MARYLAND RETIREMENT PLAN MANDATE: HELP BUSINESS OWNERS BENEFIT
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With statewide rollout of MarylandSaves, all for-profit and not-for-profit employers engaged in business in MD that pay employees through a payroll system or service must enroll, unless one of these exclusions apply:
- The employer currently offers — or offered at any time in the past two calendar years — a tax-favored retirement plan or IRA separate from the state-run program.
- The employer has not been in business for two full calendar years.
Those who haven’t yet adopted an employer-based plan have two choices:
- Adopt their own retirement plan
- Register for MarylandSaves the state-sponsored retirement savings program
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Contact a Regional Sales Consultant
No Penalties For Non-Compliance
At this time, there are no penalties if an employer does not offer MarylandSaves or another retirement plan. However, employers that participate in the program will receive a waiver of the $300 filing fee for the annual report that business entities must file. Employers do not have fiduciary responsibility for the program, and it is not covered under ERISA.
Eligible Employees
Employees aged 18 or older are eligible for the program if they work for a covered employer, unless any of the following apply:
- The employee is eligible for a “qualifying retirement plan” or participates in a multiemployer plan.
- The employee is covered by the federal Railway Labor Act (which applies to certain railroad and airline employees).
Auto-enroll payroll deduction IRA program for all employees aged 18 or older are working for a covered employer, unless any of the following apply:
- The employee is eligible for a “qualifying retirement plan” or participates in a multiemployer plan.
- The employee is covered by the federal Railway Labor Act (which applies to certain railroad and airline employees).
MARYLANDSAVES OR CUSTOMIZED PLAN?
MarylandSaves 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.
| MarylandSaves | Custom 401(k) from TRA | |
|---|---|---|
| Pre- and Post-Tax Deferrals | IRA w/ auto pre-tax payroll deduction | Pre-tax or Roth elective deferral contributions |
| Contributions | Initial default rate of 5%, with 1% auto-escalation each year. Employees can opt in or out or choose a different deferral rate at any time. | Lesser of 100% of compensation or $20,500 |
| Catch-Up Contributions | Determined by IRA contribution limits | $6,500 annually for those age 50 and older |
| Employer Match | Not available | Available |
| Income Limit | Determined by IRA contribution limits | No income limits |
| Investment Choices | Age-appropriate target date fund plus 2 elective options (after accumulating $1,000 in emergency savings) | Can provide a wide variety from top asset managers |
| Automated Payroll Integration | Available | Available |
| Customizable for businesses | Not customizable | Yes – Plans are designed to meet the employer’s needs – Traditional 401(k), Safe Harbor, Profit Sharing, Cash Balance |
| Tax Credit and Filing Fees | No, tax credit for start-up costs, but employers offering MarylandSaves can waive $300 MD annual report filing fee | Yes – 100% of the expenses paid up to the greater of $500 or the lesser of $250 for each non-HCE’s. A maximum tax credit of $5,000 per year would be available for 3 years. |
TRA Plans to Consider
For Maryland 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 MarylandSaves 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 Sales Consultants will be in contact with you.
