A new retirement plan for small businesses in Illinois
This is a guest blog from Geraldine Aglipay, Midwest Outreach Manager for Small Business Majority. This post originally appeared on Patch.com.
For small business owners, setting up an employer-sponsored retirement plan can be complicated and expensive. Too many small businesses don’t have the resources to create a formal retirement plan, which means entrepreneurs and their employees frequently struggle to plan for retirement. Nearly 80 percent of employees who work for a small business don’t have access to an employer-sponsored retirement plan. Thankfully, the Illinois Secure Choice Savings Program offers a great retirement solution for small businesses and small business employees.
As most employers know, retirement benefits are important to attracting and retaining talented employees. In fact, a Towers Watson survey found 63 percent of workers younger than 40 agreed their retirement program was an important factor in accepting their job in 2011. Small business owners who can’t afford to offer retirement plans often find themselves at a disadvantage when it comes to competing with bigger businesses for talented employees and keeping up employee morale.
The Illinois Secure Choice Savings Program, which will go into effect on June 1, 2017, offers an easy and smart solution to this problem for small business owners. The legislation will create a state retirement plan that will be privately managed. Employees in companies with 25 or more employees will be automatically enrolled in the program, although they may opt out at any time; companies with fewer than 25 employees may opt in. Self-employed individuals may opt in to the program as well. Employees will contribute to the plan through payroll deductions and can choose how much to contribute, and the program won’t impact companies that already have retirement plans. Additionally, the program places no administrative or liability burdens on small businesses, as employers will not contribute to funds, manage funds or have any responsibility for financial advice with the program.
Considering the benefits of this program, it’s no surprise Small Business Majority’s polling found a majority of small business owners in Illinois supported legislation establishing the Illinois Secure Choice Savings Program. Additionally, 63 percent of small businesses agree Illinois should do more to help small businesses prepare for retirement.
To learn more about the Illinois Secure Choice Savings Program, small business owners can visit our FAQ page.
The Illinois Secure Choice Savings Program is an opportunity to level the playing field for small businesses that can’t afford to offer retirement benefits and help more entrepreneurs and their employees save for the future. It’s important for small business owners to be aware of this new program so they can take full advantage of it next year.