State of the States: What's Happening with Mandated Retirement Plans
From plan provisions and start dates to possible penalties, state-mandated retirement plans vary widely, and non-compliance can be costly. Here's the latest on state-specific requirements and why opting in isn't always the simplest option.
The importance of retirement benefits has surged over the past several years, according to the latest ADP TotalSource Benefits Survey. 62% of employees rank an employee-sponsored retirement plan in their top three most important benefits, up from 30% in 2018.
Thanks to the rapid expansion of state retirement plan mandates, more employees will have the opportunity to save for the years ahead.
Over half of U.S. states now have proposed or active legislation in place, mandating that certain private-sector businesses participate in state-facilitated programs or offer a qualified retirement plan from a private provider that meets state requirements.
Understanding your state-specific obligations is critical to maintaining compliance and avoiding penalties. Here's the latest guidance on states with active programs for employers who don't currently offer retirement benefits.
California
Under the CalSavers program, employers with five or more employees must offer a mandated Roth IRA or another qualified retirement plan. Penalties include $250 per eligible employee if non-compliance surpasses 90 days, or $500 per eligible employee if found to be non-compliant for 180 days.
Colorado
The Colorado Secure Choice Savings Program extends to employers with five or more employees that have been in business for at least two years. The program gives employees an easy way to save with a Roth IRA. Failure to comply with the mandate could cost businesses $100 per eligible employee per year, not to exceed $5,000 annually.
Connecticut
Under the MyCTSavings retirement savings program, businesses with five or more employees must offer employees a state-facilitated IRA option or a private alternate that meets the requirements. Non-compliant employers may be subject to penalties ranging from $500 to $1,500 per employee.
Delaware
In 2024, the state launched its Delaware EARNS program. Businesses with five or more eligible employees and operating for at least six months must register. Failure to comply will result in a penalty of $250 per employee per year, up to a maximum of $5,000 per year.
Illinois
The Illinois Secure Choice Retirement Program consists of a mandatory auto-enrollment Roth IRA or qualified retirement plan for employers with five or more employees and at least one year of operations. Employers face penalties of $250 per employee for the first year of non-compliance and $500 per employee for each subsequent year.
Maine
Maine's MERIT program applies to employers with five or more employees in operation for at least 2 years. The plan is also available to self-employed individuals and contractors. Through June 30, 2026, the maximum penalty for non-compliance is $20 per employee. From there, it raises to $50 per employee.
Maryland
Launched in 2022, the MarylandSaves program requires all businesses with at least one employee and two years of operation to offer automatic payroll deductions into a Roth IRA. There's a $300 annual registration fee that's waived for sponsoring a plan or participating in the program. The state has yet to roll out plans for non-compliance penalties.
Massachusetts
The Massachusetts CORE Plan applies solely to the state's nonprofit organizations with 20 or fewer employees. Participation is voluntary, so no penalties apply.
Minnesota
Newly effective in 2026, the Minnesota Secure Choice Retirement Program applies to employers with five or more eligible employees. After two years of written warnings, failure to comply may result in penalties of $100 per employee, increasing to $200 per employee after 36 months and $300 per employee after 48 months.
Nevada
Nevada's NEST program requires employers who have been operating for at least three years and have 6 or more employees to offer the state-sponsored retirement savings program or another qualified retirement plan. The state is considering the inclusion of independent contractors into the program. Penalties are to be determined.
New Jersey
The Secure Choice Savings Program Act requires businesses with 25+ eligible employees in operation for at least two years to offer a retirement plan under RetireReady NJ. Smaller employers can join voluntarily. Failure to opt in can lead to fines of $100 for each violation the second calendar year of non-compliance, up to $500 for each violation during the fifth calendar year of non-compliance.
New York
The New York State Secure Choice Savings Program mandates workplace participation for businesses with 10+ or more employees in business for at least two years. Penalties for non-compliance have not been established at this time.
Oregon
The OregonSaves program has helped workers by requiring employers to automatically enroll employees in the IRA savings program or a qualified retirement plan. Employers will be fined $100 per employee (up to $5,000 per year) if they don't comply.
Rhode Island
A mandatory state-facilitated Roth IRA, the Rhode Island Secure Choice Retirement Savings Program, affects businesses with five or more eligible employees without an existing qualified retirement plan. Businesses face penalties of $250 per eligible employee for failure to enroll employees.
Vermont
Vermont's VT Saves program applies to businesses that have five or more employees operating for at least 2 years. Once notified by the state, employers have 270 days to register for the program or offer a private plan. Non-compliance can result in penalties of up to $75 per employee.
Virginia
RetirePath Virginia mandates participation for employers who have 25 or more employees, have operated for at least two years and do not currently provide an employee retirement plan. Penalties of up to $200 per eligible employee may apply for non-compliance.
Taking control of your retirement strategy
"State retirement mandates may be reshaping the retirement plan landscape, but they're not your only option," according to Ron Ulrich, VP of Product Consulting for ADP Retirement Services. "With many programs specifically mandating Roth IRAs, employers are boxed into choices that might not be the best fit for their company or their employees."
Ulrich points to solutions like ADP's Starter-k Complete for a streamlined, cost-effective alternative with less paperwork and lower contribution limits. "All our retirement solutions combine flexible plan design and easy administration with seamless payroll integration to help you save time and reduce errors."
See why Business.com named ADP retirement plans "Best for Small Businesses." To learn more, reach out to an ADP retirement services specialist or call (800) 432-401K.
ADP, Inc., and its affiliates do not offer investment, tax, or legal advice to individuals. Nothing contained in this article is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan's provisions, or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor.
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