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Case of the Week: State-Sponsored Retirement Plan Proposals

ERISA consultants at the Learning Center Resource Desk, which is available through Columbia Threadneedle Investments, 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 regularly 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

  • As of April 2015, only three states have succeeded in enacting laws creating such programs: California, Illinois and Massachusetts. 

  • California is in the process of implementing the California Secure Choice Retirement Savings Trust, which is a mandatory, IRA-based payroll-deposit retirement savings arrangement for employees of certain private-sector employers. 

  • On Jan. 5, outgoing Illinois Gov. Pat Quinn (D) signed Senate Bill 2758 into law, creating the Illinois Secure Choice Savings Program, which becomes effective June 1. The state law establishes a payroll-deduction Roth IRA program for private-sector workers. 

  • Massachusetts makes a defined contribution plan available for nonprofit employers with 20 or fewer employees.

  • Over the past few years, numerous other states have put forth legislation to either study the need for or create a state-sponsored retirement plan for private-sector employers. Allowing workers to establish automatic payroll deduction IRAs is a common consideration. In comments made at a Retirement Industry Conference sponsored by LIMRA LOMA Secure Retirement Institute and the Society of Actuaries, J. Mark Iwry, senior advisor to the Secretary and Deputy Assistant Secretary for Retirement and Health in the U.S. Department of the Treasury, said he believes that the increase in the number of states considering auto IRA programs is a result of the failure of the federal government to enact its proposal for automatic IRAs.?

The following is a list of states that have introduced legislation that supports state-sponsored retirement savings programs to date in 2015:

  • Colorado: HB 1235 would create a Colorado Retirement Security Task Force to study, assess and report on: (1) the factors that affect Coloradans’ ability to save for retirement and (2) the feasibility of creating a state retirement savings plan for private-sector employees.

  • Connecticut: HB 5858 would appropriate $250,000 in additional funding to the Connecticut Retirement Security Board for fiscal year 2016 to ensure completion of its market feasibility study and implementation proposal.

  • Maryland: SB 312 and HB 421 would create the Secure Choice Retirement Savings Program for eligible private-sector employees to take part in automatic payroll deduction IRAs. 

  • New Jersey: A.4275 and S.2831 would create the New Jersey Secure Choice Savings Program Act, which would establish a direct-deposit, IRA-style, state-run retirement plan for private-sector workers.

  • Utah: S.J.R. 9 is a joint resolution of the legislature that urges Utah’s workers and the business community to work with the legislature to develop a model for proving small business retirement savings through the workplace.

  • Oregon: HB 2960 and SB 615 would create the Oregon Retirement Savings Board, which would be charged with the development of a payroll-deduction retirement plan for persons employed in Oregon. 

  • Virginia: HB 1998 would require the Virginia Retirement System to convene a work group to review current state and federal programs that encourage citizens to save for retirement by participating in retirement savings plans. 

  • Washington: SB 5826 and HB 2109 would create the Washington State Small Business Retirement Marketplace that would, “… remove barriers to entry into the retirement market for small businesses by educating small employers on plan availability and promoting, without mandated participation, qualified, low-cost, low-burden retirement savings vehicles and myRA.”


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 and the inconsistencies that may arise from state to state. 

The Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC (RLC), a third-party industry consultant that is not affiliated with Columbia Threadneedle. Any information provided is for informational purposes only. It cannot be used for the purposes of avoiding penalties and taxes. Columbia Threadneedle does not provide tax or legal advice. Consumers consult with their tax advisor or attorney regarding their specific situation. 

Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Columbia Threadneedle.

Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies.

© 2015 Columbia Management Investment Advisers, LLC. Used with permission.