State Sponsored Automatic IRAs Are Underway
ira-discussion

State Sponsored Automatic IRAs Are Underway

We’ve all heard the message that Americans are not saving enough for retirement. Now, several states are trying to change that by mandating that employers offer retirement programs. So far, these programs have been structured by requiring employers facilitate deductions from employees’ paychecks if they do not already have a retirement plan. No one is requiring monetary contributions of any type from employers, either towards the program directly or as part of administrative fees.

Oregon was the first state to rollout it’s automatic IRA system. Employers in Oregon now have a tiered deadline (based on number of Oregon employees) in which they must register with OregonSaves, the state’s IRA program. Employers can opt out if certified they have an internal employee retirement program already in place. Once an employer is registered for OregonSaves, its employees will automatically be enrolled and have 5% of their pay taken out (with automatic 1% increases each year) and contributed to the state’s Roth IRA program. Employees are then free to opt-out or adjust their contribution rate. Currently, only employers with 100 or more employees working in Oregon are required to register their employees. The next deadline is fast approaching, employees with 50-99 employees need to register or submit their waiver by May 15, 2018. The remainder will continue to rollout through 2020:

  • 20-49 employees: December 15, 2018
  • 10-19 employees: May 15, 2019
  • 5-9 employees: November 15, 2019
  • 4 or fewer employees: May 15, 2020

Illinois and California are the next two states set to get their automatic IRA programs up and running. Illinois Secure Choice is set to launch this year and California Secure Choice is anticipating a 2019 launch. We anticipate more specific details on these programs in the coming months. Several other states have programs in the works, including Connecticut and Maryland. Meanwhile, New Jersey and Washington State are developing voluntary open-markets that employees can opt-in to.

Attempts to Shutdown State IRA programs

Last year, Congress repealed an Obama era U.S. Department of Labor rule that exempted state-run IRA plans from the Employee Retirement Income Security Act (ERISA). However, it is not clear what the exact impact of this decision may be. Thus far, the only impact appears to be a rather technical one; large employers in Oregon who already offer retirement programs have sued the state arguing ERISA preempts the Oregon law and they should not have to follow the law requiring them to re-certify their retirement program every three years. This suit is unlikely to halt the OregonSaves rollout.

Employers in states where IRA laws have been passed will want to pay close attention to the Oregon rollout, as well as the rollout in their own states. Other states will likely follow Oregon if their plan continues to avoid legal challenges.


Subscribe to Our Resource Center Digest

Enter your email below to receive a weekly recap of the latest articles from Paycor's Resource Center.

Check your inbox for an email confirming your subscription. Enjoy!

More to Discover

Webinar: National Payroll Week Webinar Series: COVID's Impact on Multi State Taxation

Webinar: National Payroll Week Webinar Series: COVID's Impact on Multi State Taxation

During National Payroll Week, Paycor hosted three webinars to help business leaders prepare for compliance changes and new trends in 2021.The COVID pandemic has forced many employees to shift from the office to remote work environments. As many organizations juggle the new challenges, business leaders must also evaluate their expanded footprint and how taxes are impacted. In this webinar, Paycor’s resident tax expert, James Schwantes will highlight tax considerations employers need to know.Speaker: Jim Schwantes

Webinar: National Payroll Week Webinar Series: How to Prevent a Payroll Lawsuit

Webinar: National Payroll Week Webinar Series: How to Prevent a Payroll Lawsuit

During National Payroll Week, Paycor hosted three webinars to help business leaders prepare for compliance changes and new trends in 2021. In this webinar, we'll breakdown everything HR leaders need to know to avoid costly errors and payroll lawsuits.Speaker: Becky Stauffer Becky started her own consulting company Work4Accord, LLC where she serves National and Regional clients. Becky is a “Professional Encourager of Others”. She is active in communities that support professional growth including the SHRM, Society for Human Resource Management and the NSA, National Speakers Association. Becky holds a SPHR, Senior Professional in Human Resources, SHRM-SCP Senior Certified Professional and a Master’s in Public Administration from the...

Webinar: Getting it All Done: 6 Compliance Issues your HR Department Must Embrace - 10/27 @2pm ET

Webinar: Getting it All Done: 6 Compliance Issues your HR Department Must Embrace - 10/27 @2pm ET

For HR departments to avoid costly errors and fines, there are 6 areas of compliance they need to consistently follow. During this webinar, we’ll breakdown each area and provide actionable steps to take to gain visibility as a strategic HR leader at your organization. Don’t miss this session! Register now. Speaker: Lori Kleiman Lori Kleiman is a business expert with more than 25 years of experience advising companies on HR issues. Her background as a human resources professional and consultant gives her unique insight on how HR professionals and executives can work together effectively to achieve business goals. Her programs are designed to provide critical HR updates and best practices to small businesses. In addition, she is has served...

Webinar: National Payroll Week Webinar Series: Payroll Compliance Updates & What's Ahead in 2021

Webinar: National Payroll Week Webinar Series: Payroll Compliance Updates & What's Ahead in 2021

From new salary thresholds and social security wage increases to COVID tax relief, businesses leaders have faced quite a few payroll and tax changes in 2020. As we prepare to turn the page to a new year, what new updates are on the horizon? Join Paycor’s resident payroll expert, Arlene Baker to learn about the latest updates and what you should watch out for in 2021.Speaker: Arlene Baker Arlene Baker is a Sr Compliance Analyst with over 40 years of payroll and tax experience. Arlene is a member of the National Payroll Reporting Consortium focusing on IRS compliance. Arlene has been a member of the national and local APA for 25 years and is an active member of the American Payroll Association Hotline and SPLTF Hospitality Industry...