Like many other states around the country, a financial crisis is brewing in Connecticut. More than 600,000 of the people who work there don’t have access to an employer-sponsored retirement savings plan.1 MyCTSavings is designed to fulfill this unmet need and prevent future strain on the state’s economy. It’s also an opportunity for employers to enhance their benefits packages and attract and retain talent.
What is the CT Retirement Security Program?
MyCTSavings is a state-sponsored retirement savings program that provides a convenient way for employers to help their employees reach their financial goals. There’s minimal administrative work necessary and the plan easily integrates with existing payroll systems. MyCTSavings is also affordable because it’s entirely funded by employee contributions and no fees are charged to employers.
Why is MyCTSavings being offered?
Connecticut legislators created MyCTSavings because despite efforts to encourage participation in privately-sponsored retirement benefits, nearly half of the state’s workforce is not enrolled in a plan.2 And although anyone can work with a financial institution to create an individual retirement account (IRA), saving rates generally are greater when they’re processed automatically via payroll deductions.
What type of retirement plan is CT Retirement Security?
The CT state-sponsored retirement plan is a Roth IRA, which means that employees contribute post-tax dollars to their savings account. When they retire and draw on the plan, their income is generally tax free.
What are the features of the Connecticut Retirement Security Program for employees?
MyCTSavings makes planning for retirement easy with features like these:
- Automatic enrollment
Employees are automatically enrolled in the state-sponsored plan at a contribution rate of 3%. They can adjust this rate at any time and contribute as little as 1% to as much as 100%, as long as their total annual contributions don’t exceed the IRS maximum for an IRA. - Customizable investment options
For the first 60 days, plan participants invest in a cash preservation fund. After this introductory period, their savings are automatically transferred to a target date retirement portfolio or they can customize their investments. Available options include income portfolios, balanced portfolios, conservative growth portfolios and more. - Portability
Employees who change jobs take their MyCTSavings account with them. Even if they move to another state, they can continue to contribute to the plan by check or roll their savings into another IRA. - Voluntary participation
Participants of MyCTSavings can opt out at any time. If they do so within 30 days of their enrollment, no payroll deductions will have occurred. Those that opt out after this time frame may withdraw any contributions they made to the plan. They can also re-enroll whenever they’d like to resume saving.
Which employers must participate in MyCTSavings?
Employers in CT who have five or more employees that each earn more than $5,000 in a calendar year must either participate in MyCTSavings or sponsor another qualified retirement plan through the private market. Businesses that don’t comply may be penalized.
What is the registration deadline for businesses?
The state plans to send a series of enrollment notices and reminders to eligible businesses in 2022. These communications will include each employer’s unique access code and registration deadline.
Does CT Retirement Security have fees?
MyCTSavings has certain administrative and operating expenses, which are covered by employees, not employers. Each year, plan participants pay an asset-based fee of 22%, or $0.22 for every $100 in their account, as well as a $26 account fee, billed $6.50 quarterly.
Can a small business opt to offer a different retirement plan?
Employers can certify their exemption from MyCTSavings if they offer another qualified retirement plan, such as:
- 401(k)
- 403(a) qualified annuity
- 403(b) tax-sheltered annuity
- 408(k) simplified employee pension
- 408(p) SIMPLE IRA
- 457(b) government deferred compensation
How does the Connecticut Retirement Security Program compare to alternatives?
ADP designs retirement plans that work better
| Features | CT Secure Choice IRA | ADP 401(k) | ADP SIMPLE | ADP SEP |
|---|---|---|---|---|
| Auto Enroll | Mandatory 3% | Available | Available | N/A |
| Auto Escalation | N/A | Available | N/A | N/A |
| Payroll Integration | Manual via website or FTP | Full integration | Full integration | N/A |
| Investment Option | Limited | Broad range of funds | 65+ options | 65+ options |
| Investment Advice | N/A | Available | Available | Available |
| Taxability | Roth after-tax contributions | Pretax & Roth contributions | Pretax contributions | Pretax contributions |
| Annual Contribution Limit | $6,500 employee contributions + $1K catchup (over 50) | $23,000 employee contributions + $7,500 catchup (over 50) + optional employer contributions | $16,000 employee contributions + $3,500 catchup (over 50) + employer contributions | 25% of total compensation up to $66,000 (all employer contributions) |
Frequently asked questions about MyCTSavings
Is participation in Connecticut retirement security program mandatory?
Participation in MyCTSavings is completely voluntary for employees, but mandatory for businesses that don’t sponsor a qualified retirement plan and have more than five employees who each earn more than $5,000 in a calendar year.
We already offer another plan. Can we get an exemption?
Employers who offer a retirement plan that qualifies for exemption can opt out of MyCTSavings using their unique access code and employer identification number (EIN).
Who administers the CT retirement program?
The Connecticut Retirement Security Authority oversees MyCTSavings and makes decisions about the investment options available to plan participants with the help of a private investment consultant.
How is the CT retirement security program funded?
Employees who are enrolled in MyCTSavings are charged annual fees to cover the cost of plan administration.
What does the Connecticut retirement security program cost taxpayers?
MyCTSavings is self-sustaining and requires no taxpayer funding.
2 State of Connecticut Comptroller
This information is intended to be used as a starting point in analyzing retirement plans and is not a comprehensive resource of all requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
Unless otherwise agreed in writing with a client, ADP, Inc. and its affiliates (ADP) do not endorse or recommend specific investment companies or products, financial advisors or service providers; engage or compensate any financial advisor or firm for the provision of advice; offer financial, investment, tax or legal advice or management services; or serve in a fiduciary capacity with respect to retirement plans. All ADP companies identified are affiliated companies.
