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State Mandated Retirement Programs – What You Need To Know

In response to the retirement crisis that is plaguing America, many states across the nation have begun state-mandated retirement programs. 

The most notable of the state-mandated retirement programs is California’s CalSavers program, which requires employers to register in the program unless they already have an employer-sponsored retirement account. 

Here’s everything you need to know about these state-run retirement programs, from mandate specifics to important dates.

California – CalSavers

About: CalSavers is an individual Roth IRA; contributions are made with after-tax dollars and are not tax-deductible. High-income earners are discriminated against and cannot participate in the program. 

What you need to know: The state of California requires that employers with more than 5 employees register with CalSavers, or open a private-market retirement plan.

Important dates: The deadline for employers withover 100 employees to register was September 30, 2020. Employers with 50+ employees must register by June 30, 2021, and employers with 5+ employees must register by June 30, 2022. 

Connecticut – Secure Choice

About: Originally enacted in 2016, Connecticut’s state-run retirement plan is expected to take effect sometime in 2021. 

What you need to know: Secure Choice will require employers with five or more employees to offer a retirement savings program to their employees, either through the state program or the private sector. The retirement plan will be a Roth IRA.

Important dates: Currently there are no important dates or deadlines.

Illinois – Secure Choice

About: The Illinois Secure Choice is an automatic enrollment payroll deduction Roth IRA.

What you need to know: Employers with more than 25 employees, have been in operation for at least two years, and do not already offer an employer-sponsored retirement plan are required to register with the program.

Important dates: All employer registration deadlines passed in 2018 and 2019. Employers have 30 days from the date of hire to enroll new employees in the program.

Maryland – Maryland$aves

About: Similar to Connecticut, Maryland signed their retirement program into law in 2016, but it is expected to begin sometime in 2021. 

What you need to know: The state will require all employers with automatic payroll processing to participate in the Maryland $aves program. There are exemptions available for many businesses, such as startups that have operated for less than 2 years.

Important dates: Currently there are no important dates or deadlines.

Massachusetts – CORE Plan

About: Massachusetts’ CORE plan is a multiple employer plan (MEP) 401(k) retirement plan created for the state’s nonprofit sector.

What you need to know: Nonprofit organizations with 20 or fewer employees are required to offer an MEP 401(k) or open a private-market retirement plan. Participants pay a $65 annual fee, which is automatically deducted from their plan. 

Important dates: None, however, employees will be automatically enrolled 60 days after receiving an auto-enrollment notice from CORE.

Oregon – OregonSaves

About: OregonSaves provides Roth IRA accounts to employees enrolled in the program. 

What you need to know: All employers must register with OregonSaves, or provide their own employer-sponsored retirement plan.  

Important dates: the deadlines for employers with 5 or more employees passed in 2018 and 2019. An undetermined deadline is projected for late 2021 for employers with 4 or fewer employees.

Washington State – Small Business Retirement Marketplace

About: Washington’s Small Business Retirement Marketplace is a virtual marketplace where employers and individuals can shop for state-verified low-cost retirement plans. 

What you need to know: This program is voluntary; employers are not required to offer a plan.

Important dates: None.

State-mandated retirement plans aren’t always the best route, and often have many drawbacks and restrictions that make it a less than ideal retirement solution. Want to learn more? Contact us today to learn about our 401(k) plans and how they compare to your state’s retirement plan.

Photo by Monica Silvestre from Pexels.

*This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. Saveday makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation and before engaging in any transactions. The information may not reflect the most current legal developments and is not guaranteed to be complete, correct, or up-to-date.