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A quarter of adults within the U.S. don’t have retirement financial savings. One motive? Not all staff have entry to an employer-sponsored retirement program. Seeing this looming disaster, Illinois launched the Safe Alternative Retirement Financial savings Program (Illinois Safe Alternative).
Like different state retirement packages, Illinois Safe Alternative mandates that every one companies with 5 or extra staff should facilitate Illinois Safe Alternative or supply a retirement plan.
Are you an Illinois employer? If that’s the case, learn on to study the ins and outs of the mandate, together with deadlines, qualifying alternate options, and extra.
4 Questions employers could have about Illinois Safe Alternative
Illinois Safe Alternative is the state of Illinois’ retirement financial savings program. Staff can use a default Roth IRA to contribute with after-tax {dollars} by way of payroll deductions. Nonetheless, program individuals can go for a conventional IRA in the event that they select. By the tip of 2023, Illinois companies with 5 or extra staff should facilitate Illinois Safe Alternative or supply a certified retirement plan.
Employers who select to facilitate Illinois Safe Alternative have to confirm further details about their taking part staff and register with this system.
For workers, the (fully voluntary!) Illinois Safe Alternative program may revolutionize the best way they save. Earlier than Safe Alternative, if an worker needed to begin an IRA on their very own, they must discover a monetary establishment that gives an IRA and arrange an account with them. However with this program, staff can save at work and contribute to a plan managed on their behalf.
By default, staff are enrolled with a 5% contribution charge right into a goal date fund primarily based on their anticipated retirement age. Nonetheless, staff can select to extend or lower their charge or decide out anytime.
1. How a lot can staff contribute?
Like a conventional Roth IRA, staff can contribute as much as $6,000 per yr to their Safe Alternative account.
Staff who’re 50 or over can contribute as much as $7,000 per yr.
2. Do I’ve to take part?
Not all Illinois employers should take part within the state-mandated retirement program. You have to facilitate Illinois Safe Alternative if you happen to:
- Have 5 or extra staff,
- Have been in operation for at the least two years, AND
- Don’t supply an employer-sponsored retirement plan
However once more, Illinois employers topic to the mandate do produce other choices. If you happen to don’t need to facilitate the state program, you may arrange one of many following qualifying retirement plans:
- 401(a) or 401(ok) plan
- Certified annuity plan
- Tax-sheltered annuity
- Simplified Worker Pension (SEP) plan
- SIMPLE IRA plan
- Governmental tax-deferred compensation plan
- Taft-Hartley plan
Earlier than selecting between Illinois Safe Alternative and a qualifying various, take into account what’s finest for what you are promoting.
3. When do I have to register by?
Your registration deadline for Illinois Safe Alternative (or a qualifying various) is determined by what number of staff you’ve:
- November 1, 2018: Firms with 500+ staff
- July 1, 2019: Firms with 100 to 499 staff
- November 1, 2019: Firms with 25 to 99 staff
- November 1, 2022: Firms with 15 to 24 staff
- November 1, 2023: Firms with 5 to 14 staff
What in case your employer dimension varies? Use quarterly knowledge that you simply reported to Illinois to find out your registration deadline.
Heads up! There are penalties for lacking your registration deadline. If you happen to fail to remit contributions to this system by your deadline, you would be penalized $250 per worker for the primary yr of noncompliance. And if you happen to’re nonetheless not compliant after the primary yr, your penalty will increase to $500 per worker. For extra data on penalties, take a look at the statute.
4. How can I begin a qualifying retirement program?
If you happen to’re an Illinois employer involved in organising 401(ok) for small enterprise as a substitute of facilitating the state program, assist is on the market.
Patriot and Vestwell have partnered to supply inexpensive retirement plans for small companies in Connecticut and throughout the USA. Vestwell’s digital retirement platform straight integrates with Patriot’s payroll software program, making it simpler so that you can supply and administer a company-sponsored 401(ok).
Apprehensive about administration prices? Chances are you’ll be eligible to obtain as much as $16,500 in tax credit, which may also help cancel out administration prices. You may study extra about eligibility for tax credit and the way to join a 401(ok) by way of Vestwell right here.
This isn’t meant as authorized recommendation; for extra data, please click on right here.
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