How state-mandated retirement plans work

More than 30 states have considered enacting state-mandated retirement plan legislation – and many of these have actually signed such programs into law. Find out how these new laws impact your business.

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Retirement plans

Know your state's mandate

Select a location to see your state’s retirement legislation. As state-mandated retirement legislation continues to evolve across the country, employers should check with their local representatives for the latest updates.

If you do not see your state listed, it currently has no active program or has not passed retirement mandate legislation. Check back regularly to see if your state has been added.

CalSavers - State of California IRA Program

Status Active program
Website CalSavers Program
Employers impacted

All employers with 5 or more employees.

The registration deadline for employees with 1-4 employees is December 31, 2025.

Plan type Mandatory Roth IRA
Auto-enroll

5% after 30 days

18 or older

Auto-escalation 1% annual increase on enrollment anniversary up to 8%
Investments 2 Funds + State Street Target Date Series
Penalties

1) $250 per eligible employee if noncompliance extends 90 days and

2) $500 per eligible employee if found to be in noncompliance for 180 days

Additional resources CalSavers: California retirement savings plan

Colorado Secure Choice Savings Program

Status Active program
Website Colorado Secure Choice Savings Program
Employers impacted

Employers with five or more employees in business for at least two years.

Opt-in allowed for sole proprietors and smaller businesses.

Plan type Mandatory Roth IRA
Auto-enroll 5% following the employee’s 180th day of employment
Auto-escalation Yes; increase by an additional 1% on each January 1, following the enrolled Employee’s enrollment, up to 8%
Investments 3 Funds + State Street Target Date Series
Penalties $100 per eligible employee per year, not to exceed $5,000 annually
Additional resources Colorado SecureSavings

MyCTSavings Program

Status Active program
Website MyCTSavings Program
Employers impacted Employers with five or more employees, each of whom has been paid more than $5,000 in the calendar year.
Plan type Mandatory Roth IRA
Auto-enroll

3% after 120 days for employee

19 or older

Auto-escalation N/A
Investments

8 Funds + Vanguard Target Date Series

MyCTSavings | Investments

Penalties TBD
Additional resources Connecticut Retirement Security Program

Delaware EARNS Program

Status Legislation passed; implementation TBD.
Website Delaware EARNS Program
Employers impacted Employers with five or more employees in business for at least six months of the preceding calendar year.
Plan type Mandatory Roth IRA
Auto-enroll Yes - % TBD
Auto-escalation TBD
Investments TBD
Penalties TBD

Hawaii Saves Retirement Savings Program

Status Legislation passed; implementation TBD.
Website Hawaii Saves Retirement Savings Program
Employers impacted Employers with one or more employees
Plan type Mandatory Roth IRA
Auto-enroll 3%
Auto-escalation No
Investments TBD
Penalties TBD
Other features $500 state match for the first 50,000 participants to contribute to the plan for 12 consecutive months

Illinois Secure Choice Savings Program

Status Active program
Website Illinois Secure Choice Savings Program
Employers impacted

All employers with five or more employees in business for at least two years.

Staggered deadlines for registration based on employer size.

Plan type Mandatory Roth IRA
Auto-enroll

5% after 60 days for employee

18 or older

Auto-escalation 1% annual increase on enrollment anniversary up to 10%
Investments 3 funds + BlackRock Target Date Series
Penalties

(1) $250 per employee for the first calendar year and

(2) $500 per employee for each subsequent calendar year the employer is non-compliant

Noncompliance does not need to be consecutive to qualify for the $500 penalty

Additional resources Illinois Secure Choice Retirement Savings Program

Maine Retirement Savings Program

Status Active
Website Maine Retirement Savings Program
Employers impacted All private sector employers with five or more employees in business for two years or more.
Plan type Mandatory Roth IRA
Auto-enroll Yes - 5%
Auto-escalation 1% annual increase on enrollment anniversary up to 10%
Investments TBD
Penalties

July 1, 2025 - June 30, 2026: The maximum penalty for non-compliance is $20 per employee.

July 1, 2026 - June 30, 2027: The maximum penalty per employee will be $50.

On or after July 1, 2027, the maximum penalty per employee increases to $100

Other features Plan available to self-employed individuals and contractors.

Maryland$aves Secure Choice Program

Status Active program
Website Maryland$aves Secure Choice Program
Employers impacted Businesses with at least one W-2 employee, have been in business for two years and use an automated payroll system.
Plan type Roth IRA
Auto-enroll 5%
Auto-escalation 1% annual increase each January, up to 10%
Investments 3 Funds + BlackRock Target Date Series
Penalties None
Other features $300 annual registration fee waived for sponsoring a plan OR participating in the Maryland$aves program. The first $1,000 is invested in an Emergency Savings Fund.
Additional resources MarylandSaves

Massachusetts Defined Contribution CORE Plan

Status Active program
Website Massachusetts Defined Contribution CORE Plan
Employers impacted

Voluntary for non-profit organizations with 20 or fewer employees

Outstanding legislation to expand to all employers

Plan type Voluntary MEP with safe harbor option
Auto-enroll 6% after 60 days
Auto-escalation Annual increases of 1% or 2% (based on employer’s election) up to a maximum contribution rate of 15%.
Investments Empower/Great West
Penalties N/A - voluntary
Additional resources

FAQ: Massachusetts Core Plan

New Pending Legislation: Massachusetts Secure Choice Retirement Savings Plan

Minnesota Secure Choice Retirement Program

Status Legislation passed; implementation TBD.
Website Minnesota Secure Choice Retirement Program
Employers impacted Employers with five or more employees in business for the immediately preceding 12 months.
Plan type Mandatory IRA
Auto-enroll Yes - TBD
Auto-escalation No
Investments TBD
Penalties TBD
Other features TBD

New Jersey Secure Choices Savings Program

Status Passed/implementation in progress
Website New Jersey Secure Choice Savings Program
Employers impacted Employers with 25 or more employees in business for two years or more.
Plan type IRA
Auto-enroll 3%
Auto-escalation None
Investments TBD
Penalties TBD
Additional resources New Jersey Secure Choice savings program

New Mexico Work & $ave

Status Legislation passed; target implementation date is July 1, 2024.
Website New Mexico Work & $ave
Employers impacted

Employers with five or more employees in business for at least two years.

Opt-In allowed for sole proprietors and smaller businesses.

Plan type

Marketplace – Voluntary

Work & Save Program – Voluntary Roth IRA

Auto-enroll 6% after 60 days after program enrollment
Auto-escalation TBD
Investments TBD
Penalties TBD
Other features Emergency savings TBD

Nevada Employee Savings Trust

Status Legislation passed; schedule TBD.
Website Nevada Employee Savings Trust
Employers impacted Employers with more than five employees who have been in business for at least 36 months.
Plan type Mandatory Auto IRA
Auto-enroll Yes - % TBD
Auto-escalation TBD
Investments TBD
Penalties TBD
Other features A study is to be conducted on whether to include independent contractors.

New York Secure Choice Savings Program

Status Legislation passed; implementation TBD.
Website New York Secure Choice Savings Program
Employers impacted Employers with ten or more employees at all times during the previous calendar year, in business for at least two years, and that have not offered a retirement plan in the preceding two years.
Plan type Roth IRA
Auto-enroll 3%
Auto-escalation No
Investments TBD
Penalties TBD
Other features TBD

New York City Retirement Security for All Act

Status Legislation passed; implementation TBD.
Website Retirement Security for All Act
Employers impacted Employers with five or more employees in the previous calendar year whose regular duties occur in the city. Also, employers who have been in business for at least two years.
Plan type IRA
Auto-enroll Yes - 5%
Auto-escalation TBD
Investments TBD
Penalties TBD
Other features Plan available to self-employed individuals at least 21 years of age.

OregonSaves Program

Status Active program
Website OregonSaves Program
Employers impacted

Employers with one or more employees.

Optional - Employers utilizing a PEO or leasing agency.

Plan type Mandatory Roth IRA
Auto-enroll

5% after 60 days for employees

18 or older

Auto-escalation 1% annual increase on enrollment anniversary up to 10%
Investments 2 Funds + State Street Target Date Series
Penalties Eligible employers must offer a plan or face a fine up to $100 per eligible employee per year (up to max of $5,000 annually)
Additional resources OregonSaves – state-mandated retirement plan

VT Saves

Status Implementation in progress; date TBD.
Website VT Saves
Employers impacted All employers with five or more employees in business within the past two years.
Plan type Mandatory Roth IRA
Auto-enroll 5%
Auto-escalation Yes - TBD
Investments TBD
Penalties TBD
Other features TBD
Additional resources VT Saves is replacing Vermont's former plan, Green Mountain Secure Retirement Plan.

RetirePath Virginia

Status Active program
Website RetirePath Virginia
Employers impacted Employers with 25 or more employees in business two years or more.
Plan type Mandatory Roth IRA
Auto-enroll 5%
Auto-escalation 1% annual increase every January up to 10%
Investments 4 Funds + LifePath Index Target Date Series
Penalties Up to $200 per eligible employee
Additional resources RetirePath Virginia

Washington Small Business Retirement Marketplace

Status Active program4
Website Washington Small Business Retirement Marketplace
Employers impacted N/A - voluntary
Plan type Voluntary Marketplace
Auto-enroll Optional
Auto-escalation Optional
Investments Variable
Penalties N/A - voluntary
Additional resources Washington State Retirement Marketplace
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.
A map of the United States that illustrates the status of retirement mandates by state.

Overview of state-mandated retirement accounts

As states continue to pass retirement legislation, employers across the county must now choose a retirement plan  that is right for their business and their employees – a critical aspect of retaining top talent.

Here’s what employers need to know about mandatory retirement accounts:

When states require employers to provide their employees with retirement savings opportunities, it’s known as a state-mandated retirement. Businesses generally have two ways to comply with these laws – enroll their employees into a state-sponsored retirement program or sponsor a plan through the private market, such as those offered by ADP.

The inner workings of mandatory retirement plans depend on the state, but some commonalities exist. Typically, plans are administered through payroll deductions, and employees are automatically enrolled but can opt out or change how much they contribute. Employers themselves are usually prohibited from contributing to the plans.

There are, however, some exceptions to these general guidelines. For instance, Massachusetts permits Safe Harbor matching contributions by employers. Business owners should check with local authorities for specific information on how their state-sponsored retirement plan works.

State-sponsored retirement plans are commonly Roth individual retirement accounts (IRA). With this type of savings, employee contributions are deducted from post-tax income, which means their money is generally tax-free at the time of withdrawal. A traditional IRA is funded with pretax payroll deductions, lowering the employee’s taxable income. However, when the individual draws from the account, the money is subject to taxes.

State-mandated retirement plans are designed for low to moderate-income wage earners who work for small and midsized businesses in the public sector. These plans are entirely separate from the state-funded retirement programs for public employees.

The requirements for state-mandated retirement benefits largely depend on individual jurisdictions, the size of the organization, and how long it has been in business. Generally, employers must enroll their employees in the state-sponsored program if they don’t offer another retirement plan and perform the detailed administrative and reporting work necessary under state law. These tasks can be daunting, so many employers choose one of ADP’s easy-to-manage plans instead.

Employee requirements also may vary. In states that sponsor Roth IRAs, participants must not earn more than the IRS maximum to be eligible for such plans.

Is 401k Mandatory for Employers

Employers do not have to offer a 401(k) plan. However, in some states a retirement plan is required by state law. The Employee Retirement Income Security Act (ERISA) is the federal law that sets minimum standards for retirement plans in the private industry. It only requires that those who establish plans must meet certain minimum standards.

State-sponsored retirement plans have pros and cons, which business owners must carefully weigh. On the one hand, government-run programs are generally a low-cost solution with few fiduciary responsibilities for employers. On the other hand, these plans tend to have inflexible, one-size-fits-all designs, and businesses that miss registration deadlines may be penalized. Ultimately, whether employers choose to participate in the state-sponsored plan or offer their own through the private market, the important thing to remember is that retirement benefits are a valued commodity among employees and can help improve recruitment and retention.

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Why mandate retirement plans?

Some states have begun mandating retirement plans to address this country's retirement savings gap. Their response is based on research that shows:

The average working household has virtually no retirement savings.1

Employees are more likely to save when they have access to a 401(k) or similar plan by their employer.2

Only four in 10 businesses with less than 100 employees offer retirement benefits.3

Frequently asked questions about state mandates

Which states have passed retirement mandates?

As state-sponsored plans become more common, several states have already passed legislation, including:

  • California
  • Colorado
  • Connecticut
  • Delaware
  • Hawaii
  • Illinois
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • New York City
  • Oregon
  • Rhode Island
  • Vermont
  • Virginia
  • Washington

Are any states considering retirement mandates but haven't passed them?

State-sponsored retirement legislation is still in flux in many states. As laws change, it is important to check with your local representative for the latest updates.

  • Alaska
  • Arizona
  • Arkansas
  • Georgia
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Michigan
  • Mississippi
  • Missouri
  • Nebraska
  • New Hampshire
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Tennessee
  • Utah
  • West Virginia
  • Wisconsin
  • Wyoming

Which states have not taken any steps toward introducing retirement mandates?

While state-sponsored retirement plans are rising in popularity, most states have not considered mandating a plan – yet. It is important to check with your local representatives for the latest updates.

  • Alabama
  • Florida
  • Montana
  • South Dakota
  • Texas

Are employers required to offer retirement plans?

Employers generally are not required to offer their employees retirement benefits. However, some states have government-sponsored retirement plans with mandatory participation. In these jurisdictions,  eligible employers must enroll their employees in the state program or provide retirement benefits on their own.

What is the Secure Choice Retirement Savings Act?

Secure Choice is the name of state-sponsored retirement savings programs in Illinois, New Jersey, and New York. Although they have similar naming conventions, these plans are not the same. Each has its own requirements and participation rules.

Are there penalties for not abiding by the mandates?

Employers in jurisdictions with state-mandated retirement programs who don't comply with the requirements or miss enrollment deadlines may be penalized. The exact monetary amount of the penalty varies by state.

Let's Talk

Speak to a retirement specialist to understand your state's legislation and know your options.

Are you a current ADP client?

Your privacy is assured.

This information is intended to be used as a starting point in analyzing state-mandated 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.

ADP, Inc. is affiliated with ADP Broker-Dealer, Inc. (“ADP BD”), a limited purpose broker dealer registered with the Financial Industry Regulatory Authority (“FINRA”), and operating pursuant to Securities and Exchange Commission (“SEC”) Rule 15c3-3(k)(2)(i), approved by FINRA to offer 401(k) and SEP/ SIMPLE IRAs, and related retirement plans (the “Retirement Products”) on a payroll deduction basis.

1 National Institute on Retirement Security

2 TransAmerica Center for Retirement Studies

3 LIMRA

4 Voluntary Marketplace

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