Resources for tracking state and local retirement initiatives
This guide summarizes in tabular form state and local retirement initiatives for private-sector workers. This listing is updated periodically and may not always reflect the latest developments in every locality.
In 2012, California enacted the CalSavers Retirement Savings Program — the first state-run retirement savings program for private-sector employees. Subsequently, many other states have enacted similar programs. Most of these programs, like CalSavers, are payroll deduction IRA programs that are mandatory for employers that don’t qualify for an exemption. The first table in this guide summarizes these programs as well as a recently enacted city-run program in Philadelphia. The second and third tables summarize other state-facilitated programs, such as multiple-employer plans or marketplaces where employers can find their own savings plans for their employees.
This guide provides the following information about each program:
- Program basics (e.g., payroll-deduction IRA or marketplace, mandatory or optional for employers)
- Covered employers (e.g., employers that have at least five employees and have been in business for at least two years)
- Covered employees (e.g., at least age 18 with wages that are taxable in the state)
- Employee contributions (e.g., whether employees are auto-enrolled, initial contribution rates and escalation, whether contributions are made to a Roth or traditional IRA)
- Deadlines for employers to register or certify their exemption and to enroll new employees
- Penalties for noncompliance
- Links to the program websites, codified statutory provisions, and regulations
Other relevant details may be noted in the table, but this article is not a comprehensive guide to each of the state programs. More information on how a particular program might apply to a particular employer can be found through each program’s website.
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Contribution levelsMost of the plans require employees to be automatically enrolled at a default contribution level, and many require (or allow) auto-escalation features under which the employee’s contribution rate increases annually until a maximum default rate is reached. All of these programs permit employees to opt out of the program or elect a different contribution level at any time.
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Employer responsibilitiesEmployer responsibilities for payroll deduction IRA programs are limited. A covered employer must register with each applicable program or certify their exemption by the specified deadline (generally, the state will notify employers when their deadline is approaching). The employer must also provide information about eligible employees to the program administrator by the specified deadline, which varies by program. The employer then must start withholding and remitting contributions, but the timing for this depends on whether the program includes an automatic enrollment feature (auto-enrollment programs generally give newly enrolled employees 30 days to opt out of participation before payroll deduction begins). After the initial registration and enrollment process, employer maintenance activity is generally restricted to continuing to withhold and remit contributions, adding new employees to the program, and marking former employees as terminated. Employers do not contribute to these programs or have any responsibilities beyond their administrative duties with respect to enrollment and payroll deduction.
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Status under ERISAThe payroll deduction IRAs are designed to be exempt from ERISA, so ERISA’s fiduciary rules and disclosure and reporting obligations don’t apply. In 2018, a self-described pro-taxpayer group filed a lawsuit to stop California’s program from taking effect, arguing that ERISA preempted the program. A federal district court dismissed the case on the grounds that CalSavers isn’t an ERISA plan, and the 9th US Circuit Court of Appeals upheld the dismissal. The plaintiffs then appealed to the US Supreme Court, which declined to hear the case.
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Multistate consortiumsSeveral states have entered into agreements to share program administrators providing recordkeeping, custodial, and administrative services to each state’s participating employers and employees. In 2023, Colorado and Maine entered into the first multistate agreement, known as the Partnership for a Dignified Retirement, which now also includes Delaware, Nevada, Minnesota, and Vermont. Connecticut, Hawaii, and Rhode Island have a separate agreement to share a platform.