State Retirement Plan Mandate

What States Have Them, Which States Are Pending and When Do They Take Effect?

In recent years, states across the country have enacted retirement savings programs to help individuals save for retirement. The rules of these state mandated programs vary greatly from state to state, but they could help bridge the retirement gap for as many as 41 million U.S. workers who currently don’t have access to an employer-sponsored plan. While this is an important step in fully addressing the retirement gap and its effects on the private sector, what does it mean for business owners?

Depending on where the business operates, there are specific retirement plan adoption deadlines that companies will be required to meet to continue operating legally and avoid penalties.

At TRA we want to help close the retirement access gap, we’re incredibly excited by these new developments and the renewed interest in retirement savings. To help you decipher these mandates, we’ve broken them down by state.

Which states have mandatory retirement plans?

  • When states require employers to provide their employees with retirement savings opportunities, it’s known as a state mandated retirement. Businesses generally have two ways to comply with these laws – enroll their employees into a state-sponsored retirement program or sponsor a plan of their own through the private market, such as those offered by TRA.

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      California

      CalSavers

      • Program: Employers with 5 or more employees are required to provide access to CalSavers or a private retirement plan.
      • Status: Active
      • Penalties: CalSavers announced on January 12, 2022 that it will begin to impose penalties on non-compliant employers with 100 + employees.
      • Click here for more details to help business owners benefit.
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      Colorado

      Colorado Secure Savings Programs

      • Program: The Colorado Secure Savings Program requires businesses with five or more employees to offer a workplace retirement program. The state implemented its program and employers can begin registering.
      • Status: Active
      • Upcoming deadline: Companies with 50+ employees in effect now, companies with 15-49 employees to register by 5/15/23, companies with 5-14 employees to register by 6/30/23.
      • Click here for more details to help business owners benefit.
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      Connecticut

      MyCTSavings

      • Program: Employers with 5 or more employees and don’t have an existing qualifying retirement plan, are required to provide access to the Connecticut Secure Choice Savings Plan or a private retirement plan. The program will not be mandatory for businesses with fewer than five employees or those that already offer a work-based retirement savings option.
      • Status: Active
      • Upcoming deadline: The Retirement Security Authority is still refining the implementation timeline and we expect more updates to come.
      • Click here for more details to help business owners benefit.
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      Delaware

      Delaware EARNS

      • Program: The Delaware EARNS state-sponsored retirement plan requires businesses with five or more employees to offer a workplace retirement program.
      • Status: Passed
      • Upcoming deadline: Implementation timeline is yet to be determined, once employers are required to participate, they’ll be responsible for:

        • Registering with the program and providing relevant employee information

        • Facilitating employee participation and opt-out

        • Providing employees with program information, educational materials, and disclosures

        • Remitting employee contributions.
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      Illinois

      Illinois Secure Choice Retirement Program

      • Program: Employers with 5+ employees, who have been in operation for at least two years, are required to provide access to the Illinois Secure Choice state retirement program or a qualified retirement plan by November 1, 2023. Exempt employers include those with fewer than 5 employees, have been in business for less than two years, or who already offer an employer-sponsored retirement plan.
      • Status: Active
      • Penalties: $250 per eligible employee for the first year, and an additional $500 per eligible employee for each year thereafter.
      • Click here for more details to help business owners benefit.
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      Hawaii

      Hawaii Saves

      • Program: The Hawaii Saves Retirement Program will be a payroll deduction IRA. This means each employer is required to automatically enroll each employee into the program if they do not already sponsor a qualifying plan. Those who are enrolled will automatically have a portion of their salary placed in an IRA. Any employee may opt-out at any time.

      Employers must be:

        • In business for more than two years
        • This does not apply to employers who are a part of a state or federal government agency.

      Employees must be:

        • A resident of the state
        • At least 18 years old
        • Employed and receive wages from an employer
      • Status: Expected to be up and running by July 1st, 2024
      • Upcoming deadline: The bill passed in May of 2022. The program is expected to be operational by July 1st, 2024.
      • Penalties: If eligible employees are not automatically enrolled, employers must:
        • Deposit the amount that would have been made by the employee into the employee’s account (interest rates apply).
        • Pay a penalty of $25 for each month the covered employee was not enrolled in the program and,
        • $50 for each month the eligible employee continues to be unenrolled after the penalty has been given.
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      Louisiana
      • Program: Introduced Senate Bill 283 which would have established the Louisiana Retirement Savings Plan for employers who do not provide their employees with access to a retirement plan. No further legislative action was taken after it was referred to the Committee on Retirement.
      • Status: Pending
      • Upcoming deadline: TBD
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      Maine

      Maine Saves

      • Program: The Maine Saves Retirement Program, under the bill, private-sector workers would contribute to a Roth IRA from their paychecks. The bill will require employers to provide employees the choice to contribute to a payroll deduction Roth IRA by automatically enrolling them with an opportunity to opt out. Covered employees that do choose to opt out will be automatically re-enrolled with the opportunity to opt out again at regular or ad hoc intervals.  Latest expecations are that employers may voluntarily offer the program to its employees in late 2023. Additionally, employers with five or fewer employees are not required to offer the program, they may choose to do so.
      • Status: Expected to be up and running by late 2023
      • Upcoming deadline: The program will be implemented in phases (25+, 15-24, 5-14), with official dates TBD.
      • Penalties: The board will enforce penalties on qualifying employers each calendar year (or portion of a calendar year) for failing to enroll an employee without reasonable cause. The amount of a penalty is as followed:

        • Prior to April 1, 2024: Maximum penalty per employee is $10

        • April 1, 2024 – March 31, 2025: Maximum penalty per employee is $20

        • April 1, 2025 – to September 30, 2026: Maximum penalty per employee is $50

        • On or after October 1, 2026: Maximum penalty per employee is $100
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      Maryland

      Small Business Retirement Savings Program (Maryland $aves)

      • Program: Maryland’s new Automatic Retirement Savings Plan, MarylandSaves automatic retirement savings program allows an employer to provide its workers with access to a payroll-deducted savings program if they are not eligible to participate in an existing employer plan. The State will waive the $300 annual report filing fee every year an employer participates in the State program or offers a qualified plan for their employees.
      • Status: Active
      • Click here for more details to help business owners benefit.
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      Massachusetts

      CORE Plan

      • Program: Nonprofit organizations with 20 or fewer employees must offer a retirement benefits plan through a 401(k) multiple employer plan (MEP) through the Massachusetts Defined Contribution CORE Plan or a private provider. Participants must have payroll administered by an eligible third party.
      • Status: Active
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      New Jersey

      New Jersey Secure Choice Savings Program Fund

      • Program: Both non- and for-profit businesses with 25 or more employees that have been in business for at least two years must implement the New Jersey Secure Choice Savings Program or provide access to a qualified retirement plan. Smaller or newer employers can join voluntarily.
      • Status: Active
      • Click here for more details to help business owners benefit.
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      New Mexico

      New Mexico Work and Save Program

      • Program: On February 26, 2021, Gov. Michelle Lujan Grisham signed the New Mexico Work and Save Act, creating a voluntary Roth IRA savings option for workers without employer-based retirement accounts, plus an online marketplace (the Retirement Savings Plan Marketplace) of private-sector providers for employers.
      • Status: Enacted
      • Upcoming deadline: July 1, 2024
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      New York

      New York Secure Choice

      • Program: On October 21, 2021, Governor Hochul signed into law The New York State Secure Choice Savings Plan program, requiring all private employers who have employed at least 10 New York-based employees during the previous calendar year, and that have been in business for at least 2 years, to enroll their employees in the State program, or offer a qualified retirement plan. The State program follows a Roth IRA structure.
      • Status: Active with provisions currently operating or scheduled to be implemented in the coming years.
      • Penalties: $250/employee for the first violation. $500/employee for the second violation. $1,000/employee for the third and subsequent violations.
      • Click here for more details to help business owners benefit.
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      Oregon

      OregonSaves

      • Program: All employers with employees in Oregon must offer a qualified retirement plan to their employees or implement OregonSaves.
      • Status: Active
      • Upcoming deadline: Businesses with 3-4 employees were expected to register for the program by 3/1/23, businesses with 1-2 employees expected to register by 7/31/23.
      • Penalties: $100 per eligible employee, up to $5000 a year.
      • Click here for more details to help business owners benefit.
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      Vermont

      Green Mountain Secure Retirement Plan

      • Program: The Green Mountain Secure Retirement Plan is available as a voluntary MEP to employers with 50 employees or fewer and employers that do not currently offer a retirement plan to their employees. The plan intends to cover self-employed individuals as well.
      • Status: Pending. The Green Mountain Secure Retirement plan was set to launch in the first half of 2021 but there have been no developments.
      • Upcoming deadline: TBD
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      Virginia

      RetirePath Virginia

      • Program: In 2021, the Virginia General Assembly passed legislation directing Virginia529 to establish a state-facilitated private retirement savings program to open in 2023. The program will require employers who have been in business for at least 2 years with 25 or more employees to implement the state program or offer a qualified retirement plan.
      • Status: Scheduled
      • Penalties: $200 per eligible employee annually.
      • Upcoming deadline: September 18, 2023 – Early Registration Closes. February 15, 2024 – Employer Registration Deadline.
      • Click here for more details to help business owners benefit.
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      Washington

      Washington Small Business Retirement Marketplace

      • Program: The Washington State Legislature created the Small Business Retirement Marketplace to provide small businesses and individuals access to a retirement plan. It is a website where employers and employees can shop and compare state-verified and low-cost retirement savings plans.
      • Status: Active – Voluntary
      • Upcoming deadline: None. The program is completely voluntary.

Alternative TRA Solutions to Consider

For 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 state retirement plan mandates  include SIMPLE 401(k) Plans, Group 401(k) Plans (MEPs, PEPs and Aggregation Programs), and 403(b) Plans (for non-profits).

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