State Mandates Spurring Private Plan Establishments
401(k) Plans Financial News State Mandates Regulatory Updates
- After the state mandates went into effect in 2022, there was a 35% increase in 401(k) plan establishments amongst private businesses
- The majority of affected employers seem to prefer private 401(k) plans they can design themselves and link to their payroll for automatic contributions
In case you missed Remy Samuels last PLANSPONSOR article, "the adoption of state auto-IRA
programs has proven to be a catalyst for more companies in those states to offer their own
retirement savings accounts, researchers found."
Previously, PEW Charitable Trusts had already found that in Oregon, Illinois, and California after the mandates went into effect in 2022, there was a 35% increase in 401(k) plan establishments amongst private businesses. Researchers spanning from the FDIC, The World Bank, Brown University, and George Mason University have found employers seem to prefer private 401(k) plans they can design themselves and link to their payroll for automatic contributions, over the simplistic "one-size-fits-all" state sponsored auto-IRA programs.
Maybe it's because employers know what their employees need, in a better manner than their state governments.
Maybe it's the SECURE Act and SECURE 2.0 Act tax credits that allow employers to sponsor the program for free the first three years.
Maybe it's the fact that 401(k) savers will have saved more than double what IRA users will have saved by the time they reach retirement age.
Maybe it's Maybelline?
Whatever the reason(s), if your business operates in California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Massachusetts, Missouri, Nevada, New Jersey, New Mexico, New York, Oregon, Vermont, Virginia, or Washington, you'll need to make sure you are in compliance with that state's retirement plan legislation. Visit our interactive map to ensure you are meeting your state's requirements, to avoid penalty fees.
For additional information regarding the differences between the state programs and a qualified private plan, please join us for our monthly webinar: https://zoom.us/webinar/regist...