February 21, 2023
By Jennifer Galstad-Lee, CPA, JD, Senior Tax Manager
Many Americans are not saving enough for retirement – in fact, a recent survey by the Federal Reserve found that a quarter of working adults have no retirement savings at all. To address this growing crisis, a number of states are enacting laws that require private businesses to provide employee retirement plans. The requirement comes with the option to enroll in a state-sponsored program, which provides a low-cost way for small businesses to offer a retirement plan. You do not need to enroll in a state-sponsored option if your business already offers an employee retirement plan – as long as the plan meets your state’s requirements. However, you might be subject to penalties if your business does not offer a retirement program and your state has a mandate for which you qualify.
Is your business impacted?
More than 30 states have considered enacting state-mandated retirement plan legislation, and 14 states now have laws enabling state-sponsored retirement plans. Keep in mind that even if your state does not require a workplace retirement plan, you may still be required to comply if you have a requisite number of employees reporting income in a state that does.
States with mandatory retirement plan requirements (as of February 2023)
States with active laws
California
CalSavers – www.calsavers.com
Current registration started on January 1, 2023.
Enrollment deadlines:
• December 31, 2023 | 5 or more employees
• December 31, 2025 | 1 to 4 employees
Colorado
Colorado Secure Savings Program – https://coloradosecuresavings.com
Enrollment deadlines:
• March 15, 2023 | 50-plus employees
• May 15, 2023 | 15 to 49 employees
• June 30, 2023 | 5 to 14 employees
Connecticut
MyCTSavings – https://myctsavings.com
Enrollment deadlines:
• June 30, 2022 | 100 or more employees
• October 31, 2022 | 26 to 99 employees
• March 30, 2023 | 5 to 25 employees
Illinois
Illinois Secure Choice – www.ilsecurechoice.com
Enrollment deadlines:
• ASAP: 16 or more employees (deadline passed, registration as soon as possible)
• November 1, 2023 | 5 to 15 employees
Maryland
Maryland Small Business Retirement Savings Program – www.marylandsaves.org
Enrollment deadlines:
• ASAP: One or more employees
• Employers who sign up by December 1, can save $300 of the annual registration fee beginning in 2023, and every year after.
Massachusetts
Massachusetts Defined Contribution CORE Plan – www.mass.gov/core-plan-for-nonprofits
• Currently only enacted for the state’s nonprofit sector.
Oregon
Oregon Saves – www.oregonsaves.com
Enrollment Deadlines
• March 1, 2023 | 3 or more employees
• July 31, 2023 | One to 2 employees
Washington
Washington Small Business Retirement – https://retirement-marketplace.com
Enrollment Deadlines
• ASAP | One to 100 employees
States that have signed legislation
Maine
Signed into law, scheduled
Any covered employer may voluntarily offer the program after April 1, 2023.
Enrollment beginning in 2023 with the following proposed dates:
• April 1, 2023 | 25 or more employees
• October 1, 2023 | 15 to 24 employees
• April 1, 2024 | 5 to 14 employees
New Jersey
The New Jersey Secure Choice Savings Program – www.eanj.org/engagement/newsroom/new-jersey-secure-choice-savings-program-what-employers-should-do-now (Details pending)
New Mexico
New Mexico Work and Save Program – https://nmsto.gov/special-programs/work-and-save (Details pending)
Virginia
Retire Path VA – www.retirepathva.com (Details pending)
Employer Registration:
• March 2023 | Pilot (Currently scheduled)
• July 1, 2023 | Launch (Proposed)
We Can Help You Navigate Retirement Plan Options for Your Business
State-sponsored retirement plans have pros and cons. Government-sponsored programs are generally a low-cost solution with few fiduciary responsibilities for employers. Government sponsored plans tend to have inflexible, less options within, and limited tax favored features. Businesses should evaluate accordingly whether a privately offered retirement plan vs government sponsored plan would be more suited for them.
For more information, reach out to the GRF tax team to discuss strategies for your workplace retirement plan.
