Auto-IRA Programs Progress in Several States

State automatic individual retirement account plans continue to gain momentum, as more state legislatures are passing bills to open programs, requiring private sector employers to offer a state plan if they are not already sponsoring their own retirement plan. 

Delaware 

Registration for the Delaware EARNS program (EARNS stands for Expanding Access for Retirement and Necessary Saving) officially opened on July 1. All Delaware employers who have at least five payroll employees and do not offer a qualified retirement plan, such as a 401(k), must either register for Delaware EARNS or certify for exemption by October 15, 2024. 

Delaware EARNS was created to help bridge the state’s retirement savings gap and is sponsored by the office of the state treasurer. There is no cost to employers for facilitating the program and no plan sponsor liability.  

Delaware employers can be exempt if they offer a qualified retirement plan, have fewer than five employees or have been in business less than six months.  

Before opening statewide, Delaware EARNS was tested in a pilot program involving 12 employers across the state, including My Sister’s Fault, a Puerto-Rican-themed bakery with locations in Milford and Seaford. 

“EARNS is an important step forward,” said Angie Robles, co-owner of My Sister’s Fault, in a press release. “It offers small business owners and their employees a chance to be able to save money for their retirement. The way it’s going to help our employees is that it’s going to give them a level of confidence that when they do get to retirement, they will have money set aside that they can count on.” 

Vestwell State Savings is the program administrator for Delaware EARNS, as well as similar programs in other states, including Maryland, New Jersey and Virginia.  

Vermont 

Vermont’s public retirement program, Vermont Saves, joined the Partnership for a Dignified Retirement, an interstate consortium that also includes Delaware and Maine, while agreeing to partner with the Colorado SecureSavings program.  Partnering with Colorado could lower costs and position VT Saves to launch sooner, according to Vermont Treasurer Mike Pieciak. Colorado SecureSavings was launched in 2023 and currently enrolls more than 14,000 employers and has accumulated more than $50 million.  

With more assets and accounts under management, the consortium will increase returns through economies of scale and reduce costs for savers, according to the office of the Vermont state treasurer.  

The partnership will also enable Vermont Saves to launch earlier than anticipated; its launch, now expected by the end of the year, would make Vermont the fastest state to develop and launch a public retirement program, according to the announcement. Before Vermont Saves opens fully, the Vermont state treasurer’s office will launch a pilot program in October involving businesses in various industries and regions across the state. 

Vestwell, in partnership with BNY Mellon, again serves as plan administrator, providing recordkeeping, custodial and administrative services to employers and employees in participating partner states.  

Rhode Island and New Jersey 

Rhode Island Governor Daniel McKee on June 26 signed into law the Rhode Island Secure Choice Retirement Savings Program Act, making it the 17th state auto-IRA program in the nation and the 20th state retirement program for private sector employers.  

Under the program, Rhode Island private sector employers with at least five employees will be required to offer a retirement plan to their employees. The office of the general treasurer will administer the plan and determine the plan features, as well as select a third-party administrator. The bill took effect immediately.  

New Jersey’s state plan, RetireReadyNJ, also opened for eligible employers on June 30.  

According to the Center for Retirement Initiatives at Georgetown University, all state programs have collected around $1.5 billion in total assets to date.