a written statement that describes the risk management and oversight program and should be designed to perform the following:

 

1)       ensure that an effective risk management system is in place to monitor the risk levels of the Program;

 

2)       outline the overarching investment framework of the Program, including, but not limited to, the investment options offered to participants and the composition of investment products;

 

3)       expand upon the corresponding asset allocation and glide paths associated with the necessary investment options offered to participants;

 

4)       provide an integrated process for overall risk management to ensure that the risks taken are prudent and properly managed and determine whether the risks taken are adequately compensated compared to applicable performance benchmarks and standards; and

 

5)       assess investment returns and set applicable benchmarks to assess the investment returns for underlying investment funds.

 

b)         The investment policy shall be adopted at a public meeting of the Board and posted on the Board's or Treasurer's website (see Section 721.720) at least 30 days prior to implementation of the policy.  [820 ILCS 80/35]

 

c)         The investment policy shall be reviewed annually by the Board.

 

d)         To serve the best interest of participants, the Board shall abide by the following investment principles when selecting investment options for the Program:

 

1)         Low Cost – The investment options shall be constructed and administered in a manner that minimizes fees to participants. It is understood that these costs diminish the total return accorded to participants. The lowest cost index-based portfolios shall be viewed as the default standard in evaluating investment management fees.

 

2)         Open Architecture – The investment framework shall utilize an open architecture plan design, meaning it will not be required to use proprietary funds.  The open architecture design shall allow the Board to select the underlying investment funds.  The open architecture design shall also provide the Board with: access to best in class portfolio managers; the ability to use nonproprietary products; increased flexibility when choosing underlying strategies; and the ability to obtain the lowest participant fees for underlying investment funds and accounts. 

 

3)         Market Performance – The investment options may be selected and administered in a manner that consistently tracks market performance, as measured in comparison to applicable market benchmarks, thus eliminating the potential for significant underperformance.

 

4)         Simplicity – The investment options shall be constructed and administered in a manner that provides a range of clear, easily understood options (defined in terms of expected risk/return) in order to maximize participation and savings. Furthermore, the Program shall be designed and administered in a manner that strives to achieve full transparency by delineating accordant investment expenses, program management fees, and administrative expenses. In addition, the Program shall provide a clear and simple investment approach for participants who fail to elect an investment option.

 

e)         The Board shall establish investment options for any or all of the following categories:

 

1)         The Life-Cycle Fund Option shall be the default investment option.  This fund option shall utilize dynamic asset allocations that adjust throughout glide paths that are tailored to meet investment objectives based on various investor time horizons while maintaining an optimal balance of investment risk and return. The funds move towards a more risk-averse asset allocation as the target date approaches. These options shall be invested in investment vehicles, such as mutual funds, that may include some or all of the following asset classes:

 

A)        domestic and international equity;

 

B)        domestic and international fixed income;

 

C)        real estate investment trusts (REITs); and

 

D)        cash and cash equivalent (i.e., money market funds).

 

2)         Static Portfolio Investment Option, which shall be composed of fixed asset allocations to fit a participant's risk profile (i.e., aggressive, moderate or conservative risk profiles).  These options shall be invested in investment vehicles, such as mutual funds, that may include some or all of the following asset classes:

 

A)        domestic and international equity;

 

B)        domestic and international fixed income;

 

C)        real estate investment trusts (REITs); and

 

D)        cash and cash equivalent (i.e., money market funds).

 

3)         Capital Preservation Investment Option, which shall be composed of high quality, short-term debt securities that reflect short-term interest rates with the objective of producing a rate of return that is higher than inflation while avoiding exposure to credit (i.e., default) risk and market price fluctuations.

 

f)         The Board shall regularly monitor and review the investment options and its underlying investment funds that are offered to participants.

 

Section 721.340  Responsibilities of the Program Administrator

 

a)         The program administrator is responsible for the day-to-day oversight, recordkeeping and management of the Program, including coordinating with any third party investment managers or other service providers to ensure the safekeeping of accounts. The program administrator shall abide by the Act, this Part, and the investment policy adopted by the Board.

 

b)         The Board shall contract with the program administrator to provide services needed for the effective operation of the Program in accordance with all applicable federal and State laws and regulations. These services shall include, but are not limited to:

 

1)         developing forms and any operating documents;

 

2)         facilitating employer registration and participant enrollment;

 

3)         maintaining participant and beneficiary accounts and information;

 

4)         receiving contributions;

 

5)         blocking receipt of annual contributions to a participant's account in excess of the maximum annual IRA contribution limit;

 

6)         disbursing funds;

 

7)         identifying abandoned accounts and addressing missing participants;

 

8)         providing account owners with account information, transaction confirmations and account statements;

 

9)         developing and filing required reports and forms with State and federal agencies; and

 

10)        providing fraud prevention in accordance with industry standards.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.350  Applicable Law

 

For guidance in the interpretation of the Act and this Part, the Treasurer may refer to the Internal Revenue Code, the Final Rule of the Employee Benefits Security Administration, the U.S. Department of Labor on Employee Pension Benefit Plan (29 CFR 2510.3-2(d)), and the Interpretive Bulletin Relating to Payroll Deduction IRAs (29 CFR 2509.99-1).

 

Section 721.360  Program Fees

 

Total fees for the Program shall include the following categories:

 

a)         Investment Fees

An investment manager will charge fees and expenses that are included in the cost of the underlying investment fund.  When selecting an investment manager, the Board shall keep investment fees as low as possible, but in no event shall they exceed 0.25% of the total trust balance. [820 ILCS 80/30(m)]

 

b)         Administrative Fees

The Board will charge administrative fees to participants that shall be consistent with industry standards. [820 ILCS 80/30(m)] Administrative fees include:

 

1)         A State administration fee, not to exceed 0.05 percent (i.e., 5 basis points) of the participant's total account assets under management. This fee may be charged to defray certain expenses (e.g., marketing, auditing, program oversight) incurred by the Board or Treasurer in administering the Program.

 

2)         A program administration fee to defray costs incurred by the program administrator for maintaining and administering the Program.  This fee shall be made up of the following:

 

A)        An asset-based fee not to exceed 0.25% (i.e., 25 basis points) of the participant's total account assets under management; and

 

B)        A dollar-based fee not to exceed $4 per quarter.

 

3)         Activity-Based Fees

The following additional fees will be charged based on each participant's elections or requests:

 

A)        A paper delivery fee of $1.25 per quarter will be charged unless a participant elects to receive communications electronically.

 

B)        A paper check fee of $5 per instance of a participant requesting a paper check for withdrawal of funds unless the participant elects to receive an electronic transfer of funds.

 

C)        A priority delivery fee of $25 per instance of a participant requesting a priority delivery.

 

D)        A rejected payment fee of $20 per instance of a participant Automated Clearing House (ACH) payment or a participant-provided check being rejected.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.370  Administrative Fund

 

The Illinois Secure Choice Administrative Fund is created as a nonappropriated separate and apart trust fund in the State Treasury. The Board shall use moneys in the Administrative Fund to pay for administrative expenses it incurs in the performance of its duties under the Act. The Board shall use moneys in the Administrative Fund to cover start-up administrative expenses it incurs in the performance of its duties under the Act. The Administrative Fund may receive any grants or other moneys designated for administrative purposes from the State, or any unit of federal or local government, or any other person, firm, partnership, or corporation. Any interest earnings that are attributable to moneys in the Administrative Fund must be deposited into the Administrative Fund. The State Treasurer shall be the administering agency for the Administrative Fund on behalf of the Board.  [820 ILCS 80/16]

 

Section 721.380  Reporting Requirements

 

a)         The Board shall annually submit to the Governor, the Comptroller, the Treasurer, and the General Assembly, during each fiscal year, by January 1 of the following year, an audited financial report, prepared in accordance with generally accepted accounting principles, on the operations of the Program. The report shall be provided electronically to any member of the General Assembly upon request. Additionally, the Board shall provide periodic reports at least annually to participating employers, reporting the names of each enrollee employed by the participating employer and the amounts of contributions made by each employee during the reporting period, as allowed under federal and State laws governing IRAs, as well as to enrollees, reporting contributions and investment income allocated to, withdrawals from, and balances in, their Program accounts for the reporting period.

 

b)         For each State fiscal year, the Treasurer will  prepare a report, in consultation with the Board, that includes a summary of the benefits provided by the Program, including the number of enrollees in the Program, the percentage and amounts of investment options and rates of return, and such other information that is relevant to make a full, fair, and effective disclosure of the operations of the Program and the Fund. The report will be made available on the Program website (see Section 721.720) by the January following the end of the State fiscal year. [820 ILCS 80/80]

 

(Source:  Amended at 44 Ill. Reg. 5444, effective March 12, 2020)

 

Section 721.390  Forms

 

The Board may use forms provided or promulgated by the IRS or other federal agencies pursuant to the Program.  The Board may also promulgate its own forms reasonably necessary to implement the Program. 

 

Section 721.395  Information Packets

 

Prior to the opening of the Program for enrollment, the Board shall design and disseminate to all employers an employer information packet and an employee information packet, which shall include background information on the Program. [820 ILCS 80/55(a)] The Board should strive to use plain language, whenever and wherever possible.  The employee information packet shall include a disclosure form, as well as a document with information on how to opt out of the Program or select a contribution rate other than the default contribution rate.  Participating employers shall provide the employee information packets to employees upon launch of the Program and to new employees at the time of hiring. Alternatively, participating employers shall provide the program administrator with the employee contact information necessary for the program administrator to send employees the employee information packet. Informational packets may be updated as necessary. Delivery of information packets may also be accomplished electronically in accordance with 26 CFR 1.401(a)-21 or in any other form permitted by the IRS.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

SUBPART D: PARTICIPATION IN THE PROGRAM

 

Section 721.400  Eligibility

 

a)         Provided they meet the requirements of section 408 and 408(A) of the Internal Revenue Code, the following individuals are eligible to participate in the Program:

 

1)         All employees 18 years or older, who work for employers that have 5 or more employees, that have been in business for at least 2 years, and that do not offer qualified retirement plans will be automatically enrolled in the Program;

 

2)         All employees who work for a small employer that chooses to make the Program available to its employees;

 

3)         Any employee who does not work for a participating employer may set up their own account but may be required to make contributions through methods other than a payroll deduction; and

 

4)         Any individual with earned income during the calendar year, regardless of whether they work for an employer.

 

b)         Total employee count is based on employer-reported quarterly data submitted to the Department.

 

(Source:  Amended at 46 Ill. Reg. 3194, effective February 8, 2022)

 

Section 721.410  Registration and Enrollment

 

a)         The Board shall establish an implementation timeline under which employers shall register for the Program and facilitate enrollment of their employees into the Program. The Board shall approve the implementation timeline at a public meeting of the Board and make the timeline publicly available by posting it on the Board's or Treasurer's website (see Section 721.720).

 

b)         After implementation, the Board shall identify and notify employers not yet registered for the Program and facilitate enrollment of their employees into the Program on an annual basis.

 

c)         The program administrator shall notify employers of the dates on which registration and enrollment of employees may begin and the dates by which registration of employers and enrollment of employees must be complete. The program administrator shall also provide employers with access to an online portal to register for the Program and facilitate enrollment of their employees.

 

d)         Registration Information

 

1)         In order to register for the Program, employers shall verify the following information on the online portal:

 

A)        Employer name and assumed business name, if any;

 

B)        Federal Employer Identification Number;

 

C)        Employer mailing address;

 

D)        Name, title, telephone number and email address of an individual designated by the employer to serve as the point of contact;

 

E)        Number of employees; and

 

F)         Any additional information necessary for registration.

 

2)         In the event that any of the information listed in this subsection (d) is not available on the online portal or inaccurate, employers shall provide the missing or correct information, as applicable.

 

e)         An employer who lacks access to the internet may register for the Program and facilitate enrollment of its employees through alternate means established by the Program, including by phone and paper forms.

 

f)         By a date specified by the Board, employers shall facilitate enrollment of their employees into the Program and provide the program administrator with the following information for each employee:

 

1)         Full legal name;

 

2)         Social security number or taxpayer ID number;

 

3)         Date of birth;

 

4)         Mailing address;

 

5)         Employee's designated email address, if available;

 

6)         Employee's phone number, if available; and

 

7)         Any additional information needed to complete the enrollment when the information submitted for enrollment is unclear or insufficient, or when further information is required for purposes of administering the Program.

 

g)         The Board shall establish an automatic enrollment process for employees, which shall include the establishment of an IRA by or on behalf of the State for each employee who has not opted out of the Program.

 

h)         After initially facilitating enrollment of existing employees into the Program, participating employers shall enroll newly hired employees in the Program as soon as administratively possible, not to exceed 60 days after first payment of employee wages.

 

i)          Participating employers shall not contribute to or endorse the Program, or execute any discretionary authority, control, or responsibility with respect to the Program.

 

j)          Any employer who is not required to participate in the Program but receives a registration notification from the program administrator shall indicate to the Program, through the online portal or by contacting the program administrator, that it is not required to participate.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.415  Client Employer Registration and Enrollment

 

a)         PEOs shall provide the Treasurer with a list of all Illinois client employers with whom they have a contract. On an annual basis, PEOs shall provide the following information for each client employer:

 

1)         Full legal name;

 

2)         Doing Business As (DBA) Name, if applicable;

 

3)         FEIN, if available;

 

4)         Contact person's full name;

 

5)         Mailing address;

 

6)         Email address, if available;

 

7)         Client employer's phone number, if available;

 

8)         Number of employees; and

 

9)         Any additional information needed to contact the client employer when the information submitted is unclear or insufficient, or when further information is required for purposes of administering the Program.

 

b)         The program administrator will contact each client employer to facilitate the registration and enrollment of its employees, as outlined in Section 721.410.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.420  Voluntary Participation

 

a)         Small employers may choose to make the Program available to their employees.

 

b)         Small employers who choose to make the Program available to their employees shall notify the program administrator and shall register for the Program using the online portal.

 

c)         The program administrator will develop a process that allows for the enrollment of employees from small employers that choose to make the Program available to their employees.

 

d)         The Board may, but need not, choose to allow for the automatic enrollment of employees from small employers as described in Section 721.410.

 

e)         The Board may allow individuals who do not work for a participating employer to enroll in the Program. The program administrator will develop a process that allows those individuals to open accounts and make contributions separate from an employer payroll system.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.430  Opt Out Procedures

 

a)         Employees who do not wish to participate in the Program will be given an opportunity to opt out before any payroll deduction contribution is made. The Board shall ensure that an employee has a minimum of 30 days to opt out of the Program from the time he or she is notified that the employer has facilitated the employee's enrollment before an IRA is established and the first payroll deduction is made.

 

b)         The program administrator shall provide employees with a number of opt out methods, including electronically and by phone.

 

c)         Any employee who does not opt out of the Program within the 30-day period described in subsection (a) will be automatically enrolled in the Program, and an IRA will be established for that employee pursuant to Section 721.410(g). 

 

d)         Any employee who is enrolled in the Program can cease participation and revoke his or her Roth IRA during the account revocation period.

 

e)         Employees can opt out after the account revocation period at any time by giving notice to the program administrator, and participants may cease making contributions to their accounts at any time by giving notice to the program administrator.  After receiving notice, the program administrator shall notify the employer to cease payroll deductions for the participants.  Employers shall cease payroll deductions as soon as administratively feasible, not to exceed 30 days following receipt of the notification from the administrator.

 

f)         Employees who opt out of the Program may enroll at any time by following the Program's enrollment procedures.  Following notification of the employee's intent to enroll, employers shall enroll employees as soon as administratively feasible, not to exceed 30 days following receipt of the notification.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.440  Termination of Participation

 

a)         An employer who begins offering a qualified retirement plan and becomes exempt from the Program may notify the program administrator of its exemption and terminate its participation in the Program.

 

b)         Employers who choose to terminate participation in the Program must notify the program administrator and participants at least 60 days before payroll contributions cease and provide them with information describing how to contact the program administrator.

 

c)         Accounts will remain in the Program and participants may continue to make contributions pursuant to Section 721.420(e), unless they elect to transfer or close their accounts, in accordance with Section 721.540 and Subpart F.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

SUBPART E: ACCOUNTS, INVESTMENTS AND STATEMENTS

 

Section 721.500  Accounts

 

a)         Accounts are IRAs into which participants contribute funds that, in turn, are invested in investment options established by the Board pursuant to Section 721.330, such as a Life-Cycle Fund Option. A separate account will be established for each participant and accounts are owned by the participant.

 

b)         Accounts shall be portable, and each participant will have one account, regardless of whether the participant makes contributions from a single employer or multiple employers (simultaneously or separately throughout the participant's lifetime).

 

Section 721.510  Contributions

 

a)         During the account revocation period, participant contributions will be directed into a capital preservation investment selected by the Board.  As of the close of business on the business day coincident with or next following the expiration of the account revocation period, the existing balance in the account will be invested in the default investment option selected by the Board unless a participant has provided an alternate investment election.

 

b)         Participant contributions made subsequent to the end of the account revocation period will be directed into the default investment option at the default contribution rate selected by the Board, unless a participant has provided an alternate investment election.

 

c)         Participant contributions will be directed into the default investment option selected by the Board at the default contribution rate approved by the Board, unless a participant has provided alternate elections.

 

d)         Participants may select any contribution rate by notifying the program administrator.

 

e)         The program administrator shall notify employers of any changes to their participant employees' contribution rate, and the employer shall enter those changes into its payroll system as soon as administratively possible, not to exceed 30 days following receipt of the notification.

 

f)         Participants may direct their contributions to any of the available fund options offered by the Program by notifying the program administrator.

 

g)         The program administrator shall develop a process for participants to select their investment options and shall notify participants on how to make those selections.

 

h)         On each payroll date following enrollment into the Program, and in accordance with their participant employees' contribution rate, employers shall make the necessary payroll deductions and remit the contributions to the program administrator as soon as administratively possible, not to exceed seven business days from the date of deduction. Notwithstanding the foregoing, amounts deducted by employers shall not exceed the amount of the employees' wages remaining after any payroll deductions required by law to have a higher precedence than the participant's Program deduction.

 

i)          Failure by the employer to timely remit a participant employee's deducted wages to the program administrator constitutes an unlawful deduction under the Illinois Wage Payment and Collection Act [820 ILCS 115/9].

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.515  Automatic-Escalation

 

a)         Contributions for participants who have been enrolled in the program for at least six months will automatically increase by 1% of an enrollee's wages at the beginning of each subsequent calendar year, up to a maximum of 10% of an enrollee's wages.

 

b)         The program administrator shall notify all eligible enrollees in advance of any automatic contribution increase to allow for enrollees to opt out of automatic escalation or make alternative changes to their contribution rate.

 

c)         The program administrator shall notify employers in advance of any automatic contribution increase for their eligible participant employees, and the employer shall enter the contribution changes into its payroll system as soon as administratively possible, not to exceed 30 days following receipt of the notification.

 

d)         Participants may adjust the rate of their automatic increase, opt in to automatic escalation, or opt out of automatic escalation at any time by notifying the program administrator.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.520  Participant Statements

 

Account statements shall be provided to participants by the program administrator on a quarterly basis. The account statements may be sent by U.S. mail and/or provided electronically in accordance with 26 CFR 1.401(a)-21 or in any other form permitted by the IRS.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.530  Limits on Investment and Direction

 

a)         The Board may set limits on the number of times participants can change the investment options of their contributions or adjust their contribution rate in any calendar year.

 

b)         The Board shall select a default contribution rate for participants within the range of 3% to 6% of a participant's wages.

 

c)         The Board shall select a default investment option for the accounts, in accordance with Section 721.330.

 

Section 721.540  Rollovers, Transfers and Conversions

 

a)         At the direction of the Board, the program administrator shall develop processes through which a participant or beneficiary may roll over or transfer an account to a different retirement savings vehicle in accordance with the Internal Revenue Code. The Program may receive rollovers and transfers from other retirement savings vehicles in accordance with the Internal Revenue Code.

 

b)         During a conversion from one program administrator to another, the program administrator shall take all commercially reasonable steps necessary to effect an orderly transition of the relevant portions of its duties and responsibilities in a manner that provides for reasonable consideration for the best interests of the participants and beneficiaries, avoids the likelihood of an increase in economic loss, and avoids the likelihood of resulting liability to the Board, its members, or the State. The program administrator shall not impede or delay the orderly transfer of its duties and responsibilities.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

SUBPART F: WITHDRAWALS

 

Section 721.600  Withdrawals

 

A participant may make a withdrawal of funds from his or her account at any time.  Withdrawals shall be subject to any applicable State and federal income tax obligations and may be subject to penalties under the Internal Revenue Code (see 26 CFR 1.408A-6).

 

Section 721.610  Withdrawal Method

 

A participant may request a withdrawal of funds from his or her account by submitting a completed withdrawal request to the program administrator.  This request may also be accomplished electronically or in any other form permitted by the IRS.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.620  Closure

 

A participant may close his or her account at his or her direction, or an account may be closed by a process established by the Board if:

 

a)         all funds from the participant's account have been withdrawn pursuant to Section 721.600; or

 

b)         all funds from the participant's account have been rolled over or transferred pursuant to Section 721.540.

SUBPART G: MISCELLANEOUS

 

Section 721.700  Abandoned Accounts

 

An account will be presumed abandoned according to the unclaimed property law of the state of the last known address of the participant.  If the last known address of the participant is in Illinois, the provisions of the Revised Uniform Unclaimed Property Act [765 ILCS 1026] shall apply. If there is no last known address of the participant in the Program records, federal common law shall determine the state with the first priority claim.

 

Section 721.710  Disclosure

 

The Board may disclose aggregate data that does not include information that is identifiable by participant or employer for purposes of research or reporting associated with the Program.  The Board may disclose information that it is required to disclose under the Freedom of Information Act [5 ILCS 140].  The Board may disclose account information to the program administrator, the providers of investments for the Program, the Treasurer's Office, Illinois Department of Revenue, Illinois Department of Employment Security, regulatory agencies to the extent disclosure is required by law, and to other persons or entities to the extent the disclosure is necessary to administer the Program.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)

 

Section 721.720  Website

 

Information regarding the Program is available on the Treasurer's website at www.illinoistreasurer.gov or the Program's website at www.ilsecurechoice.com.

 

(Source:  Amended at 47 Ill. Reg. 17903, effective November 16, 2023)