NEW JERSEY RETIREMENT PLAN STATE MANDATE: HELP BUSINESS OWNERS BENEFIT
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While the initial implementation date was March 28, 2021, the program was allowed up to a one-year extension due to COVID-19. As of late 2022, it appears that the state was still finalizing their implementation timelines.
Those who haven’t yet adopted an employer-based plan have two choices:- Adopt their own retirement plan
- Register for RetireReady NJ Savings Program, the state-sponsored retirement savings program
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Contact your Regional Plan Consultant
Deadlines are Here
- September 15, 2024 is the deadline for employers with 40 or more employees
- November 15, 2024 is the deadline for employers with 25 to 39 employees
Non-Compliant Employers Face Stiff Penalties
NJ businesses that don’t adhere to state-mandated retirement legislation within one year will receive a written warning from the government. Each subsequent year of non-compliance will result in these penalties:
- 2nd year: $100 per employee
- 3rd and 4th years: $250 per employee
- 5th year and beyond: $500 per employee
Employers have little responsibility when offering the RetireReady NJ Savings Plan. Employer responsibilities include the following:
- They must offer the plan to any employee who has worked for the company as of their 90th day of employment.
- They must track employees who opt out of the program.
- They must provide program information to all current and new employees.
- They must automatically withhold three percent of pretax earnings for employees who do not opt out of the plan.
- They must deposit retirement benefit deductions with the state.
- They must offer an annual open enrollment period.
- They must submit an employee census to Secure Choice annually
You can help your clients avoid these fines and offer a retirement plan that will:
- Comply with the New Jersey mandate
- Reduce taxes
- Control costs
- Attract and retain top talent
- Maximize business value
- Enable them to work with their preferred business partners
RetireReady NJ OR Customized Plan?
RetireReady NJ 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.
| RetireReady NJ | 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 | Auto-enrolled at a 3% contribution rate, unless they opt out or change their rate, and may contribute $7,000 maximum to the plan per year | Lesser of 100% of compensation or $23,000 |
| Catch-Up Contributions | Determined by Roth IRA contribution limits | $7,500 annually for those age 50 and older |
| Employer Match | Employers cannot contribute to the program such as matching funds. | Available |
| Income Limit | Determined by Roth IRA contribution limits | No income limits |
| Investment Choices | Limited | Can provide a wide variety from top asset managers |
| Automated Payroll Integration | 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 – 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 RetireReady NJ 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 RetireReady NJ 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) Fiduciary Services 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.
