03 Oct State Run Retirement Savings Programs

A growing number of states have established state-facilitated retirement savings programs to help their constituents save for retirement. Most of the programs share common features, such as requiring employers who do not offer their own retirement plans to enroll their employees into these state-run programs automatically. Often, the employers that are required to register and facilitate participation in the programs must be of a certain size, with registration deadlines occurring in phases based on company size.

In general, employee savings are deposited into a personal account—typically a Roth Individual Retirement Arrangement (IRA), but some also offer other options such as a traditional IRA—which are administered by private sector financial firms and overseen by a public board that typically includes one or more state agencies.

Many state-run retirement savings programs are currently in place, while others have not yet been implemented. This Compliance Overview provides information on each state’s program to date.

State-run Retirement Savings Programs

While the specifics of each state’s retirement savings program vary, nearly all programs require employers to automatically enroll their employees if the employer does not offer its own retirement plan. In certain states, failure to facilitate participation in these programs may subject the employer to fines and penalties. The programs are generally funded by employee after-tax contributions (through payroll tax withholding) and are voluntary for employees, meaning they can opt in or out of participation.

In general, employee savings are deposited into a personal account (typically a Roth IRA, but some also offer other options such as a traditional IRA), which is administered by private sector financial firms and overseen by a public board that typically includes one or more state agencies (such as the state department of labor or treasurer). Typically, the board sets the default contribution rate, and some state programs have established a process for automatic increases of participant contributions until a maximum rate is reached.

For most state-run programs, employers cannot contribute and have a limited role in the program’s benefits and operations. Employers are typically responsible for:

• Registering for the program (or certifying that they are exempt). Employer registration deadlines often vary based on employer size;
• Uploading employee payroll information and submitting employees’ contributions; and keeping employee records up to date.

The following are overviews of each state program, with an emphasis on employer registration deadlines and which employers are required to register.

California

By the end of 2025, most California employers will be required to offer a retirement plan to their employees or provide their employees with access to CalSavers, the state-run Roth IRA program. The phased rollout started in 2020 and included staggered deadlines for eligible employers to either begin to offer their own retirement plan or register for CalSavers.

Eligible employers are generally those with one or more employees that do not offer an employer-sponsored retirement plan. The registration deadlines for many employers have passed. Eligible California employers will have until Dec. 31, 2025, to allow employee participation in the program.

Colorado

All eligible Colorado employers are required to register for the state-sponsored Roth IRA retirement savings program, called Colorado SecureSavings, if they do not already offer a retirement plan to their employees. Covered employers that are required by law to facilitate Colorado SecureSavings are generally those who have five or more employees and do not offer a qualified retirement plan for their employees.

Starting in April 2024, newly eligible businesses should have received a notification that they were required to register for Colorado SecureSavings or certify exemption from the program. The deadlines for all businesses previously notified have passed. Employers are advised to take action as soon as possible to register their businesses.

Connecticut

All qualified Connecticut employers are required by law to register for the state-run retirement security program, MyCTSavings, if they do not offer a retirement plan to their employees. The program establishes a Roth IRA for covered employees, and employee contributions are facilitated by employers through automatic payroll deductions.

Qualified employers with five or more employees in Connecticut—at least five of whom have been paid more than $5,000 in the calendar year—are required to join MyCTSavings if they don’t offer a retirement plan for their employees.

Initial registration deadlines have passed for previously notified businesses, but employers can still take action to avoid enforcement penalties in 2024. Each year, MyCTSavings will review state data to identify newly eligible employers for the program. Newly eligible businesses will receive a notification that they are required to sign up for MyCTSavings or certify exemption from the program.

Delaware

The Delaware Expanding Access for Retirement and Necessary Savings (EARNS) program was established in 2022 for eligible employees who do not have access to a specified tax-favored retirement plan through work. The program allows covered employees to choose whether to contribute to a Roth IRA, including allowing them to contribute through a payroll deduction IRA arrangement by automatically enrolling them with an opportunity to opt out.

The Delaware EARNS Program Board will oversee the initial design and implementation of the program. The registration deadline for covered employers is Oct. 15, 2024. Covered employers are those who:

Employ at least five covered employees (and have done so during the previous calendar year); and  Have been in business in Delaware for at least six months in the immediately preceding calendar year.

Hawaii

The Hawaii Retirement Savings Program was established in July 2022 and provides a state-facilitated Roth IRA savings program to eligible employees who do not have access to a tax-qualified retirement plan through work. Unlike other state programs, employees will not be automatically registered and will have to opt in to the program to participate.

Covered employers are those that are in business in Hawaii, employ one or more individuals, and have not maintained a tax-qualified retirement plan for their employees during the preceding two years. The Hawaii Retirement Savings Board will implement and administer the program, but it has not yet been implemented.

Illinois

Illinois has a state-sponsored retirement program—the Illinois Secure Choice Retirement Savings Program (Secure Choice)— that offers a Roth IRA to employees in Illinois who do not have access to a tax-qualified retirement program through work.

Employers in Illinois must participate in Secure Choice if they meet the following criteria:

• Have five or more employees;
• Have been in operation for at least two years; and
• Do not offer an employer-sponsored retirement plan.

The registration deadlines for eligible employers have passed, and those who do not comply may be subject to fines and penalties. An employer checklist that provides an overview of each step in the registration process is available from Secure Choice.

Maine

In 2021, Maine established a state-facilitated retirement savings program—referred to as the Maine Retirement Investment Trust (MERIT)—for eligible employees who do not have access to a tax-qualified retirement plan through work. The Maine Retirement Savings Board is charged with developing and administering the program, which allows eligible employees to choose whether to contribute to a Roth IRA, including allowing them to contribute through a payroll deduction IRA arrangement by automatically enrolling them with an opportunity to opt out.

Registration for the program opened in January 2024, and covered employers had to register by June 30, 2024.

Covered employers are required to enroll in MERIT if they:

•  Are a Maine business with five or more employees; and
•  Do not already have a retirement savings plan in place for their employees.

Maryland

In 2022, Maryland’s state-operated retirement savings program, called MarylandSaves, launched statewide. Maryland businesses (of all sizes) that do not have existing retirement savings programs are required to offer their employees access to a retirement savings plan through the MarylandSaves program, established by the Maryland Small Business Retirement Savings Board. The program is funded by employee savings that are deposited into a personal account, which is a Roth IRA.

The Maryland Saves website includes FAQs and other resources for employers, including registration information.

Massachusetts

The Massachusetts Defined Contribution CORE Plan is a tax-deferred and post-tax 401(k) savings plan developed for employees of eligible small nonprofit organizations that choose to adopt it. Massachusetts nonprofit organizations with 20 employees or fewer may be eligible to adopt the CORE Plan. The Office of the State Treasurer and Receiver General, as sponsor of the CORE Plan, assumes most administrative and investment responsibilities, reducing the burden on participating nonprofit employers.

Minnesota

The Minnesota Secure Choice Retirement Program Act established a new retirement savings program in the state intended to benefit employees who do not have the opportunity to save for retirement through an employer-sponsored retirement plan.

Covered employers will transmit a percentage of each employee’s pay to a state-sponsored IRA. The program’s board of directors is required to begin operation of the program no earlier than Jan. 1, 2025.

Participation in the program is mandatory for covered employers, defined generally as those with five or more covered employees that do not sponsor or contribute to a retirement savings plan for their employees.

Missouri

In July 2023, the Missouri Show-Me MyRetirement Savings Plan was established, which is a multiple-employer 401(k) retirement savings program that will be designed, developed and implemented by the Show-Me MyRetirement Savings Board. The board may implement the program in phases based on employer size. The program applies to employers that employ no more than 50 employees, and it is required to be fully implemented no later than Sept. 1, 2025.

Nevada

The Nevada Employee Savings Trust Program was established in June 2023. The law will require covered employers that do not already offer a retirement plan to their employees to enroll all covered employees in the program, which will be implemented by a Board of Trustees. The board may implement the program in phases based on employer size. The first phase of implementation, where covered employees will be able to make contributions to the program, must begin by July 1, 2025.

Covered employers are generally those that:

•  Employ more than five people in the state;
•  Have been in business for at least 36 months; and
•  Have not maintained a tax-favored retirement plan for their employees.

New Jersey

Employers are required to participate in New Jersey’s state-facilitated IRA savings program, known as RetireReady NJ, if they have at least 25 employees, have been in business for at least two years, and do not offer a qualified retirement plan to their employees. Employers must register by the following dates depending on their company size:

• Sept. 15, 2024: Employers with 40 or more employees must register by this date; and
• Nov. 15, 2024: Employers with 25-39 employees must register by this date.

Employers will be notified by RetireReady NJ when it is time for their businesses to register. At registration, employers will have the option to exempt their businesses if they already offer a qualified plan or are otherwise exempt. RetireReady NJ provides an employer portal that includes detailed information on how to register, as well as other resources. Frequently asked questions are also available.

New Mexico

New Mexico’s automatic IRA program, called Work and Save, is not yet operational and is voluntary for employers and employees. The deadline for the New Mexico Work and Save Board to design and implement the program was July 1, 2024.

New York

New York’s retirement savings program, called the New York State Secure Choice Savings Program (SCSP), was originally enacted in 2018 and was voluntary for employers. In 2021, amendments to the law made the program mandatory for covered employers and required employees to be automatically enrolled (with the option to opt out), among other changes. Covered employers are those who had 10 or more employees at all times during the previous calendar year; have been in business for at least two years; and have not offered a qualified retirement plan in the last two years.

The program offers a Roth IRA to employees in New York who do not have access to a tax-qualified retirement program through work. It is overseen by the New York State Secure Choice Savings Board. The SCSP is under development and there is no enrollment required at this time.

Oregon

Oregon’s state-sponsored retirement program, called OregonSaves, offers a Roth IRA to eligible employees who do not have access to a tax-qualified retirement plan through work. All employers in Oregon, regardless of size, must facilitate the OregonSaves program for their employees if they do not offer an employer-sponsored retirement plan.

Employers have been able to register with OregonSaves at any time since the program became available in October 2017. While the registration deadlines were staggered based on employer size, the various deadlines for existing Oregon businesses have passed. Newly registered businesses will receive a notification that they are required to sign up for OregonSaves or certify exemption from the program.

Rhode Island

On June 26, 2024, Rhode Island legislation established a state-operated retirement savings program called Rhode Island Secure Choice. The program will include one or more payroll deduction IRAs, as determined by the Office of the General Treasurer, who will administer the program. Employers who do not already offer a retirement savings plan will be required to offer workers access to the Secure Choice program.

For purposes of the program, an “eligible employer” is generally defined as one that has five or more employees. There will be a phased implementation period as follows:

• Employers with 100 or more employees will have to participate within 12 months of the program opening;
• Employers with 50 or more employees will have to participate within 24 months of the program opening; and  All other eligible employers will have to participate within 36 months of the program opening.

Vermont

In June 2023, Vermont established a state-operated retirement savings program called the VT Saves Program, which is a Roth IRA that employees will contribute to with automatic payroll deductions. The law requires Vermont employers that do not already offer a retirement plan to their employees to sign up for the program, and does not specify employer size requirements, but implementation will occur in phases based on employer size as indicated below. VT Saves is not yet open for enrollment, and it is expected that the program will launch in early 2025. There will be a phased rollout of the program, as follows:

• July 1, 2025: Covered employers with 25 or more employees must offer the program by this date.  Jan. 1, 2026: Covered employers with 15-24 employees must offer the program by this date.
• July 1, 2026: Covered employers with 5-14 employees must offer the program by this date.

Virginia

Virginia’s state-facilitated IRA savings program—known as RetirePath Virginia—opened in 2023 and required eligible employers to register with the program before Feb. 15, 2024. To avoid enforcement penalties, eligible employers are advised to register for RetirePath using their Employment Identification Number (EIN) and Access Code (they can contact RetirePath for the Access Code).

In general, employers in Virginia must participate in RetirePath if they have 25 or more eligible employees (i.e., those who are employed at least 30 hours per week), have been in operation for at least two years prior to the program’s implementation and do not offer a qualified retirement plan to their employees.

Washington

Washington has established a new automatic IRA program in the state, known as Washington Saves, that is intended to benefit employees who do not have the opportunity to save for retirement through an employer-sponsored retirement plan. Washington Saves is set to be launched by July 1, 2027. The governing board may stagger implementation in stages after that date, which may include phasing in implementation based on employer size or other factors.

Covered employers are defined as those who have been in business in the state for at least two years, maintain a physical presence in the state, employ those working a combined minimum of 10,400 hours and do not offer a qualified retirement plan to their covered employees who have been continuously employed for at least one year. The governing board is required to conduct an outreach and education initiative in consultation with covered employers and employees regarding the design and implementation of the program.

Note that Washington also offers a Small Business Retirement Marketplace that is completely voluntary for both employers and employees, administered by the Washington Department of Commerce and available to businesses with fewer than 100 employees. These businesses can shop for low-cost retirement savings plans, including IRAs, through this Marketplace.

LINKS AND RESOURCES

The relevant links to each state’s program can be found below. However, the following federal resources may also be helpful:

• IRS’ frequently asked questions (FAQs) on retirement plans IRS’ webpage on choosing a retirement plan for your business
• IRS’ webpage on Roth IRAs
• U.S. Department of Labor’s retirement savings education webpage for employersProvided to you by Barrow Group/Hilb Group

This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.