Retirement Plans: What should you know as an employer?
What are state-mandated retirement plans?
State-mandated retirement plans are when states require employers to provide employees with a retirement savings opportunity. Employers typically can choose between enrolling employees in a state-sponsored program or offering their own option through the private market.
Why are states mandating these retirement plans?
The average household in the United States has no or little to no savings for retirement. In efforts to address the lack of retirement savings, some states have begun mandating retirement plans. It is proven that employees are more likely to save when they have access to retirement savings opportunities through their employer.
What are the requirements for employers?
Employer requirements vary based on on the size of the company and how many years it has been in business. Many employers must enroll their employees in a state-sponsored retirement program or offer their own private retirement savings opportunity.
Retirement programs through the state are usually a low-cost solution and leave employers with the least responsibility. However, they have one-size-fits-all designs and strict deadlines that businesses must adhere to. Employers that don’t comply with the state requirements or miss crucial deadlines may be penalized. The exact penalty amount varies.
The important thing to remember when offering retirement savings opportunities is that employees value these opportunities and it helps businesses improve recruitment and retention.
Which states have mandatory retirement plans?
More than 30 states have considered enacting state-mandated retirement plan legislation. To find out if your state requires employers to offer retirement savings opportunities, contact a local attorney or tax professional.
This information is intended for information purposes only. Any reader understands that Apex Benefit Group is not providing legal advice, tax advice, or professional services. This article serves to offer practical information regarding the subject matter and is not a comprehensive resource.
If you would like to discuss your retirement program needs with a specialist, please contact us today.
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