Colorado and neighboring New Mexico plan to form a partnership regarding the state-run retirement saving programs each operates.
The Colorado Department of the Treasury announced Nov. 9 that the Colorado Secure Savings Program and the New Mexico Work and $ave programs signed a Memorandum of Cooperation to pursue a formalized partnership agreement for their auto-enroll IRA programs.
This is the first such arrangement between states, and creates what will be the first multi-state auto-enrollment IRA program in the United States.
Officials believe that the agreement will reduce fees by creating economies of scale, and will create a “truly portable benefit that follows workers across jobs and state lines.” They also hope that the partnership will bring each state’s program to self-sufficiency faster.
The memorandum highlights areas of collaboration, including:
- shared program administration and financial services;
- marketing and outreach support;
- program evaluation;
- data collection; and
- participant privacy.
Both states enacted their programs in 2020. On Feb. 26, 2020, Gov. Michelle Lujan Grisham (D) signed the New Mexico Work and Save Act into law, creating the New Mexico Work and $ave Program and the New Mexico Work and Save Board. The voluntary program covers individuals who are at least 18 years old and either are employed in the private sector or by a nonprofit (either full time or part time) or are self-employed as a sole proprietor or an independent contractor. Payroll deductions will be invested in Roth IRAs.
Gov. Jared Polis (D) on July 14, 2020 signed into law a measure creating the Colorado Secure Savings Program, an IRA-based program that is to be an automatic enrollment payroll deduction IRA, not a defined benefit plan.
“With this historic partnership, Colorado and New Mexico are working to ensure that a dignified and sustainable retirement isn't only a dream for the privileged few. This is one step in the right direction for a truly portable retirement benefit—one that carries across state lines,” said Colorado State Treasurer Dave Young in the press release. His counterpart in New Mexico, State Treasurer Tim Eichenberg, said of the partnership that it “exemplifies the best in forward thinking and collaboration. Together Colorado and New Mexico can forge a pathway by working with private sector employers and workers to build retirement savings security for those who might otherwise be left behind.”