© 2022 American Payroll Institute, Inc. Ensure Compliance With Mandatory State Auto-Enrollment Retirement Programs Several states have established state-run mandatory, automatic enrollment retirement plans. It is important for employers to be aware of these programs, due to the payroll deduction requirements. State auto-enrollment retirement programs Several states have active state-sponsored auto-individual retirement account (IRA) programs: California, Connecticut, Illinois, Maryland, Oregon, and Washington. Legislation has been passed and implementation scheduled for similar programs in: Colorado (pilot in progress program begins early 2023), Delaware (January 1, 2025), Maine (April 1, 2023), New Mexico (July 1, 2024), and Virginia (July 1, 2023). Legislation has been passed, but implementation has not yet been scheduled in Hawaii, New Jersey, New York, and New York City. Massachusetts and Vermont have created state plans that are voluntary. California expands program coverage Effective August 26, 2022, California expanded the CalSavers Program definition of an eligible employer to include employers with at least one eligible employee (previously five employees or more) and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement. Sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the business owners are excluded from the definition. Eligible employers that do not provide a retirement savings program must have a payroll deposit savings arrangement to allow employee participation in the program by December 31, 2025 [S.B. 1126, L. 2022]. Eligible employers with five or more employees and that do not offer a retirement savings program were already required to have a payroll deposit savings arrangement to allow employee participation in the program by June 30, 2022. Employers that have not already done so can register via the program website. Colorado program to begin in early 2023 The Colorado SecureSavings Board in the Office of the State Treasurer announced that Colorado SecureSavings the state’s new mandatory, automatic enrollment retirement program will be available for employer registration early in 2023. The program has an employer section of its website, which provides program details and links to additional guidance and resources. All qualified Colorado businesses will be required to facilitate Colorado SecureSavings if they: (1) have been in business for two or more years (2) have five or more employees and (3) do not already offer a retirement savings plan for any employees. Employers that already offer a qualified employer- sponsored retirement savings plan will be required to certify their exemption when the program fully launches. To verify whether an employer-sponsored retirement savings plan qualifies for exemption, see the FAQs on the program website or contact Client Services at 1-844-692-1073. Employers will be notified by Colorado SecureSavings when they must register. To begin registration, the employer will need its Federal Employer Identification Number (EIN) and the Colorado SecureSavings Access Code from the notification. Then the employer will need to upload employees’ payroll information and submit employees’ savings contributions levels. Employers will be required to report on and submit employee payroll contributions and to keep a staff list up to date on an ongoing basis. The retirement plans will be Roth IRAs that will be portable even if the enrolled employees change or leave their jobs. Delaware establishes state plan Delaware has established the Expanding Access for Retirement and Necessary Saving (EARNS) program, a state- administered retirement savings program, for qualified employees of employers with at least five employees, that have been in business in the state for at least six months in the preceding calendar year, and that do not already offer a qualified employer-provided retirement savings program. Covered employees who do not opt out will be automatically enrolled in the program [H.B. 205, L. 2022]. Employers that maintain a specified tax-favored retirement plan are exempt from facilitating the EARNS program. The federal government, the state, any other state, any county, any municipal corporation, or any of the state’s or another state’s agencies or instrumentalities are also exempt. The EARNS program section of the Office of the State Treasurer’s website provides a summary of the program, fact sheet, updates, and additional resources. Employers can sign up to receive email updates on the program. The target launch date for full implementation of the program is January 1, 2025. Hawaii establishes state plan Hawaii has established a state retirement savings board within the Department of Labor and Industrial Relations (DLIR) to create a state retirement savings program. The development and implementation time frame will be determined by the board [S.B. 3289, L. 2022]. A covered employer will be required to: (1) provide covered November 14 , 2022 Volume 24 Issue 22
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