37% of Americans are not saving for retirement. Only 4 in 10 businesses with less than 100 employees offer retirement benefits. These are sobering statistics. In response to these stats, state governments are taking action. They are passing legislation to require small businesses to provide their employees with some type of retirement plan. Employers satisfy this requirement by either enrolling their employees into a state-sponsored retirement program or sponsoring their own plan (ex., 401K) via the private market. The state-sponsored program is normally a Roth IRA.
The management of these plans will vary by your state, but some key aspects are common. Usually, employees are automatically enrolled in the plan with payroll deductions normally the mechanism for plan contributions. The employee can opt out if desired, or change the contribution amount. Typically, the employer cannot contribute to the plans.
Which states have mandated retirement plans?
In addition to the above, the following states will have their own plans in the near future:
As an employer, a state-mandated retirement plan is one way to bridge that retirement savings gap for your employees.
If you’re looking for information on how to implement a qualified retirement plan or other benefit programs, reach out to TSIB and speak with one of our Benefits Specialists to help you get started.
TSIB’s Risk Consultants are currently servicing the following locations:
East Coast: New York City, NY; Bergen County, NJ; Fairfield County, CT; Philadelphia, PA
Texas: Austin, San Antonio, Houston, Dallas
California: Orange County, Los Angeles County, Riverside County, San Bernardino County, San Diego County