The Illinois Senate may vote soon on a bill that would require school districts in the Land of Lincoln that offer their employees a 403(b) plan to enter into a contract with only one vendor in the plan.
On Feb. 14, 2024, Sen. Karina Villa (D-West Chicago) introduced language for SB2568 stating that a school district in Illinois that offers its employees a 403(b) can contract with only one vendor to administer their 403(b).
The bill provides that:
- The 403(b) vendor would be selected with the approval of the employees' exclusive bargaining representative, if there is one. If there is more than one exclusive bargaining representative for the employees to whom the plan would be offered, then the vendor would be chosen with the approval of a committee of the employees' exclusive bargaining representatives through a competitive bidding process.
- School districts that, on the effective date of the measure, have a contract with a vendor nonetheless would be required to begin a competitive bidding process by no later than July 1, 2026.
- Renewal or extension of a contract with a vendor that is in effect on the effective date also would be subject to the competitive bidding process.
- Contracts into which the school districts enter with 403(b) vendors would last no longer than seven years.
Implications
Limiting the number of providers to a single provider, suggests NTSA Executive Director Nathan Glassey, will affect plan participants’ access to advice. “The available advisors left to provide advice and support to the teachers in Illinois districts will be severely limited with this proposal,” says Glassey. Plan participants, he argues, should be able to choose where to put their money and be able to work with an advisor whom they trust.
Status
The Senate Labor Committee approved the measure on Feb. 21, 2024. The committee must approve a second amendment to the bill by Friday, March 15 before it can be considered by the full Senate. Bills must pass the Senate by April 12.
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