The ERISA consultants at the Retirement Learning Center Resource regularly receive calls from financial advisors on a broad array of technical topics related to IRAs, qualified retirement plans and other types of retirement savings plans. We bring Case of the Week to you to highlight the most relevant topics affecting your business.
A recent call with a financial advisor from Illinois is representative of a common inquiry related to states and retirement plans. 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 the Discussion
As of August 20, 2019, 10 states have succeeded in enacting laws creating retirement savings programs for private-sector workers.[1]
|
State |
Plan Name |
Type of Plan |
|
Automatic Roth IRA |
|
|
Automatic Traditional or Roth IRA |
|
|
Automatic Roth IRA |
|
|
Automatic Traditional IRA |
|
|
Massachusetts Defined Contribution CORE Plan
|
A multiple employer plan that is a pre-tax and post-tax 401(k) savings plan developed for employees of eligible small nonprofit organizations. |
|
New Jersey Small Business Retirement Marketplace
|
A marketplace for diverse retirement plans, including, at least, life insurance plans, Savings Incentive Match Plans for Employees (SIMPLE) IRAs and payroll-deduction IRAs. |
|
Payroll Deduction Roth IRA |
|
|
|
Automatic Roth IRA |
|
Vermont Green Mountain Secure Retirement Plan
|
A multiple employer plan that is a tax-deferred, pre-tax 401(k) savings plan with optional future employer contributions |
|
Washington’s Small Business Retirement Marketplace
|
A marketplace where qualified financial services firms offer low-cost retirement savings plans to businesses and individuals |
Another 24 states have introduced legislation on this topic that is still under consideration: Arizona, Colorado, Georgia, Iowa, Indiana, Kentucky, Louisiana, Maine, Michigan, Minnesota, New Hampshire, Nebraska, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, West Virginia and Wisconsin.
Conclusion
Considering that federal legislation to address the retirement security of American works has progressed at a snail’s pace, some state legislatures have taken on the task and enacted laws that create state-sponsored retirement savings plans for private-sector workers. Many other states are considering similar action.
Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Consumers should consult with their tax advisor or attorney regarding their specific situation.
©2019, Retirement Learning Center, LLC. Used with permission.
[1]AARP Public Policy Institute, State Retirement Savings Resource Center, August 2019.
