Illinois Enacts Automatic IRAs; Is Federal Mandate Coming?

Automatic enrollment for traditional IRAs might soon be a reality in Illinois as Governor Pat Quinn signed legislation enacting the Illinois Secure Choice Savings Program (SCSP) into law on January 4, 2015.  However, the program will not become effective until at least July 2017.  With the success of automatic enrollment in 401(k)s and mentions of a federal auto-IRA program by President Obama, it is not a total surprise that a State was willing to implement such legislation in an attempt to improve the retirement security of Americans.  The baby boomers do not have enough money saved for retirement, Social Security’s future is murky and will not look the same in twenty years as it does today, and employers aren’t offering traditional retirement pensions anymore.  As the responsibility of saving for retirement is shifting onto the individual, new savings vehicles and strategies will be needed in order to assist people with developing their own retirement plan.