SIMPLE IRA Versus Illinois Secure Choice

In an effort to boost retirement savings for workers, the state of Illinois introduced a state-sponsored retirement program known as Illinois Secure Choice. The plan provides a Roth IRA account for employees who do not have access to a retirement plan through their employer. Below is a comparison of the SIMPLE IRA and Illinois Secure Choice:

SIMPLE IRA		Illinois Secure Choice
Eligible Employers/Required Enrollment	Corporations or non-profit organizations (fewer than 100 employees)	Required for employers that have 5 or more Illinois employees and have been in business at least 2 years unless they already offer a qualified retirement plan.
Contribution Eligibility	Employer and employee or Roth (check with plan provider to see if it’s available)	Employee only
Contribution Types	Employee pre-tax and employer match or non-elective (required)	Roth contributions (Traditional IRA option for alternative election)
Employee Contribution Limit	$16,500¹ Catch up ages 50-59 and 64+: $3,500¹ Catch up ages 60-63: $5,250	$7,000 + $1,000 catch-up (age 50+)
Employer Contribution	Each year, must select either¹: Non-elective – 2% of compensation to all eligible employees, OR Match – 100% of salary deferral up to 3% of compensation (may be lowered to 2% or 1% of compensation in two of five years) Employer has the option to make an additional 10% nonelective contribution to each eligible employee up to $5,100. Combined employer/employee contributions generally cannot exceed: - $33,000 for participants under age 501 - $40,000 for participants ages 50-59 or 64+¹ - $43,500 for participants ages 60-63	None
Administrative Requirements	Minimal paperwork	Minimal employer involvement
Benefits	Tax-deductible employer contributions High contribution allowance	Tax-free and penalty-free withdrawals of contributions at any time
Consideration	Required employer contribution	No employer contribution Lower contribution limit
Investment Options	Stocks, bonds, mutual funds, exchange traded funds (ETFs), and limited options strategies	Designated fund lineup created by the program

¹ Employees may be able to defer a total of $17,600 plus an additional 10% of the catch-up limits (maximum $3,850 for ages 50-59 or 64+) if the employer has 25 or fewer employees or has 26 or more employees and agrees to a 4% matching or 3% non-elective contribution, subject to plan provisions.

Contact a Stifel Financial Advisor to discuss the Illinois Secure Choice requirements or to establish a SIMPLE IRA for your company.

Stifel does not provide legal or tax advice. You should consult with your legal and tax advisors regarding your particular situation.

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