State Mandated Retirement Plans are Coming

September 11, 2019

A recent trend in state laws could soon impact your business. There are currently 8 states mandating retirement plans for working residents. Those states include: California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, Oregon, and Washington. These states require auto enrollment in a state-run IRA plan when workers are not offered a company sponsored retirement plan.

What could this mean for you and your employees if Pennsylvania follows this trend?

First, it requires some work for the company. Typically, if a company has 5 or more employees they must participate in the program. The company is required to set up automatic deductions from participants paychecks to fund the state’s retirement account. If the employer fails to do so, there is a warning issued, evolving to penalties that must be paid to the state. Additionally, companies may miss out on tax benefits that can be realized when offering a retirement plan through the business.

Although it is important to encourage retirement savings, these state-run plans often have high expenses and limited flexibility. One of the state plans has only five investment options and participants are restricted in the number of times they can make changes to their account.

PA State legislators have started the conversation addressing retirement security in PA. According to the website, a staggering 44 percent of working Pennsylvanians – over two-million workers – lack access to any retirement plan. Pennsylvania House Democrats have proposed the Keystone Retirement Security Program to address this concern.

Many small businesses don’t offer a retirement plan because they believe plans are too complicated and expensive. However, there are quite a few affordable options and local advisors can help companies navigate the regulations to simplify the process. Getting ahead of a state mandated program allows you to make the best decision for your business.

Marjorie Wentz, AIF® is a Retirement Plan Advisor at Trinity Wealth Management. She helps business owners and their employees achieve their financial goals through Retirement Plan advice. 610-296-2020 |

Trinity Wealth Management, LLC (“TWM”) is a Registered Investment Adviser. This article is solely for informational purposes. Advisory services are only offered to clients or prospective clients where TWM and its representatives are properly licensed or exempt from licensure. Investing involves risk and possible loss of principal capital. No advice may be rendered by TWM unless a client service agreement is in place.

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