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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) All employers with 25 or more employees should currently be registered prior to 2020
Contribution Eligibility Employer and employee Employee only
Contribution Types Employee pre-tax and employer match or non-elective (required) Roth contributions only
Employee Contribution Limit $14,000 + $3,000 catch-up (age 50+) $6,000 + $1,000 catch-up (age 50+)
Employer Contribution Each year, must select either:
  1. Non-elective – 2% of compensation to all eligible employees, OR
  2. Match – 100% of salary deferral up to 3% of compensation (may be lowered to 2% or 1% of compensation in two of five years)
Total contribution limit of $28,000 (includes employee and employer contributions)
Administrative Requirements Minimal paperwork Minimal employer involvement
  • 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

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.