State-mandated retirement plans are here to nudge (erhm, push) employers into helping employees save for their future. But, all the different rules and regulations can cause you to trip on your way to offering retirement plans.
Don’t get tripped up. We’re here to help you understand your responsibilities. Read on to learn about states with mandatory retirement plans and the specifics of each program.
What are state-mandated retirement plans?
A state-mandated retirement plan is when a state requires eligible employers to offer their employees a retirement plan option. Generally, employers can choose between enrolling employees into a state-sponsored program or offering a qualifying retirement plan (e.g., 401(k)). Employers who enroll employees in the state retirement program do not contribute to employee accounts.
State-sponsored retirement programs are typically Roth individual retirement accounts (IRAs). Employees fund Roth IRAs with after-tax dollars, so they don’t need to pay taxes when withdrawing retirement funds. Employees elect to participate and can choose how much they want to contribute. Employers then withhold employee contributions from each paycheck and remit to the employee’s account.
You are not the plan sponsor if you enroll employees in a state-sponsored retirement program. The state oversees the program. You simply handle contributions and remittances, along with any related administrative responsibilities.
Failure to comply with your state’s mandatory retirement plan may result in penalties in the hundreds or thousands, depending on the state.
Are employers required to offer 401(k) plans?
You may be wondering, Is 401(k) mandatory for employers to offer? The answer depends on your state, along with factors such as your:
- Number of employees
- Length of time in business
- Current retirement program (if applicable)
For a more in-depth look at whether you need to offer employees a 401(k) or another qualifying retirement plan, understand your state requirements (which we’ll get to later).
What are qualifying retirement plan alternatives?
Already offer a retirement plan? Great! It may satisfy your state’s requirements. Again, mandatory retirement laws by state require that you either enroll employees in your state program or offer a qualifying retirement plan.
Qualifying retirement plans may include:
- 401(k) plans
- SIMPLE IRA plans
- Qualified annuity plans
- Simplified Employee Pension plans
Benefits of mandatory retirement plans
Quick, pause that eye roll! State-sponsored retirement programs may feel overwhelming now, but they also come with a slew of benefits for both you and employees.
Offering a retirement program can:
- Boost your employer brand by adding a new benefit
- Attract new hires and keep you competitive
- Help employees save for retirement
- Score you 401(k) tax credits (if you start a new 401(k) plan and/or add an automatic enrollment feature)
Remember that there are typically costs associated with retirement plans—both state-sponsored programs and individual plans. For example, some states have an annual report filing fee employers must pay.
States with mandatory retirement plans
Only about 10% of employees at small businesses have a retirement plan. Yikes. If you think that stat is low, you’d be correct. It is low, which is why states are lining up to implement mandatory retirement plans.
But like anything new, state-mandated retirement plans lead to confusion for employers, especially small employers. Because being an expert on state laws is, well, hard. And when you’re juggling a million other things in your business, it might feel downright impossible.
So, we’re here to bring you the basics of state-mandated retirement plans.
Below is a list of states that require retirement plans, along with states that passed legislation and are working on implementing plans soon.
If you don’t see your state, hang tight. It may pass a law to implement a state-mandated retirement program sooner rather than later. For example, Arizona, Ohio, and Wyoming are just some of the states with pending legislation.
California
CalSavers is the name of California’s state-mandated retirement program. Through CalSavers, employees can contribute to a Roth Individual Retirement Account (IRA).
Employers with five or more employees must participate in CalSavers or offer a qualifying retirement plan alternative. Employers with fewer than five employees must comply by December 31, 2025.
Check out California’s retirement plan website for more information.
Colorado
The Colorado Secure Savings Program is Colorado’s state-mandated retirement program in the form of a Roth IRA.
All employers with five or more employees who have been in business for at least two years must comply with the state retirement law.
You can review Colorado’s website for further information on the program.
Connecticut
Connecticut’s state-mandated retirement program, MyCTSavings, is a Roth IRA.
All employers with five or more employees paid more than $5,000 each per year must enroll or offer a qualifying plan alternative.
For more information, head over to the MyCTSavings website.
Delaware
Delaware’s upcoming state-mandated retirement program, Delaware Expanding Access for Retirement and Necessary Savings (Earns), is a Roth IRA program. EARNS is scheduled to start in January 2025.
Employers with more than five employees who have been in business in the state for at least six months will need to enroll or offer an alternative plan.
You can learn more about the program on Delaware’s website.
Hawaii
The upcoming Hawai’i Retirement Savings Program requires employers in Hawaii to provide a state-facilitated Roth IRA. The program is slated to be operational by July 2024.
Employers with one or more employees must enroll or offer an alternative plan if they have been in business for at least two years.
You can learn more about the plan on Hawaii’s website.
Illinois
The state’s program, Illinois Secure Choice, is a Roth IRA.
Employers with five or more employees who have been in business for at least two years must enroll or offer an alternative plan.
Check out the Illinois Secure Choice website for more information.
Maine
The Maine Retirement Savings Board will oversee Maine’s upcoming retirement program, which is a Roth IRA.
Employers with five or more employees who have been in business for at least two years and haven’t offered a qualifying plan in the preceding two calendar years must enroll or offer an alternative plan.
The deadline to enroll comes in phases that are based on employer size:
- 25+ employees: Deadline passed
- 15 – 24 employees: Deadline passed
- 5 – 14 employees: April 1, 2024
For more information on the upcoming bill, check out Maine’s retirement savings legislation.
Maryland
MarylandSaves (or Maryland $aves) is the state’s mandatory retirement program for qualifying employers. It is a Roth IRA.
All employers with at least one W-2 employee, have been in business for at least two calendar years, and use an automated payroll system must enroll or offer an alternative plan.
Want more information? Check out MarylandSaves’ website.
Massachusetts
Unlike other states, Massachusetts’ statewide retirement program, CORE (Connecting Organizations to Retirement), is voluntary and targeted to nonprofits. CORE is a post-tax 401(k) savings plan.
CORE is available for small nonprofit organizations with 20 employees or fewer.
For more information, check out the Massachusetts state website.
Minnesota
The upcoming Minnesota Secure Choice Retirement Program is scheduled to launch by October 1, 2024. Employees can decide if they want their contributions to their IRA to be pre-tax or after-tax (Roth).
All employers with one or more employees who have been in business in the state for at least one year must comply.
You can learn more about the state’s law here.
Missouri
The upcoming Missouri Workplace Retirement Savings Plan is a voluntary multi-employer retirement plan.
Missouri plans to implement the plan by September 1, 2024. Stay tuned for more information.
You can view the bill summary here.
Nevada
The Nevada Employee Savings Trust is an upcoming IRA retirement program beginning July 1, 2025.
Employers with more than five employees who have been in business for at least 36 months and have not maintained a tax-favored retirement plan at any time in the calendar year or three preceding calendar years must comply.
For more information, check out the Nevada bill here.
New Jersey
New Jersey’s Secure Choice Savings Plan is an upcoming program.
Employers with 25 or more employees who have been in business for at least two years must enroll or offer another retirement plan.
For more information, head over to the New Jersey Secure Choice Savings Plan website.
New Mexico
New Mexico Work & $ave is an upcoming program where employees can contribute to Roth IRAs. It is expected to launch on July 1, 2024.
Unlike many other state-mandated retirement plans, Work & $ave is voluntary for employers.
Want more information? Check out New Mexico’s state website.
New York
New York State Secure Choice Savings Program is an upcoming Roth IRA retirement program.
Employers with 10 or more employees who have been in business for two or more years and have not offered a qualified plan in the preceding two years must enroll or offer an alternative retirement plan.
Check out New York’s website for more information and deadlines as they’re released.
Oregon
OregonSaves, the state-mandated retirement program of the state, is a Roth IRA.
All employers must enroll in OregonSaves or offer another eligible retirement plan.
You can view the OregonSaves website for more details.
Rhode Island
In September 2024, Rhode Island signed legislation creating the Rhode Island Secure Choice Retirement Savings Program.
Employers with five or more employees must enroll or offer another qualifying plan.
The deadline to enroll is based on employer size:
- More than 100 employees: Within 12 months of the program opening
- More than 50 employees: Within 24 months of the program opening
- Under 50 employees: Within 36 months of the program opening
View more information on Rhode Island’s website.
Vermont
VTSaves lets employees contribute to a Roth IRA. The state expects it to launch in early 2025.
Employers with five or more employees must enroll or offer another qualifying plan.
The deadline to enroll comes in phases based on employer size:
- 25+ employees: July 1, 2025
- 15 – 24 employees: January 1, 2026
- 5 – 14 employees: July 1, 2026
Check out more information on Vermont’s website.
Virginia
Virginia’s state-mandated retirement plan, RetirePath, allows employees to contribute to a Roth IRA.
Employers with 25 or more eligible employees who have been in business for at least two years must enroll or offer another retirement plan.
For more information, check out the RetirePath website.
Washington
Washington’s Small Business Retirement Marketplace is a voluntary program available to employers.
Unlike other state-mandated programs, the Retirement Small Business Marketplace lets employers choose between various types of retirement plans.
Check out the Retirement Marketplace website for more details.
Retirement plan mandates by state: Chart
Skimmers, rejoice. Take a look at our quick-reference chart below to determine if your state has a mandatory retirement plan and whether your business must comply.
| State | State-mandated Retirement Program | Who Must Comply? |
|---|---|---|
| California | CalSavers | Employers with 5 or more employees |
| Colorado | Colorado Secure Savings Program | Employers with 5 or more employees who have been in business for at least 2 years |
| Connecticut | MyCTSavings | Employers with 5 or more employees paid more than $5,000 per year |
| Delaware | Delaware EARNS | Employers with more than 5 employees who have been in business in the state for 6 or more months |
| Hawaii | Hawaii Retirement Savings Program | Employers with 1 or more employees who have been in business for 2+ years |
| Illinois | Illinois Secure Choice | Employers with 5 or more employees who have been in business for at least 2 years |
| Maine | Maine Retirement Savings Program | Employers with 5 or more employees who have been in business for at least 2 years and have not offered a qualifying plan in the preceding 2 calendar years |
| Maryland | Maryland$aves | All employers that have at least 1 W-2 employee, have been in business for at least 2 years, and use an automated payroll system |
| Massachusetts | CORE | Voluntary; available to nonprofit organizations with 20 employees or fewer |
| Minnesota | Secure Choice Retirement Program | Employers with 1 or more employees that have been in business in the state for at least 1 year |
| Missouri | Missouri Workplace Retirement Savings Plan | Voluntary |
| Nevada | Nevada Employee Savings Trust | Employers with 5+ employees who have been in business for at least 36 months and have not offered a qualifying plan in the 3 preceding years |
| New Jersey | Secure Choice Savings Plan | Employers with 25 or more employees that have been in business for at least 2 years |
| New Mexico | New Mexico Work & $ave | Voluntary |
| New York | New York State Secure Choice Savings Program | Employers with 10 or more employees who have been in business for at least 2 years and have not offered a qualified plan in the preceding two years |
| Oregon | OregonSaves | All employers |
| Rhode Island | Rhode Island Secure Choice Retirement Savings Program | Employers with 5+ employees |
| Vermont | VTSaves | Employers with 5+ employees |
| Virginia | RetirePath | Employers with 25 or more employees that have been in business for at least 2 years |
| Washington | Retirement Small Business Marketplace | Voluntary |
Your responsibilities in a nutshell
Mandatory retirement programs by state can be overwhelming. But, it doesn’t have to be. As an employer, you can get started by taking the following three steps:
- Determine if your state has a mandate that affects you
- Decide whether you want to facilitate the state program or offer employees a qualifying alternative
- Take action! (Enroll employees in the state program or set up another plan)
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Patriot’s payroll also offers additional integration options, including time and attendance software and accounting software integration, to streamline administration.
This article has been updated from its original publication date of August 31, 2022.
This is not intended as legal advice; for more information, please click here.