Guide to Secure Choice Retirement Programs

With an epidemic of Americans being underprepared to provide financially for their twilight years, more and more states are mandating that businesses offer a retirement plan to their employees.

Businesses must choose.

Although the details vary from state to state, most are requiring businesses with 5 employees or more to offer a retirement benefit to their employees.

Businesses can choose to use the state-managed program, which is usually a payroll-deduction Roth IRA, or purchase a qualifying alternative privately. Either way, a decision must be made that affects employees.

Look at the alternatives.

About half of affected businesses are choosing a private option, and among those that use the state plans, many later change their minds.
The retirement landscape has changed drastically for small businesses, and most can afford a much better benefit than they imagined. Take a look at the details for your state and compare it to the 401GO alternative.
Retirement state mandates map

California

Colorado

Connecticut

Illinois

Maine

Maryland

Oregon

Virginia

State
Notes

California

Active plan, final deadline 12/31/2025.

Colorado

Active plan, all deadlines have passed.

Connecticut

Active plan, add deadlines have passed.

Delaware

Legislation signed, launch date not yet established.

Hawaii

Legislation signed. Opt-in (not auto-enroll) for employees. Expected to launch July 2024.

Illinois

Active plan, final deadline 11/2023.

Maine

Active plan, final deadline 4/2024. Plan to partner with Colorado in the future.

Maryland

Active plan, no deadlines established.

Massachusetts

Active, voluntary MEP for non-profits only.

Minnesota

Legislation signed, launch date expected in 2024 or 2025.

Missouri

Voluntary MEP, expected to launch September 2025.

Nevada

Legislation passed, expected to launch July 1, 2025.

New Jersey

Legislation signed, launch date not yet established.

New Mexico

Active, voluntary plan. Partnership with Colorado expected to launch July 2024, will still be voluntary.

New York

Plan was expected to launch in 2022, but it is not live yet and no deadlines have been established.

Oregon

Active plan, all deadlines have passed.

Pennsylvania

Legislation passed, waiting to be signed. Expected to launch 2025.

Vermont

Legislation signed, expected to launch 2025. 

Virginia

Active plan for businesses with 25+ employees, deadline 2/15/2024.

Washington

Voluntary marketplace with multiple types of plans, for companies with 100 or fewer employees.

Download the free guide to secure choice retirement plans.

With secure choice plans being offered in more and more states, it’s important for businesses to understand enough details to make an informed decision. Retirement plan decisions can have far-reaching consequences for both employer and employee.
State mandated plans are typically Roth IRAs, which have different rules and regulations than 401(k) plans. Plan designs and mandates vary from state to state, but most have some basic similarities that will help you make a smart choice.
This guide will help you know what to consider when choosing a retirement benefit.
Secure choice or 401k
Is it legally required in all U.S. states for employers to provide retirement plans to employees?

In most states, employers are not required to offer retirement plans. However, a few states do have these requirements, and several more are working on legislation. See the list above for details.

What counts as an employer retirement plan?

While 401(k)s are the most common employer-sponsored retirement plan, other options include SIMPLE IRA plans, SEP plans, profit-sharing plans, cash-balance plans, and stock ownership plans. Each state has rules about what types of plans will count as an exemption from the state plan, so it’s best to consult your state regulations.

Do employees like the state plans?

Obviously, opinions vary. A payroll-deduction IRA is more powerful than a private IRA, and both of those are better than no retirement option at all. However, many bad reviews of the state plans can be found, and most of them focus on communication and education issues and poor support. 

By contrast, 401GO has a 4.8-star rating and leads the industry for customer support.

Do employees have to participate in state plans?

Most states offer auto-enrollment IRA plans, meaning employees will be automatically added to the plan, and contributions will be taken from their paychecks. However, employees are always able to opt out of the plan, and stop and start contributions anytime.

Many 401(k) plans also have auto-enrollment features, always with the ability to opt out, so education and communication with employees is important.

 

What are the penalties for not offering a retirement plan?

These penalties vary from state to state. Those states that have mandates in place will almost always have penalties attached for those who don’t comply. It’s best to consult your state to determine the exact penalties and deadlines.

LEARN MORE ABOUT STATE RETIREMENT MANDATES

An epidemic of under-preparedness for retirement is growing in the United States, while confidence in Social Security is shrinking. States are responding with legislation that requires businesses to offer a work-sponsored retirement program to their employees, either a private plan — such as a 401(k) — or the state-provided plan, often a Roth IRA.

While a Roth IRA can be a beneficial tool for retirement saving, these broad scale programs are far from ideal. Program details vary from state to state, so it’s wise to read the fine print.

In these articles, we discuss program details, pros and cons, and consider alternatives.
OregonSaves Pros & Cons

OregonSaves Pros & Cons

OregonSaves, the country’s first state-mandated Secure Choice retirement plan, celebrated its sixth birthday in 2023. It already has $200 million invested on behalf of the approximately 118,000 workers in the state who use the plan to save toward their retirement.

Complying with State Retirement Mandates

Complying with State Retirement Mandates

Although life expectancy in the U.S. peaked in 2014 at 78.9 years, many of us are living much longer, and it costs money. The government is making less noise than it used to about ending Social Security, but few people are able to live on that alone, assuming that it...

MarylandSaves Retirement Program: Pros and Cons

MarylandSaves Retirement Program: Pros and Cons

The state of Maryland introduced the Maryland Small Business Retirement Savings Program and Trust in 2016, and the program was made available in September of 2022. Like many other similar state retirement programs, it mandates that all employers that do not offer a...

CalSavers: The California Secure Choice Program

CalSavers: The California Secure Choice Program

The state of California has enacted into law a mandatory retirement plan called CalSavers. This mandate will affect millions of companies with employees in California. Understand the details and implications before making a decision with far-reaching consequences.

401(k) or Secure Choice: The Ultimate Guide

401(k) or Secure Choice: The Ultimate Guide

With secure choice plans being offered in more and more states, it’s important to understand enough details to advise clients properly on their best options. Retirement plan decisions can have far-reaching consequences for both employer and employee.

Illinois Secure Choice Program: Pros and Cons

Illinois Secure Choice Program: Pros and Cons

The state of Illinois passed the Illinois Secure Choice Program Act, which became effective in June of 2015. Like many other similar state retirement programs, it mandates that all employers that do not offer a retirement plan to their employees participate in the state plan.