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States around the country are looking into ways of providing retirement savings opportunities for individuals who do not have access to an employer retirement plan. States with a retirement program under consideration or with a program adopted are in bold below. A brief description of the state program is included for each bolded state.
Alabama | Alaska | Arizona |Arkansas | California | Colorado | Connecticut | Delaware | Florida | Georgia | Hawaii | Idaho | Illinois | Indiana | Iowa | Kansas | Kentucky | Louisiana | Maine | Maryland | Massachusetts | Michigan | Minnesota | Mississippi | Missouri | Montana | Nebraska | Nevada | New Hampshire | New Jersey | New Mexico | New York | North Carolina | North Dakota | Ohio | Oklahoma | Oregon | Pennsylvania | Rhode Island | South Carolina | South Dakota | Tennessee | Texas | Utah | Vermont | Virginia | Washington | West Virginia | Wisconsin | Wyoming
In addition to the below summaries, AARP’s Public Policy Institute has established a State Retirement Savings Resource Center, a library of policy papers, key facts, opinion pieces, and studies related to state-based plans for private-sector workers. The Pension Rights Center authored two papers — one on consumer protections in such plans and one on the advantages of pooled accounts.
In September 2015, the Government Accountability Office published a report, Federal Action Could Help State Efforts to Expand Private Sector Coverage, which looks at coverage rates, efforts by states and other countries to expand coverage, and the obstacles states face in implementing new state-based plans.
In 2014, a bill was introduced in the Arizona House of Representatives, HB 2063, to establish the Arizona Secure Choice Retirement Savings Program. The program would benefit Arizona’s private-sector workers whose employers do not offer a retirement plan. To date, the legislation to establish the program has not been enacted. The program would enable Arizona employees whose employers do not offer a tax-favored retirement plan to enroll in a payroll withholding savings plan managed by the state. Employee contributions would be deposited in a Roth IRA for the employee at a 3% contribution rate. Participation would not be mandatory.
In 2016, Senator Kevin De Leon introduced S.B. 1234. The bill provided the framework for California’s workplace retirement program, CalSavers. CalSavers is a retirement savings program for private-sector workers. It enables eligible California employees, whose employers do not offer a tax-favored retirement plan, to enroll in a payroll withholding savings plan. Employee contributions are made to a Roth IRA in the employee’s name at a standard rate of 5%, increasing to 8%, of gross pay. Employees have the option to choose a different contribution rate. Participation is voluntary for employees, and California residents who are not eligible employees also have the opportunity to participate. Employers who do not have a workplace retirement plan will be required to join the program on a phased schedule beginning September 30, 2020. To learn more, visit the website.
Senate Bill 200, introduced to the Senate Finance Committee in March of 2020, authorizes the implementation of the Colorado Secure Savings Program. The Colorado Secure Savings Program is set to be a privately administered, revenue-neutral, automatic IRA program for private-sector workers. To date, legislation for the program has not been implemented. The program would enable Colorado employees whose employers do not offer a tax-favored retirement plan to enroll in a payroll withholding savings plan managed by the state. Employees have the option to contribute to an IRA at a 5% contribution rate. Participation is not mandatory and Colorado residents who are not eligible employees will have the opportunity to participate.
In 2016, the Connecticut legislature enacted Public Act 16-29, an act creating the Connecticut Retirement Security Program. The Connecticut Retirement Security Program requires covered employers to enroll their employees in a Roth-IRA arrangement automatically unless they choose not to participate. Covered employers are private employers with five or more employees who received at least $5000 in wages during the previous year. The Connecticut Retirement Security Program was mandated to launch on January 1, 2018. However, administrative issues presented problems and by December of 2019, the board voted unanimously to suspend all financial expenditures. In the budget for 2020 Governor Lamont included budgetary and organizational reforms designed to restart the program.
In 2014, the Illinois General Assembly passed SB 2758, an act creating the Illinois Secure Choice Savings Program. Read our summary of the law. The bill requires all businesses in existence for at least two years, with 25 or more employees, to automatically enroll their employees in the Secure Choice Savings Program unless they offer another retirement option. Employee contributions are made to a Roth IRA at a default 5% contribution rate. Assets are pooled into a single fund and managed by the Illinois Treasurer and a qualified board. Employee participation in the program is not mandatory, and employees may opt-out and rejoin at any time. The program was implemented in phases and should be fully operational by 2020. Click here to learn more.
In 2015, HB 1279 was introduced along with a companion bill, SB 555, into the Indiana state Senate. Together, the bills would create, the Hoosier Employee Retirement Option (HERO). The proposed Hoosier Employee Retirement Option (HERO) plan is a portable IRA for employees who do not have access to a retirement plan through their employers. Employers with at least one employee and self-employed individuals are eligible to participate. Participation by either the employer or the employee is voluntary. Contributions to the accounts would be in post-tax dollars, and the default contribution rate is 3%. Although the legislation was proposed, no further action has been taken.
In 2016, SSB 3164 was introduced into the Iowa Senate. The bill would create the Iowa Retirement Savings Plan Trust to help Iowans save for retirement. The bill was referred to a Senate Ways and Means Subcommittee. However, no action to implement the plan has been taken.
On February 3, 2015, HR 261 was introduced by a bi-partisan group of state legislators. The bill would establish the Kentucky Retirement Account Program, a state-sponsored retirement program for private sector workers. Employers with five or more employees would be required to participate, unless they receive a hardship exemption. Employers with fewer employees are allowed to participate on a voluntary basis.
The bill would create a governing board to design and implement the program, which would be established as an automatic enrollment payroll deduction Roth IRA program. The board would be required to implement the program within 24 months of enactment, unless insufficient funds are made available. The bill permits the board to seek an opinion as to the applicability and impact of ERISA.
On February 9, 2015, the bill was referred to the Agriculture and Small Business Committee, which held a hearing on the bill on February 25. No further action was taken on the bill prior to the end of the legislative session.
In 2014, SB 283 was introduced in the Louisiana Senate by Senator Troy Brown. No further action has been taken on the bill since April of 2014. However, the bill would have established the Louisiana Retirement Savings Plan, a state-based plan for private-sector workers without access to an employer sponsored retirement plan. The plan would be an automatic payroll deduction IRA, although employees could opt-out at any time. The default contribution rate is set at 3%. The plan would also allow employers to contribute up to $5,000 per year per employee. Assets would be managed professionally, and benefits would be distributed as an annuity starting at age 69.
Several bills have been introduced in Maine to establish a secure choice retirement savings option for individuals without retirement plans through their employers.
In 2015, LD 768 was introduced by Representative Diane Russell. The bill would have established the Maine Secure Choice Retirement Savings, a state-sponsored payroll-deduction IRA. Employers with five or more employees would be required to participate. Employees could contribute a default contribution rate of 3% but have the option to opt-out. A more recent bill is LD 594 introduced in 2019 by State Senator Eloise Vitelli to establish a retirement savings board to explore program options.
In 2016, Maryland Governor, Lawrence Hogan, signed HB 1378 into law. The law established the Maryland Small Business Retirement Savings Program, a retirement savings program for employees of companies that do not offer another qualified retirement program. The program is known today as Maryland Saves. Any private sector employer who fits certain criteria must participate. Employers must not already offer a retirement plan and they must pay employees through a payroll system or service and must have been in operation for two years. Eligible employees will be automatically enrolled in the program but can opt-out at any time.
Employees of nonparticipating employers have the option to participate as well. Participating employees contribute a fixed percentage or dollar amount of their salary or wages to an IRA. Additional regulations and provisions are still in process.
According to the website, the pilot program will launch in the fourth quarter of 2020. In the first quarter of 2021, the program will be fully implemented. These dates, however, are subject to change. To learn more, visit www.marylandsaves.org
In 2017, Massachusetts launched CORE (Connecting Organizations to Retirement). CORE provides workers at nonprofits with 20 or fewer employees access to a Roth 401k plan. If an organization chooses to participate, both the employer and employee can contribute, helping to ensure adequate retirement savings. To learn more, visit the official website.
CORE established a retirement savings option for a limited group of eligible employees. Massachusetts legislators are working to expand a payroll savings option to other employees. Both H. 1075 and S. 602 would establish a Massachusetts Secure Choice Retirement Savings Program to benefit employees who are not employed by the federal government, the state, any other state, country, or municipal corporation. Employees whose employer does not already sponsor a specified tax-favored retirement plan would be eligible for participation. If an employee opts to participate, contributions will be made to a Roth IRA with the possibility of employer contributions.
In 2014, HF 2536 was signed into law. This bill required the Commissioner of Management and Budget to report on a potential state-administered retirement savings plan. The consulting company, Deloitte, conducted the retirement savings study and laid out the dimensions of Minnesota’s retirement savings gap and options for creating a state-administered vehicle, for those without access to a retirement plan. Following the report, Sen. Sandy Pappas and Rep. Jamie Becker-Finn proposed legislation, the Minnesota Secure Choice Retirement Act. However, only informational sessions occurred. No legislation has been established or implemented.
On December 10, 2013, the Retirement Systems Committee of the Nebraska Legislature held a hearing to discuss LR 344, a resolution calling for an interim study to examine the availability and adequacy of retirement savings for Nebraska’s private-sector workers. The hearing was hosted by Committee Chair Senator Jeremy Nordquist. No further legislative action has been scheduled.
On January 8, 2015, HB 239 was introduced by Representative David Danielson. The bill would establish the Statutory Commission on Retirement Security to study the creation of a state-sponsored program for workers without access to a retirement plan through their employers. The commission would study a program that would provide for automatic enrollment into a payroll-deduction account, with an option for employees to opt out of the program. No employer contributions would be required. The accounts would be portable, and self-sustaining, and the assets would be pooled and professionally managed. The commission would be required to submit its report by November 1, 2015, and an appropriation of $100,000 would be authorized to support the commission.
HB 239 was voted on in the House on February 11, 2015, and the bill failed to advance.
In 2019, Governor Phil Murphy signed legislation creating the New Jersey Secure Choice Savings Program. The legislation will help workers whose employers do not otherwise provide a qualified retirement plan to save for retirement. The law requires employers without other retirement plans, who have been in business for two or more years and have 25 or more employees, to participate in the Secure Choice Savings Program. Participation of employers with fewer than 25 employees is optional. Employees will be automatically enrolled in the plan but have the option to opt-out. Contributions are made to a traditional IRA at a default 3% contribution rate. Employer contributions are not permitted. The Secure Choice Savings program will begin in March 2021.
On In 2018 New York state legislators passed the fiscal 2019 budget bill. The bill included a provision laying the groundwork to establish the New York State Secure Choice Savings Program. Bill A05978 authorizes the implementation of the program. The program aims to enable employees whose employers do not provide a defined contribution plan to establish retirement savings accounts. The program is optional for both employees and employers. All employee contributions are made to a Roth IRA, and employees can opt-out at any time. Click here for more information.
In 2019 the North Carolina General Assembly passed House Bill 604. The bill is an effort to create a joint legislative committee to study small business retirement options. The committee was supposed to report its findings, recommendations, and any recommended legislation by March 31, 2020. Click here for more information.
On January 12, 2015, HB 1200 was introduced by Representative George Keiser. The bill was defeated in the House on February 10, 2015.
HR 1200 would have established the Save Toward a Retirement Today retirement savings program administered by the State Treasurer. Employers with no more than 100 workers who do not offer retirement plans to their employees would have been eligible to participate on a voluntary basis. Employees of qualifying employers who opt not to participate could have enrolled on an individual basis.
Contributions by employers were not required, and workers could select their own contribution amounts. Contributions would be tax deferred at both the state and federal levels. The state would not be held liable for investment performance. An appropriation of $100,000 would have been authorized to design and implement the program.
On October 2, 2013, SB 199 was introduced by Senator Eric Kearney. The bill was modeled after the California legislation and would establish the Ohio Secure Choice Retirement Savings Board, which would design and administer the Ohio Secure Choice Retirement Savings Program.
The program would be a state-sponsored payroll-deduction IRA for workers who do not have access to a retirement plan through their employers. Employers with five or more employees would be required to participate. Employees could select their contribution rate into the accounts, though a three percent of salary contribution would be set for those who do not select their own rate. Employees could opt-out at any time.
Assets would be pooled and professionally managed, and a minimum rate of return would be guaranteed through private insurance. Neither the state nor employers would be subject to any liability for fund performance. The program would be established only if the board finds that it will be self-sustaining, qualifies for favorable federal tax treatment, and is not subject to ERISA.
SB 199 was assigned to the Senate Finance Committee but did not advance during the 2013-2014 legislative session.
In 2015, HB 2960 was signed by Oregon State Governor, Kate Brown. The bill would enable workers whose employers do not already offer a retirement plan to have a retirement savings option. The retirement plan, Oregon Saves, requires that any business with employees in Oregon that doesn’t offer an employer-sponsored retirement plan must offer the OregonSaves retirement savings program to its employees. All employees who choose to participate will have a default contribution rate of 5% with the ability to contribute as little as 1% of their annual wages. Contributions are made to a Roth IRA. Employees also have the option to opt-out of participation. Click here to learn more.
House Bill 6080 was introduced by Representatives Edwards, Blazejewski and others on April 15, 2015. The bill was referred to the House Committee on Labor and a hearing took place on April 30, 2015. The Committee recommended the bill be held for further study and no additional action has been taken.
House Bill 6080 would create an automatic enrollment payroll deduction IRA program for private sector workers that would be administered by the Department of Labor and Training (DLT).Employers who have been in business at least two years and have five or more employees would be required to participate in the program unless they receive a hardship waiver. Smaller employers may participate on a voluntary basis. The Department would be responsible for designing a program that would allow employees to opt out, select a contribution level and investment option, and terminate participation, and would facilitate education and outreach to employers and employees. The default contribution option would be set at three percent, unless the employee chooses a higher rate. Investment options would include a life-cycle fund or target date fund as the default options. Employers would not have fiduciary obligations related to this program, and neither employers nor the state are liable for any investment losses resulting from participation in the program.
Implementation would begin 24 months after enactment and employers would establish a payroll deposit retirement savings option within six months after implementation.
On January 30, 2015, joint resolution SJR 9 was introduced by Senator Todd Weiler and House Sponsor Jon Cox. The resolution passed the House on March 4, 2015 and was signed by the Senate President on March 9, 2015. It was sent to the office of the Lieutenant Governor for filing on March 18, 2015.
SJR 9 urges Utah’s small business workers and small business community to work with the state’s Legislature and its Treasurer to study and develop a model for saving for retirement through the workplace that is accessible to Utah’s workers. The community is further urged to consider legislation, if necessary, to put the plan into action.
In 2020, the Virginia House of Delegates approved H.B. 775. The legislation establishes Virginia’s multiple employer retirement plan for private employers and their employees. Self-employed individuals, sole proprietors, and nongovernmental employees without access to an employer-sponsored retirement plan may also participate. Employer participation in the program will be voluntary. Participating employees contribute to a Roth IRA and may opt-out at any time. Participating employers can contribute to their employee’s retirement accounts, but they are not required to do so. Although the legislation is advancing quickly, the bill contains a reenactment clause that requires a complete study of the current state and federal retirement programs and other retirement savings options. Recommendations are due by Dec 15, 2020, to the General Assembly.
A bill introduced in Washington State’s 2019-2020 legislative session, SB5740, would establish the Secure Choice Retirement Savings Plan to help address inadequate retirement funds of residents. Washington employers who don’t already offer a retirement plan would be required to enroll their employees in the program. However, employee participation would be optional and employees could opt-out at any time. Participating employees make contributions to an auto-IRA via payroll deductions. The legislation was referred to a committee in the state senate for further study.
On March 6, 2015, SCR 58 was introduced by Senator Tom Takubo and referred to the Rules Committee. No further action was taken on the bill before the legislative session ended.
The Senate Concurrent Resolution would direct the Joint Committee on Government and Finance to study the need and feasibility of the state creating a cost-effective and portable group retirement savings program for small businesses and their workers. The study would include a comparison of the costs of establishing the program with currently available private sector financial and retirement security opportunities for small business (defined as businesses with 50 or fewer employees).
SCR 58 directed that the report by submitted to the regular session of the legislature in 2016 and include drafts of any legislation that would be needed to implement its recommendations. The funds to conduct the study would be taken from the Joint Committee’s normal appropriations.
In 2019, Governor Tony Evers signed executive order #45. The executive order creates a task force on retirement security. The task force is to assess the overall preparedness of Wisconsinites for retirement and provide recommendations on how the state can best address the retirement crisis. The report is due to the governor by August 2020. For more information, visit the website.
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