A 50-state guide to state-mandated retirement plans [Updated for 2024] All but three states have either active mandates in place or are working towards implementing mandated retirement programs. Check your state to see how your business may be impacted. Table of contents: All active state mandate programs In-progress state mandate programs States with legislation being considered Unknown state mandate programs The retirement landscape is changing rapidly, with many Americans living longer but saving less for their golden years. One of the most significant developments in this space has been the rise of state-mandated retirement plans. These plans are designed to provide essential benefits to workers who may not have access to them through their employer. With a growing number of private workers not having access to these crucial benefits, states are increasingly requiring businesses to provide retirement plans to employees. In 2015, the Department of Labor (DOL) issued guidance to support the states' efforts to help promote retirement benefits within their respective states. What exactly are state-mandated retirement plans? In recent years, more states have passed legislation requiring businesses to provide retirement benefits for their employees. In these states, employers have the choice between enrolling their workers in the state-sponsored program or establishing their own workplace retirement plan through providers like Betterment. A state-sponsored plan usually involves an Individual Retirement Account (IRA) set up by the employer for participants to contribute. However, certain features may vary between states, so it's a good idea to research your state's specific program to ensure compliance. All but three states are currently working on legislation to implement these plans, which means that more and more Americans will have access to the retirement benefits they need. However, it's important to stay up-to-date on these changes, as failing to comply with the new rules could result in hefty fines. For more details on how state-mandated plans could impact you, read: What state-mandated plans could mean for your small business. All active state mandate programs The following states have enacted legislation and have either implemented or are in the process of implementing a state-mandated program. California Plan Name: CalSavers Status: Mandate in place Deadlines: Deadline passed for 5+ employees; December 31, 2025, for 1-4 employees Details: Not all employers are required to participate. Only employers who do not sponsor a retirement plan and have one or more California employees must join CalSavers. Fines: $250 per eligible employee Illinois Plan Name: Illinois Secure Choice Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: Not all employers are eligible. Only private-sector employers who do not offer a qualified retirement plan, had at least five employees in every quarter of the previous calendar year, and have been in business for at least two years must facilitate Illinois Secure Choice. Fines: $250 per employee for the first calendar year the employer is non-compliant Oregon Plan Name: OregonSaves Status: Mandate in place Deadlines: Deadline passed for 1+ employees Details: All Oregon employers are required by law to facilitate OregonSaves if they don’t offer a retirement plan for their employees. Fines: $100 per affected employee, with a $5,000 maximum fine per year Connecticut Plan Name: MyCTSavings Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: Eligible Connecticut businesses are required to facilitate MyCTSavings if they don’t offer a retirement plan and have 5 or more employees. Fines: Penalties may be imposed. Bill is currently in the legislature. Colorado Plan Name: Colorado SecureSavings Program Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: All Colorado employers who have been in business for at least 2 years, have 5 or more employees, and don’t offer a qualified retirement plan for their employees are required by law to facilitate Colorado SecureSavings. Fines: $100 per affected employee with $5,000 maximum fine per year Maine Plan Name: Maine Retirement Savings Program Status: Mandate in place Deadlines: Deadline passed for 5+ employees Details: Every Maine employer with 5 or more employees will need to facilitate the program if they don’t already offer their own qualified retirement savings plan. Fines: Penalties for failing to enroll employees go into effect on July 1, 2025, as follows: $20 per employee from July 1, 2025, to July 30, 2026 $50 per employee from July 1, 2026, to July 30, 2027 $100 per employee on or after July 1, 2027 Virginia Plan Name: RetirePath Status: Mandate in place Deadlines: Deadline passed for 25+ employees Details: State law requires Virginia employers with 25 or more eligible employees who have operated for 2 or more years and not offered a qualified, employer-sponsored retirement plan must now register and facilitate RetirePath. Fines: $200 per eligible employee New Jersey Plan Name: RetireReady NJ Status: Mandate in place Deadlines: Deadline passed for 40+ employees; November 15, 24 for 25+ employees Details: Every New Jersey employer with 25 or more employees will need to register with the program if they don't already offer their own qualified retirement savings plan. Fines: Businesses that don’t follow state-mandated retirement legislation within one year will receive a written warning. Each following year of non-compliance will result in fines of: 2nd year: $100 per employee 3rd and 4th years: $250 per employee 5th year and beyond: $500 per employee Delaware Plan Name: Delaware EARNS Status: Mandate in place Deadlines: October 15, 2024 for 5+ employees Details: Every Delaware employer with five or more employees will need to facilitate the program if they don’t already offer their own tax-qualified retirement plan. Fines: $250 per affected employee, with $5,000 maximum fine per year Maryland Plan Name: Maryland Saves Status: Mandate in place Deadlines: December 31, 2024 for 1+ employees Details: Businesses are required to register if they have been in operation for at least 2 calendar years, have at least one employee over the age of 18, and use an automated payroll system. Fines: Maryland does not impose a penalty, instead, they use an incentive, offering businesses that enroll $300 per year, waiving the annual filing fee for Maryland businesses. In-progress state mandate programs Vermont Plan Name: Vermont Saves Status: Will be mandatory Deadlines: July 1, 2025 for 25+ employees; January 1, 2026 for 15-24 employees; July 1, 2026 for 5-14 employees Details: It is expected that the program will launch in late 2024. Nevada Plan Name: Nevada Employee Savings Trust Status: Will be mandatory Deadlines: July 1, 2025 for 1,000+ employees; January 1, 2026 for 500-999 employees; July 1, 2026 for 100-499 employees; Jan 1, 2027 for <100 employees Details: In 2023, the Nevada legislature passed SB305 which mandates the establishment of a retirement savings program for private sector employees. Fines: Information not available at this time. Massachusetts Plan Name: Massachusetts Defined Contribution CORE Plan Status: Nonprofit mandatory only Deadlines: Currently effective, but no deadline yet Details: Massachusetts nonprofit organizations with 20 employees or fewer may be eligible to adopt the CORE Plan. The CORE Plan is structured as a 401(k) Multiple Employer Plan (MEP). The MEP structure allows each adopting employer to join the CORE Plan under one plan and trust by executing a Participation Agreement. Fines: Not applicable. New York Plan Name: New York State Secure Choice Savings Program Status: Will be mandatory Deadlines: The SCSP is under development and there is no enrollment requirement at this time. Details: If you’re an employer in New York, state laws require you to offer the Secure Choice Savings Program if you have had 10 or more employees during the entire prior calendar year, have been in business for at least two years, and have not offered a qualified retirement plan during the prior two years. Fines: Information not available at this time. Minnesota Plan Name: Minnesota Secure Choice Retirement Program Act Status: Will be mandatory Deadlines: Expected to launch by Jan 1, 2025 Details: On May 19, 2023, Governor Walz signed into law a bill establishing the Minnesota Secure Choice Retirement Program. Employers with 5 or more covered employees that do not sponsor a retirement plan for their employees are required to participate in the plan. Fines: Information not available at this time. Hawaii Plan Name: Hawaii Retirement Savings Program Status: Will be mandatory Deadlines: Implementation in progress Details: The Hawaii Retirement Savings Program is a state-facilitated payroll-deduction retirement savings plan where individuals can choose to opt into the program. Employers will be required to provide covered employees with written notice that they may opt into the program, withhold covered employees’ contribution amount from their salary or wages, and transmit covered employees’ payroll deduction contributions to the program. Fines: Information not available at this time. Rhode Island Plan Name: Rhode Island Secure Choice Retirement Savings Program Act Status: Will be mandatory Deadlines: Implementation in progress Details: Private-sector employers with five or more employees will be required to offer a qualified retirement plan or opt into the state-run program. Fines: Information not available at this time. Washington Plan Name: Washington Saves Status: Will be mandatory Deadlines: Expected to launch Jan 1, 2027 Details: Employers must offer their employees access to a state-facilitated IRA if they don’t offer a retirement savings plan. Employees would be enrolled automatically unless they opt out. The program is slated to launch in 2027 and Washington will continue to offer its small-business retirement marketplace in the meantime. Fines: Penalties beginning after January 1, 2030. New Mexico Plan Name: New Mexico Work and Save IRA Status: Voluntary Deadlines: 7/1/24 deadline, but still voluntary Details: Work and Save is a voluntary savings program for private-sector and nonprofit employers and employees and the self-employed facilitated through a Roth Individual Retirement Account. Fines: Not applicable. Missouri Plan Name: Missouri Show-Me MyRetirement Savings Plan Status: Voluntary Deadlines: Expected to launch September 1, 2025 Details: Missouri introduced HB 1732 in 2022, which would create a voluntary MEP for small employers with 50 or fewer employees. Fines: Not applicable. Pennsylvania Plan Name: Keystone Saves Status: Will be mandatory Deadlines: To be determined pending bill passage by Pennsylvania State Senate Details: Employers will be required to offer a state-sponsored IRA or other qualified retirement plan. Employers do not have to participate if they have an established retirement program, have fewer than five employees, or have been in business less than 15 months. Fines: According to the current bill, covered employers shall not be subject to a penalty for not participating in the program. States with legislation being considered The following states have legislation currently being considered for state-mandated reprograms: Alaska, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Utah, West Virginia, Wisconsin, Wyoming Unknown state mandate programs The following states have not yet made clear if they intend to mandate a state retirement program. We will actively update this article as legislation changes. Alabama Florida South Dakota What do state-mandated plans mean for your business? Now is the time to plan ahead if you do not offer a retirement plan for your employees, especially if you operate in a state with an upcoming mandate deadline. In most cases, you’ll have one of two options: Implement your state’s plan: You’ll need to follow your state’s procedures for enrolling and offering a retirement plan, usually an IRA, to your employees. Implement a 401(k) plan: A second option is to skip the state plan, and instead, offer a 401(k) plan from a private provider like Betterment at Work. The benefits of offering a 401(k) Offering a 401(k) has become a tablestakes benefit as employers attempt to attract and retain talent in today’s competitive environment. State mandated plans are designed by the government to address a lack of savings among employees. The purpose is admirable, but state mandated plans may lack some of the benefits of a modern, 401(k) plan, which include: Higher contributions limits to help people save more. A wider range of investment options depending on the number of funds available. The option to provide an employer matching contribution. (Did you know? A 401(k) employer match is the #2 most desired benefit among employees. Learn more.) Learn how to offer a modern 401(k) today At Betterment, we make it easy for small and mid-market businesses to provide a scalable retirement plan. With a Betterment 401(k), you get: Simplified administration, payroll integrations, fiduciary support, and compliance testing Customizable plan features and optional employee benefits Service and support at every step Learn more

Almost 50% of Employees Think Their Companies Should Offer This Benefit Our recent survey of 1,000 full-time U.S. workers found that nearly half of employees agreed employers should focus on one thing. Let’s see what that is…. In our 2023 Retirement Readiness Annual Report, we surveyed 1,000 full-time U.S. workers to learn more about how retirement readiness and financial well-being have evolved over the last year. One theme stood out to us: Employees want more help from their employers with student loan debt. In fact, 49% of employees believe that employers should play a role in helping them pay off their student loan debt — this was felt most strongly among Gen Z (71%) That’s something to consider: Nearly half of employees think their companies should offer a benefit helping to pay student loans. It’s clear, employees want student loan benefits And there’s a good reason for this: 40% of workers currently have student loan debt that they’re responsible for paying down. 64% of borrowers said their student debt had impacted their ability to save for retirement. What’s more, our study also found that a 401(k) with an employer match is the number one most desired benefit. But what should employers do? Talk to your employees about their needs Before you jump into offering a new student loan benefit, first take a step back to gain a wider view of your employee’s needs. Ask your employees what they want in terms of a financial benefits package. A simple approach is to have employees rank benefits in order of most likely to use to least likely, and give them a chance to submit open-ended comments. You can start with a list of benefits, like this, for your employees to rank: 401(k) retirement plan 401(k) employer match 401(k) match on student loan payments Access to a financial advisor 529 college savings plan If you already offer some of these benefits, it’s still good to have employees rank their perceived value of them. Additionally, add other benefits to the list that you may consider offering. After you step back and look at the data, you can implement financial benefits that make sense for your company. Betterment at Work offers a variety of benefits to help you meet your employees’ needs Once you’re ready to implement new benefits for your employees, we’ve got you covered. And if you need help deciding what’s best, our team can talk you through the decision. You’ve got options. 401(k) match on student loan payments: When it comes to alleviating student loan debt, we offer an industry-first 401(k) student loan payment matching program. We’ve found that it solves a larger problem when we help employees save in a 401(k) while at the same time they pay down their student loans. Employees don’t have to choose between reducing their debt and saving for retirement. (See it in action: Watch our video to learn how you can offer a 401(k) match based on an employee's student loan payments.) 529 education savings plan: Forward-thinking employers can take it a step further and provide a state-sponsored 529 to save up for higher education costs. Many younger parents are doing three things at once: paying down their student loan debt, saving for their retirement, and saving for college for their kids. That’s a lot to balance. We offer a tax-advantaged 529 savings plan to help your employees tackle rising education costs. Access to a financial advisor: Take your Betterment 401(k) to the next level with Financial Coaching. Offer a benefits package that includes 1:1 financial guidance to help every employee better achieve their goals in and out of work. Award-winning 401(k) for small businesses: Get an affordable and customizable retirement plan designed to scale with you. After all, a 401(k) plan with an employer match is the most wanted benefit among employees. Plus, we’re trusted by some great companies Here are some of the many companies with a Betterment at Work 401(k)... Ready to offer financial benefits your employees want? Betterment at Work makes it easy for small and mid-market businesses to provide a scalable 401(k) plan with an employer match. Plus, our platform empowers you to offer additional benefits like 529 plans, student loan payment 401(k) matches, and 1:1 advice from our financial advisors. Set up a call today to learn more.

5 ways small to mid-sized businesses can attract and retain employees Our recent survey of 1,000 full-time U.S. workers uncovers five ways to attract and retain employees of small businesses. According to the U.S. Chamber of Commerce, companies are “facing unprecedented challenges trying to find enough workers to fill open jobs.” In today’s competitive job market, data from our recent survey has found that small to mid-sized businesses can—and should—consider expanding their employee benefits packages to attract and retain talent. In our 2023 Retirement Readiness Annual Report, we surveyed 1,000 full-time U.S. workers to learn more about how retirement readiness and financial well-being have evolved over the last year. And what employees told us about financial benefits could help small businesses build loyal workforces. One of the report’s findings revealed that retirement security appears to decrease by company size. Only 8% of small business employees expect to have a million or more dollars saved for retirement, compared to 17% of midsize and 16% of large business employees. With that in mind, here are five employee financial benefits that smaller companies can implement to help support and retain their staff. 1. Offer a 401(k) program with matching contributions Out of all financial benefits, a 401(k) program is the place to start if you are aiming to attract and retain employees. According to the Retirement Readiness Annual Report, a 401(k) plan is the most desired benefit among employees, yet only 59% of employers currently offer access to a 401(k). A few other stats from the report jumped out at us, showing the demand for these benefits: For employees with access to a 401(k), 83% reported they contribute to that 401(k). 68% of workers receive a match from their employer—a 23% increase from the year before. Of the employees who receive an employer match, 86% contribute enough to get the full match. 92% of employees without a 401(k) match wish their employer matched, a 16% increase in one year. When you offer a 401(k) with employer-matching contributions, your company not only shows that you care about your employees’ future but you also provide a significant financial incentive for employees to stick around. It’s a win-win situation: Employees save for retirement, and you benefit from increased loyalty and reduced turnover. 2. Implement a student loan/401(k) matching program Offering a 401(k) match on student loans can help employees save for retirement while they pay off their college debt. Student loan debt is a major concern for many employees, especially younger ones. And student loans only become more stressful when one is trying to balance saving for retirement at the same time, as our report shows: 40% of workers currently have student loan debt that they’re responsible for paying down. 64% of borrowers said their student debt has impacted their ability to save for retirement. Almost half (49%) of employees believe that employers should play a role in helping them pay off their student loan debt — this was felt most strongly among Gen Z (71% of whom agreed). Through Betterment at Work’s industry-first solution, employers can provide 401(k) matches on student loan payments. This innovative benefit shows that you understand the financial challenges your employees face and are willing to help them manage both short-term and long-term financial goals. 3. Provide an employer-sponsored emergency fund Financial emergencies can strike at any time, leaving employees stressed and distracted. An employer-sponsored emergency fund can offer a safety net that can reduce financial anxiety. According to our report: 49% of employees said an employer-sponsored emergency fund would reduce their financial anxiety. Just over half (52%) of employees reported currently having an emergency fund — a seven percentage point drop from 2022 (59%), and a 14 percentage point drop from 2021 (66%). 51% of small business employees used their emergency funds, dropping to 43% for workers at midsize and large businesses. Of all generations, millennials (53%) tapped their emergency funds the most — compared to 49% of Gen X, 46% of Gen Z, and just 27% of boomers. One of the most striking statistics in our report is that only 8% of employers offer an employer-sponsored emergency fund, yet it is the third most valued benefit for employees — making it the largest gap of any benefit. In a world where nearly four out of five workers (78%) reported that their finances cause them anxiety, offering an emergency fund shows you care about their well-being. This may lead to higher job satisfaction and increased loyalty, as employees feel supported and valued. 4. Offer access to a live financial advisor Navigating the complexities of personal finance can be confusing. By providing access to a live financial advisor as a financial benefit, you can make a significant difference in your employees’ financial lives. Offering this benefit helps employees make informed financial decisions, including planning for retirement, debt management, estate planning, and more. Our report found that: Only 17% of employees report having access to a financial advisor through their employer. For those who don’t have access to an advisor through their employer, 50% reported that they would want that as a financial wellness benefit and 59% would want to meet with them two to three times a year. Small business employees meet with advisors most at 75% of employees —compared to just 42% of large business employees. Thomas Moore, Sr. Director of Betterment for Advisors, sums it up well, stating that access to a financial advisor “presents a huge opportunity for employers to differentiate by providing more holistic wellness programs to their employees — benefits packages should start, but not end, with the 401(k).” 5. Provide access to a 529 college savings plan Education expenses can be a significant financial burden. And for some parents, it’s a double burden if they are paying off their own student loans while attempting to save for their children’s education. By offering access to a 529 college savings plan, you can help employees save for their children's education and alleviate some of that stress. Our report highlights that: Over a quarter (26%) of employees are currently saving money for education expenses, but less than half (45%) are currently using a 529 education savings plan due to inaction and lack of awareness. Only 5% of employers currently offer 529 plans, which is surprising since, according to research, 70% of parents are concerned about having enough funds to pay for college. Offering a 529 plan can help attract employees who are thinking about their children’s future and want to work for a company that supports their goals. Offer financial benefits your employees want Betterment at Work makes it easy for small and mid-market businesses to provide a scalable 401(k) plan with an employer match. Plus, our platform empowers you to offer additional benefits like 529 plans, student loan payment 401(k) matches, and 1:1 advice from our financial advisors. Set up a call today to learn more.

What are unallocated funds? Unallocated funds are non-invested assets within the plan. Many 401(k) plans have unallocated funds as a result of daily plan administration. Plan sponsors can view the balances of their unallocated funds under the 401(k) Plan tab >> Activity in their Plan Sponsor Dashboard. There are three types of unallocated funds: Forfeiture funds Suspense funds Cash funds We’ll describe each of these below. What are Forfeiture funds? Where do they come from? Forfeitures can arise in two main ways: When participants are auto-enrolled in the plan and choose to request their money back (within the 90-day permissible window under EACA), any employer contributions associated with those returned participant contributions become Forfeiture funds. Unvested contributions: When terminated participants have unvested contributions, take a distribution, or incur a 5-year break in service, and have unvested employer contributions, those unvested employer contributions associated with the terminated participants’ distribution become Forfeiture funds. How can Forfeiture funds be used? The way they can be used is written into the plan document. Generally speaking, they can be used to: Pay eligible plan expenses. Offset employer matching or profit sharing contributions. Allocate to eligible participants as additional employer contributions. Forfeitures cannot be used as elective deferrals. Timing requirements Depending on the plan document, Forfeiture funds generally should be used before the end of the following plan year in which the forfeiture occurred. What are Suspense funds? Where do they come from? Suspense funds mainly arise due to excess employer contributions or over-contribution of the employer match due to pre-funding the employer match for the year or profit-sharing (including the IRS 415(c) limits). How can suspense funds be used? Suspense funds can only be used to offset employer contributions or allocated to eligible participants as additional employer contributions. They cannot be used to pay for plans fees. Timing requirements These funds should be used as soon as administratively possible, but typically no longer than the end of the plan year in which they occur. What are Cash funds? How do they come up? Assets in the cash fund arise from payroll corrections and other miscellaneous recordkeeping-related tasks that result in excess money in the plan’s trust. How can they be used? Generally speaking, these funds can be used to offset employer contributions. These funds, along with the other unallocated funds, cannot go back to the plan sponsor except when specifically directed as a “mistake of fact”. The “mistake of fact” rules set in place by the IRS are quite narrow, and it is often unclear whether a particular error meets the “mistake of fact” standard: plan sponsors are required to affirmatively attest to when they use “mistake of fact”. In instances where assets are placed in the plan’s cash account, generally they are only there temporarily pending further action directed by the plan sponsor. How can unallocated funds be used towards payroll at Betterment? Based on the plan sponsor’s direction, Betterment will automatically apply unallocated funds to offset employer contributions during upcoming payrolls. The order of operations of fund usage is: Suspense, Forfeiture (the oldest eligible year then current year), then Cash funds. Betterment will automatically apply the regulatory timing restrictions of when certain funds need to be used by. If the unallocated funds cannot cover the entire employer contribution portion of a particular payroll, an entire employer portion of a particular payroll (or if there are no remaining unallocated funds), then the plan’s bank account(s) will be used to cover the outstanding amount. Unallocated funds can only be applied to a specific employer portion of a payroll if the automated usage setting is turned on before the payroll is approved (otherwise the funds would be applied to the next payroll). Plan sponsors can find details on the amount of each unallocated fund that was applied towards a payroll on the Payroll Overview page in their dashboard. If a plan does not want unallocated funds to be applied automatically towards payroll, but would rather use funds for a specific payroll, a “mistake of fact” return, or towards a year-end contribution, then the plan should reach out to Plan Support. This automated function will be turned on for all plans unless you (as plan sponsor on behalf of your plan) direct us to opt-out. Reports guide To see granular information on how funds were generated or used, utilize the Forfeiture fund, Suspense fund, and Cash fund reports. Use the Unallocated fund summary report to view the yearly balances of each fund. Please note, the Forfeiture fund, Suspense fund, Cash fund, and Unallocated fund summary reports were previously named the Forfeiture account, Suspense account, Cash account, and Plan accounts summary, respectively. Glossary (for terms used in the reports) Correction_redistribution: Typically a payroll correction to add money towards a specific employees’ payroll contributions that should have originally been made. Compliance_inflow: Inflow to participants – anything related to year-end compliance testing that causes funds to be added to the plan/participants (i.e. True ups, QNECs, ADP/ACP, Top Heavy, Lost Earnings). Corrective_transfer: Outflow from participants – compliance outflow (i.e. ADP Test, ACP Test, 415 Annual Additions Excess, Funding in Excess of Formula). Component_reversal: Typically a payroll correction to reverse payroll contributions that should not have been made. Year_end_contribution: Employer contributions only (typically annual additions added during compliance season but can also occur at anytime to correct issues). Interested in bringing a Betterment 401(k) to your organization? Get in touch today at 401k@betterment.com.