You’ve probably heard of workplace retirement plans. While these are not mandatory, they do help boost your savings. According to AARP, workplace retirement plans increase worker savings by 15 times. Ten states already have mandatory retirement plans, and several others consider mandating auto-IRAs.
New York’s Secure Choice
If you are a business owner in New York, it is crucial to understand the new requirements of Secure Choice. The Secure Choice Savings Program will be implemented on Aug. 9, 2023, for companies with ten or more employees in the state. You must join a plan to be eligible for a pension, but there are exemptions for small businesses and retirement plans. The Secure Choice Savings Board will establish rules for companies and individuals regarding the program.
Legislation passed by Governor Hochul created the program. It requires private employers with ten or more employees to provide a retirement plan. If the company has not offered a qualifying retirement plan within the last two years, it must provide its employees with a Secure Choice retirement plan. Some restrictions apply, however. You must be at least 21 years old to participate in the program. In addition, you must be in business for at least two years.
In June 2018, the governor of California signed a law making CalSavers mandatory for all employers with more than five W-2 employees. This is essential to retirement security, and employers are encouraged to sign up. In addition, California has a reputation for favoring employee interests in its legislation. So it is not surprising that the state’s retirement plan has been a subject of controversy. But despite the difficulties of implementing a retirement plan, CalSavers is proving to be a good option for many companies.
The program also carries with it several disadvantages. The employer-sponsored plan is not required to be a qualified employer-sponsored plan, and MyCTSavings will come with many manual requirements. For example, an employer will have to review employee opt-outs and contribution changes, which limits the plan’s flexibility. Additionally, employees must be at least 19 years old to participate. In addition, employers will have to make their employees’ contributions through the program and may not be allowed to opt-out.
Connecticut’s Retirement Security Program
Under the new law, Connecticut employers with five or more employees must offer their workers a retirement plan. Private employers with four or fewer employees may opt to participate as well. Employers who do not provide retirement plans are not required to make any contributions. Connecticut’s retirement savings program is similar to California, Oregon, Illinois, and several other states. It is expected to provide financial security to as many as 600,000 employees in the state. In addition to Connecticut, Virginia and Maryland are developing similar retirement pension plans.
Connecticut has created the Connecticut Retirement Security Authority (CRSA) to oversee the new state-sponsored retirement savings program. The program is mandatory for private-sector employees and is similar to legislation passed by other states. Lawmakers formed the CTRSA in 2016 to oversee the implementation of a retirement savings program for state employees. The law will be effective in the fall of 2021 when eligible employers must offer a retirement plan to their employees.
As an employer, MyCTSavings is an excellent way to keep your employees informed and involved in their retirement plans. The program is simple to use and incorporates seamlessly the retirement information into the payroll process. MyCTSavings was first piloted in October 2021 with several employers. Employers enrolled in the pilot program were happy with the ease of enrollment and the benefits the program offers workers. Now that the program has been approved for statewide use, employers and employees in Connecticut can benefit from this new state-sponsored retirement plan.
The program is mandatory for all employers with more than 25 employees, but employers with fewer than 25 can opt out of the program if they wish to. Companies can also waive the $300 annual filing fee if they offer a qualified retirement plan. The plan is set to launch in waves, and the deadline for companies with less than 25 employees is October 2022. Employers in the first wave of the plan must offer it by October 2021, and the second and third waves will be rolled out in February, March, and June, respectively. In addition to Vermont, Maryland$aves is planning a June 2022 employer pilot and a September 2022 program launch. The Colorado Secure Savings Program is also planning to launch in October.