As the Social Security Board of Trustees (Federal government) estimates that from 2035, the payments of scheduled benefits might be reduced to around 75% (unless there is a reform to increase the fund assets), more and more States are requiring small businesses to join State programs offering retirement options to their employees, if not already a program in place (i.e. 401k).
The latest implementation is for Retire Ready NJ. Note that this program was signed by Governor Phil Murphy back in March of 2019. If you are a business who has 25 or more employees, does not offer a retirement program (i.e. SEP IRA, SIMPLE IRA, 401(k) or Defined Benefit Plan) and has been in business for at least two years, you are required to sign up for Retire Ready NJ. However, the program is voluntary for employees, who can change their contribution or opt-out of the program.
Note that NJ Retire Retire Ready program deadline for NJ companies with more than 40 employees is September 15, 2024 (deadline for NJ companies with 25 to 39 employees is November 15, 2024).
NJ guidance – About the Secure Choice Savings Program
Official 2019 NJ regulations – Chapter 56 (pdf of Act)
This is becoming a common standard at the State level, if employers do not offer a retirement plan to employees, as you can read some examples:
- California – CalSavers Retirement Savings Program – Initial requirement for over 100 employees was September 2020. Note that it became more and more restricted as the number of employees was reduced to 5 or more employees since June 2022. The next step is the 1 or more employees from December 2025.
- PA – Keystone Saves Program – The program was signed in May 2023 but it allows 24 months for the Treasure Department to implement the program (plus an additional one year delay). Note that this program follows an employee tiered approach (similar to the California one) which is the following:
- Employers with 100 or more employees: no later than two years after the effective date.
- Employers with 20-99 employees: no later than 30 months after the effective date.
- Employers with 10-19 employees: no later than three years after the effective date.
- Employers with 5-9 employees: no later than four years after the effective date.
- NY – New York Secure Choice Savings – The bill S5395 was signed back in 2021 and was directed to businesses in operations for two years with at least 10 employees. However, as of the date of this post, the program is under development as it reads on the official website: “ The SCSP is under development and there is no enrollment requirement at this time.”
This is a relevant topic for small business owners as the retirement requirements change from State to State, plus there are numerous updates and some of the plan developments are still on going. To ensure compliance with the State laws (i.e. penalties are several hundred dollars per employee or even more), it is important to review your payroll reports to determine the number of employees, check if a retirement option is already available and you can reach out to us if you have further questions on this topic.
