Illinois has a new law that will allow 401(k)-type retirement savings for workers who don’t have a 401(k). The governor has signed into law Secure Choice, which sets up a retirement saving program for private-sector workers in Illinois whose employer offers neither a pension nor a 401(k) program – about 2½ million people.
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It’ll take 3 percent of workers’ pay and hold it tax-deferred until retirement. “This is an opportunity for people at their workplace to set aside money in a secure place that will be available to them, in addition to their Social Security,” says state Comptroller Jerry Stermer.
The funds will be overseen by a seven member Illinois Secure Choice Savings Board, which will select a private firm to manage the money. The state will not have access to the funds as the investments are pooled as private property of the workers outside of the state treasury.
Enrollment will be automatic, unless the worker opts out or opts for a different amount to be withheld.
The law takes effect in June, with the program to be up and running within two years.