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Delaware EARNS Act Awaits Governor’s Nod

State Auto-IRA Plans

All it will take for Delaware to become the next state to offer a retirement plan that would provide coverage for employees whose employers do not offer one is the stroke of one pen. 

The bill, approved by both chambers of the state legislature, now awaits the assent of Gov. John Carney (D). 

The Delaware House of Representatives passed HB 205, the measure that would create the Delaware Expanding Access for Retirement and Necessary Savings (EARNS) program, on May 17 in a 35-1 vote. The Senate followed suit on June 21 in a 20-1 vote. 

Bill sponsors and proponents cite the National Compensation and Benefits Survey, which reports that 54% of Delaware employers do not offer retirement plans; further, they seek to help employees in populations that historically have not had as high a savings rate and as much economic security as others. They also seek to enhance Delaware’s ability to compete with neighboring states economically. 

EARNS is intended to be a public-private partnership that will encourage—but not replace or compete with—employer-sponsored retirement plans. 

EARNS and Employers 

EARNS would apply to any person, partnership, limited liability company, corporation or other entity that does business in Delaware, including a nonprofit, that:

  • employs at least five covered employees and did so during the previous calendar year; and 
  • has been in business in Delaware for at least six months in the immediately preceding calendar year.

Covered employers would be required to:

  • Register with EARNS and provide the program administrator relevant information about its employees. 
  • Offer, or assist EARNS in offering, all covered employees the choice to either participate in EARNS by voluntarily contributing to an IRA through the program or opt out of it. 
  • Provide, or assist the EARNS administrator in providing, program-related information, educational materials and disclosures to covered employees and participants. 
  • Remit participant contributions in a timely fashion. 
  • Perform any other duties or functions the Delaware EARNS Program Board may require them to perform in order to facilitate enrollment and administration of the program.

Program Administration

The measure would create the Delaware EARNS Program Board to oversee initial design and implementation of the program. The Board would have seven members:

  • the State Treasurer;
  • the Secretary of Finance;
  • the Insurance Commissioner;
  • the Secretary of Labor;
  • one member who is the chairperson of the Plans Management Board; and 
  • two public members appointed by the Governor—an owner of a small business and one with experience in providing financial advice or assistance to lower- to moderate-income workers or retirees. 

The Board would be disbanded no later than Dec. 31, 2025, when the Plans Management Board would assume all of its duties and functions.