Currently, there are 14 states with retirement program mandates to help individuals save for retirement. In this article, explore program mandates, structure, and roll-out programs for each of the 14 states to understand how (and if) this applies to you and your small business.
California
Name: CalSavers
Mandate: Companies with 5+ employees must offer a program or face a fine of $250 per eligible employee after 90 days of noncompliance and an additional fee of $500 per eligible employee after 180 days of noncompliance.
Timing: As of September 30, 2020, anyone with 100+ employees must have complied; as of June 30, 2021, those with 50+ employees must have complied, and by June 30, 2022, those with 5+ employees must comply.
Colorado
Name: Colorado Secure Savings Programs
Mandate: Companies that have been in business for 2+ years with 5+ employees must offer a program or face a fine up to $100 per eligible employee per year (up to max of $5,000 annually).
Timing: The pilot program begins in October 2022, enrollment begins in 2023.
Connecticut
Name: MyCTSavings
Mandate: Companies with 5+ employees paid more than $5K each in the calendar year (unless the business already offers a qualified, employer-sponsored retirement program). Non-compliance may result in an investigation and penalties.
Timing: Pilot launched in November 2021, with full launch slated for early 2022.
Illinois
Name: Illinois Secure Choice Retirement Program
Mandate: Companies with 25+ employees, have been in operation for at least 2 years, and do not offer a qualified employer-sponsored retirement program. Legislation has been recently enacted that lowers the threshold from 25 to 5 employees. The enrollment deadlines for companies with less than 25 employees will be in waves starting in 2022.
Timing: Already live. Upcoming enrollment deadlines include:
- No sooner than September 1, 2022: Employers with 16-24 employees must start offering a retirement program
- No sooner than September 1, 2023: Employers with 5-15 employees must start offering a retirement program
Maryland
Name: Small Business Retirement Savings Program (Maryland $aves)
Mandate: Mandatory for all companies with automatic payroll processing that have been in business for 2+ years. By offering a program, the State will waive the annual $300 filing fee.
Timing: Mid-2022.
Massachusetts
Name: CORE Program
Type: Multiple Employer Program (MEP).
Mandate: Voluntary. All nonprofit organizations with ≤20 employees who have payroll administered by an eligible third-party payroll service are allowed to participate.
Timing: Already live.
Maine
Name: Maine Retirement Savings Program
Mandate: Mandatory for companies with 5+ employees, with the following two exceptions: companies who have offered a tax-favored retirement program at any time in the current or past two calendar years, or companies that have not been in business during both the current and previous calendar year.
Timing: Launching April 1, 2023, the program will be implemented in three phases, based on company size, with the following enrollment deadlines:
- April 1, 2023: Employers with 25 or more employees in Maine must start offering the program
- October 1, 2023: Employers with 15 to 24 employees in Maine must start offering the program
- April 1, 2024: Employers with 5 to 14 employees in Maine must start offering the program
However, eligible employers of all sizes can voluntarily start offering the program to its employees on April 1, 2021.
New Jersey
Name: New Jersey Secure Choice Savings Program Fund
Mandate: Companies with 25+ employees (including leased employees) that have been in business 2+ years must offer a program or face penalties that increase annually. Employers with less than 25 employees and less than 2 years in business can join voluntarily. Governmental employers and independent contractors are excluded. 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
Timing: Extended to March 28, 2022.
New Mexico
Name: New Mexico Work and Save Program
Types: Hybrid program consisting of a voluntary IRA and web marketplace. Marketplace options to be determined by the Board.
Mandate: Voluntary. All companies with their primary place of business located in New Mexico are eligible.
Timing: Launching July 1, 2024.
New York
Name: New York State Secure Choice Savings Program
Mandate: Requires most employers with 10 or more employees to provide retirement options for workers. Senate Bill S5395A requires private sector employers without a current retirement program to automatically enroll their employees in New York’s program.
Timing: Expected to launch in 2022.
Oregon
Name: OregonSaves
Mandate: All employers that don’t already offer a qualified, employer-sponsored retirement program.
Timing: Already live and mandatory for all companies with 5+ employees; Targeting late 2022 mandate for companies with less than 5 employees.
Vermont
Name: Green Mountain Secure Retirement Program
Type: MEP designed for employers with 50 or less employees (including self-employed) and employers that currently do not offer a retirement program.
Mandate: Voluntary.
Timing: Expected to launch in 2021.
Virginia
Name: VirginiaSaves Program
Mandate: Mandatory for companies with 25+ employees that have been in business for 2+ years and do not already offer a qualified retirement program to employees.Noncompliance may result in fines of up to $200 per eligible employee. The Board is still finalizing details.
Timing: Scheduled to launch on or before July 1, 2023.
Washington
Name: Retirement Small Business Marketplace (run by the Washington State Department of Commerce)
Types: Participating financial service providers offer 9 types of low-cost IRAs and 401(k)s to companies with less than 100 employees including sole proprietors and self-employed.
Mandate: Voluntary.
Timing: Already live.
Other States
Additionally, Arizona, Arkansas, Idaho, Indiana, Iowa, Kentucky, Louisiana, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Utah, West Virginia, Wisconsin and Wyoming have all introduced legislation but no word yet on when or if they will offer programs.
To learn more about setting up a 401(k) for your small business, visit vestwell.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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