The ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with a financial advisor in Texas is representative of a question we commonly receive related to state-sponsored retirement plan programs. The advisor asked:
“Which states, if any, have enacted or proposed legislation that would enable them to offer retirement savings programs to private-sector workers?”
Highlights of Discussion
• So far, only two states have succeeded in enacting laws creating such programs: California and Massachusetts. California is in the process of implementing the California Secure Choice Retirement Savings Trust (CSCRST), which is a mandatory, IRA-based, payroll deposit retirement savings arrangement for employees of certain private sector employers. Massachusetts makes available a defined contribution plan for nonprofit employers with 20 or fewer employees.
• Over the past few years, as many as 16 U.S. states have put forth state-level legislation to either study the need for or create a state-sponsored retirement plan for private-sector employers. See the box below for a list of states that have introduced legislation for such retirement savings arrangements to date in 2014.
Conclusion
The states that have enacted or proposed legislation promoting state-sponsored retirement plans for private-sector workers are well-intentioned. They recognize the retirement savings deficit in this country and are taking steps to address it. However, opponents of such plans are concerned about the impact that potential added costs will have on already-strapped state budgets. 
The Columbia Management Retirement Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC, a third-party industry consultant that is not affiliated with Columbia Management. For informational purposes only. Please consult a tax advisor or attorney for specific tax or legal needs. © 2014 Columbia Management Investment Advisers, LLC. Used with permission.
