Staying Informed: State Automatic IRA Retirement Plan Mandates Are Gaining Momentum
CHROs need to stay informed of benefits trends and complex requirements to manage employee expectations appropriately. Recently, Connecticut became the fifth state to mandate certain employers that do not already sponsor an retirement savings plan to automatically enroll workers in a state-run retirement savings plan. Other states with a similar mandate include California, Illinois, Maryland, and Oregon.
The goal of this type of state legislation is to expand access to retirement savings plans through the workplace. Studies have established that as much as half of the workforce does not have access to a payroll deduction retirement savings plan. Further, studies have shown that automatic enrollment in such plans increases participation dramatically.
To date, these State "Automatic IRA" mandates are diverse and states' laws vary somewhat as to coverage and other matters. Although the State Automatic IRA plans are designed to minimize employer involvement, certain complications may arise and penalties for employer noncompliance may also vary considerably.
So what does it mean to you? Read the latest Eye on Washington for vital information that can help you understand the impact to your business, such as:
- What types of employers are excluded from this legislation?
- What types of employees are excluded?
- How are Roth IRA deductions affected? What if you do not know the full-year income of new hires or amounts that an employee may have already saved in an IRA?
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