The retirement community has watched with keen interest this year as significant milestones were reached by several of the five states that have enacted a state-run mandatory IRA program for private-sector workers. These programs generally require most employers that do not already offer a retirement plan to automatically enroll employees in the state program through payroll deduction.
The five states – California, Connecticut, Illinois, Maryland, and Oregon – have each continued to work toward full implementation of their programs despite encountering a number of hurdles, including the congressional repeal of an Obama-era regulation intended to help facilitate such programs, ERISA preemption lawsuits (in Oregon and California – so far), lengthy procurement processes, and staffing challenges. Below is a brief update on the implementation status of the programs in each state.
In addition to the states noted above, Seattle enacted a city ordinance in November 2017 that would create a mandatory IRA program for workers in the city.
Voluntary state-run programs. Although the mandatory programs described above tend to garner the most attention due to the directive to employers, a number of states have chosen instead to enact programs that are voluntary for employers. These include Massachusetts, which launched a defined contribution retirement plan for small non-profit employers in October 2017, and Washington, which launched an online retirement “marketplace” in March 2018. States that have voluntary programs under development include New York, which enacted the first voluntary state-run IRA program in April 2018, and Vermont, which recently selected a program administrator for its state-run multiple employer plan (MEP).
Voluntary state-run programs. The views expressed in this material are the views of SSGA Defined Contribution as of 05 November 2018, and are subject to change based on market and other conditions.
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Exp.July 31, 2020