CONNECTICUT RETIREMENT PLAN MANDATE: HELP BUSINESS OWNERS BENEFIT
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It’s the law: By the end of 2022, Connecticut businesses with more than 26 employees must offer a retirement saving opportunity. Those who haven’t yet adopted an employer-based plan have two choices:
- Adopt their own retirement plan
- Register for MyCTSavings, the state-sponsored retirement savings program
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Contact your Regional Plan Consultant
Non-Compliant Employers Face Stiff Penalties
Employers who don’t comply with the Connecticut retirement plan mandate by their deadline date are subject to civil actions and are punishable by imprisonment & fines:
| Size of Business | Compliance Deadline Date |
|---|---|
| >100 employees | June 30, 2022 |
| 26 – 99 employees | October 31, 2022 |
| 5 – 25 employees | March 30, 2023 |
- Subject to civil action – brought by employee or Labor Commissioner to require employer to enroll employee
- Punishable by imprisonment & fines – based on amount employer failed to contribute
You can help your clients avoid these fines and offer a retirement plan that will:
- Comply with the Connecticut mandate
- Reduce taxes
- Control costs
- Attract and retain top talent
- Maximize business value
- Enable them to work with their preferred business partners
MYCTSAVINGS OR CUSTOMIZED PLAN?
MyCTSavings is a basic, one-size-fits-all retirement savings program for businesses that do not wish to sponsor a plan for their own employees. Yet there are many businesses that would be better served with a plan from TRA that’s customized to their needs.
| MyCTSavings | Custom 401(k) from TRA | |
|---|---|---|
| Pre- and Post-Tax Deferrals | Roth IRA w/ auto after-tax payroll deduction | Pre-tax or Roth elective deferral contributions |
| Contributions | Capped at maximum Roth IRA contribution rates; $6,500 in 2022 for those < age 50 | Lesser of 100% of compensation or $23,000 |
| Catch-Up Contributions | Determined by Roth IRA contribution limits | Bigger catch-up contributions – $7,500 annually for those age 50 and older |
| Employer Match | Not available | Available |
| Income Limit | Determined by Roth IRA contribution limits | No income limits |
| Investment Choices | Only 2 standard investment options plus 9 elective options | Can provide a wide variety from top asset managers |
| Automated Payroll Integration | Not available | Available |
| Customizable for businesses | Not customizable | Yes – for example, Safe Harbor, SIMPLE, Profit-Sharing & Cash Balance |
| Tax Credit | No, since there are no start-up costs for employers | Yes – 50% of the expenses paid up to the greater of $500 or the lesser of $250 for each non-highly compensated employee, not to exceed $5,000 |
TRA Plans to Consider
For Connecticut businesses who want to sponsor a retirement plan, some plans to consider include:
• 401(k)
• Safe Harbor 401(k)
• Cross Tested Profit-Sharing Allocation
• 401(k) plus Cash Balance Plan
Other alternatives to CTSaves include SIMPLE 401(k) Plans, Group 401(k) Plans (MEPs, PEPs and Aggregation Programs), and 403(b) Plans (for non-profits).
Working closely with you, TRA will create a customized plan that meets your client’s business. We partner with top recordkeepers and investment managers around the country and deliver exceptional client service. We also offer 3(16) Plan Administration Relief Services (PARS) to relieve business owners of day-to-day plan administration responsibilities and manage their fiduciary risk.
Complete the form below and one of TRA’s Regional Plan Consultants will be in contact with you.
