15 States Closing Retirement Savings Gaps With Auto-IRAs

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1. Illinois

Initially created in 2015 and subsequently updated no fewer than five times, the Illinois Secure Choice retirement savings program is among the oldest state-based savings programs.

Employer participation is mandatory for certain employers, with a two-year deferral for new businesses. Affected employers include those with five or more employees who have not offered a qualifying retirement plan in the last two years.

The program uses auto-enrollment Roth IRAs as the default, with a traditional IRA option as an alternative election and a 5% default rate paired with annual auto-escalation of 1%, permitted to a maximum of 10% of wages. Employer contributions are not permitted.

After pilot testing was completed in 2018, the program formally launched with a first wave of employers with more than 500 employees, required to register by November 2018. The final wave, affecting employers with between five and 15 employees, is required to register by Nov. 1, 2023.

Credit: ilsecurechoice.com website

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2. Oregon

The OregonSaves program was also originally enacted in 2015 and stands among the oldest state-facilitated savings programs.

The program features auto-enrollment Roth IRAs as the default, with a traditional IRA option as an alternative election.

The default contribution rate is 5% with auto-escalation of 1% per year to a maximum of 10%. Auto-escalation applies to participants who have been contributing for at least six months.

Two pilots were completed in 2017, and the program has been implemented in six employer registration phases or “waves,” based on the number of employees. The program is now completing its final employer wave, and the registration deadline for employers with one or two employees (or those using a professional employer organization or leasing agency) is July 31, 2023.

However, employers are free to register at any time before their deadline.

Credit: oregonsaves.com website

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3. Maryland

Maryland’s state-facilitated savings program was enacted in 2016 and has been amended twice since its inception.

MarylandSaves is based on auto-enrollment Roth IRAs, again with a traditional IRA option as an alternative election. Savers are defaulted at a 5% contribution rate with annual auto-escalation of 1% up to a maximum of 10%, while employer contributions are not permitted.

In designing the program, the state-empowered board decided to allow non-covered employers, employees of non-covered employers, gig workers, 1099 employees, and self-employed people to use the program.

The state’s pilot program was launched in March 2022, and pilot employers began to register in early June 2022. The program opened to all eligible workers on Sept. 15, 2022.

Credit: marylandsaves.org website

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4. Connecticut

Also among the oldest in operation, the MyCTSavings program was established in 2016 and amended in 2019 and 2022.

Employer participation is mandatory for those with five or more employees, subject to a number of qualifying conditions, including that the employer does not currently offer a qualified plan and has at least five employees that make $5,000 or more in taxable wages.

The program is based on auto-enroll Roth IRA accounts, with a 3% default contribution. Employer contributions aren’t permitted.

While the program is not available to employers with fewer than five employees, self-enrollment is available for interested individuals.

The employer pilot program began Oct. 25, 2021. The program launched formally on April 1, 2022, utilizing a wave approach. The third wave, affecting employers with between five and 25 employees, was originally required to register by March 30, 2023, but the deadline was extended to Aug. 31, 2023.

Credit: myctsavings.com website

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5. California

Launched in 2016 and amended various times since, participation in CalSavers is mandatory for eligible employers with one or more employees that do not already provide a qualified retirement plan.

The program is based on auto-enrollment Roth IRAs, with a traditional IRA as an alternative election.

The default contribution rate is 5%, with auto-escalation of 1% per year to a maximum of 8% of salary.

Employer contributions are permitted only in cases where such contributions would not trigger coverage by the Employee Retirement Income Security Act.

The CalSavers pilot program began in November 2018. Employer registration opened July 1, 2019, and was initially implemented in three phases. The final registration deadline for employers with between one and four employees is Dec. 31, 2025, but employers are free to register at any time.

Credit: calsavers.com website

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6. New Jersey

Created in 2019, the New Jersey Secure Choice program replaced a marketplace approach that was enacted in 2016 but never actually implemented.

The program affects employers with 25 or more employees that have been in business at least two years and have not offered a qualified retirement plan. It is based on auto-enrollment Roth IRAs and traditional IRAs, with a 3% default contribution rate.

Employer contributions aren’t permitted.

The board tasked with administering the program is still in the development process, and a detailed program implementation timeline is still to be determined.

Credit: nj.gov/treasury/securechoiceprogram website

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7. Colorado

The Colorado SecureSavings program was enacted in 2020, and it will eventually require participation for employers with five or more employees.

The program utilizes auto-enrollment Roth IRAs as the default, with a traditional IRA as an alternative election. It features a default contribution rate of 5% with annual auto-escalation of 1% up to a maximum of 8%.

Employer contributions aren’t permitted, thought employers not required to participate in the program will be allowed to participate on a voluntary basis. Individuals who qualify for an IRA also will be allowed to participate voluntarily.

The program launched its employer pilot in October 2022, and then opened to all eligible employers on Jan. 18, 2023. The onboarding of employers was completed in three waves, with the final wave for employers with between five and 14 employees having closed June 30.

Credit: coloradosecuresavings.com website

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8. Virginia

Virginia’s state-facilitated program, RetirePath Virginia, was enacted in 2021.

The program features mandatory participation by employers with 25 or more employees who worked at least 30 hours a week in the preceding calendar year, have been in business for at least two years and do not already provide a qualified employer-sponsored retirement plan.

The program is built around auto-enrollment Roth IRAs as the default, with a traditional IRA as an alternative election.

The default contribution rate is 5% with annual auto-escalation of 1% up to a maximum of 10%, and employer contributions aren’t permitted. Employers not required to participate in the program will be allowed to participate on a voluntary basis, and any eligible employee whose employer does not facilitate participation in the program, or any self-employed individual, may participate.

The pilot phase began Feb. 23, 2023, and the program opened to all eligible employers on June 20.

Credit: retirepathva.com website

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9. Maine

Established in 2021 and updated just this year, the Maine Retirement Investment Trust program requires participation by employers with five or more employees that don’t already offer a retirement savings option.

The program features auto-enrollment Roth IRAs as the default, with the option to add a traditional IRA if the employer chooses. The default contribution is 5% of salary, with authority to use auto-escalation at 1% per year up to a maximum of 8%.

Employers with fewer than five employees are not required to offer the program to covered employees, but they may voluntarily offer the program. Employer contributions are barred, but the program also must permit participation by self-employed individuals and independent contractors.

A 2023 legislative amendment changed the deadline to Dec. 31, 2024, for covered employers to register, with the launch date and enrollment waves leading up to that deadline to be determined by the program’s state-empowered board.

Credit: mainesaves.org website

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10. New York

The New York State Secure Choices Savings Program was created in 2021 after the state’s legislature amended an original 2018 law creating a voluntary payroll deduction IRA program.

Under the updated approach, participation is mandatory for employers who at all times during the previous calendar year employed at least 10 employees in the state and have not offered a qualified plan in the past two years.

The program utilizes auto-enrollment Roth IRAs with a default contribution rate of 3%, and employer contributions are not permitted.

Deadlines for participation are still being developed by the state-empowered board tasked with administering the program. Under the law, the program “shall be implemented, and enrollment of employees shall begin, within 24 months after the effective date,” and the board may delay implementation by an additional 12 months if needed.

Credit: securechoice.ny.gov website

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11. Hawaii

Enacted in 2022, the Hawaii Retirement Savings Program requires employers to notify employees of their right to opt in and, if employees choose to opt in, then the employer must facilitate contributions to the state program.

Employers affected include “any person who is in business in the state and has one or more individuals in employment.”

The program utilizes a hybrid enrollment approach based in Roth-style accounts, wherein employees are not technically automatically enrolled but under which their eligibility must be announced and their desire to enroll must be acted upon.

The default contribution rate upon enrollment is 5%, and employer contributions are barred.

The program’s implementation timeline is yet to be determined, but before implementation of the program, the state-empowered administrative board may conduct a detailed implementation and evaluation study and perform other due diligence tasks to determine the feasibility of the program.

Credit: labor.hawaii.gov/blog/hrsp website

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12. Delaware

The Delaware Expanding Access for Retirement and Necessary Savings program was established in 2022, and it affects employers with five or more employees during the previous calendar year that have been in business at least six months and do not offer a qualified retirement plan.

The program is based on auto-enrollment Roth IRAs, with traditional IRA also authorized to be made available.

It’s default contribution rate is allowed to be determined by the state-empower administrative board, but it may not be less than 3% and not more than 6% of compensation, and employer contribution aren’t permitted.

Under the law, the board may implement the program in stages, which may include phasing in the program based on the size of employers or other factors. To the extent practicable, the board shall implement the program so covered employees can begin to participate and make contributions by Jan. 1, 2025.

Credit: treasurer.delaware.gov/earns website

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13. Minnesota

Established by legislation earlier this year, the Minnesota Secure Choice savings program affects employers that employ five or more covered employees and do not offer a retirement plan.

The default is an auto-enrollment Roth IRA, unless an employee elects to contribute on a pre-tax basis, which is also permitted.

The default, minimum, maximum and escalation rates are to be determined by the state-empowered board tasked with launching the program.

The board must begin operation of the program no earlier than Jan. 1, 2025, and it must open the program in phases. Under the law, the last phase must be opened no later than two years after the opening of the first phase, while appointments to the board must be made by Jan. 15, 2024.

Credit: Adobe Stock

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14. Vermont

Vermont’s VT Saves program was created this year through a legislative update that changed the original 2017 MEP-style program.

Under the updated law, all employers that have not offered a qualified retirement plan in the preceding two years must participate.

The default account is an auto-enrollment Roth IRA, but the state treasurer is authorized to provide an option to contribute to a traditional IRA instead.

The default contribution rate is 5%, and the treasurer is instructed to provide for an annual increase of each active participant’s contribution rate “by not less than 1% but not more than 8% of salary or wages each year.”

Under the law, the treasurer shall also establish the processes for phasing in enrollment of eligible individuals, including phasing in enrollment of covered employees by size or type of covered employer.

Credit: Adobe Stock

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15. Nevada

Nevada’s legislature recently voted to establish a state-facilitated savings program with mandatory participation by employers with five or more employees in the state, so long as the employer has been in business for at least 36 months and has not maintained a tax-favored retirement plan for its employees.

A state-empowered board will be created under the legislation, and it will have the authority to set the default account type and contribution rates. Automatic enrollment is required, and the board is authorized to establish a process for the auto-escalation of contributions.

Under the law, the board must establish and implement the program so that covered employees are able to make contributions beginning July 1, 2025.

If the board chooses to implement the program in phases based on the number of employees employed by the covered employers, the first phase must not begin before July 1, 2025.

Credit: Shutterstock

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1. Illinois

2. Oregon

3. Maryland

4. Connecticut

5. California

6. New Jersey

7. Colorado

8. Virginia

9. Maine

10. New York

11. Hawaii

12. Delaware

13. Minnesota

14. Vermont

15. Nevada

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15 States Closing Retirement Savings Gaps With Auto-IRAs

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More on this topic

1. Illinois

2. Oregon

3. Maryland

4. Connecticut

5. California

6. New Jersey

7. Colorado

8. Virginia

9. Maine

10. New York

11. Hawaii

12. Delaware

13. Minnesota

14. Vermont

15. Nevada

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