Key Takeaways:
- 22 states require certain employers to offer retirement savings options.
- Most mandates target businesses that do not offer employees plans such as a 401(k).
- Mandates typically require automatic enrollment into a state-facilitated Roth IRA.
- Secure Act 2.0 provides generous tax credits to help small businesses.
Across the country, more states are stepping in to help close the retirement savings gap and make it easier for employees to build long-term financial security. At the same time, many employers (especially small businesses) are learning what these new rules mean for them.
Today, 22 states have passed laws requiring certain employers to offer a retirement savings option. Of these, 12 programs are already active and enforceable, while others are still being developed.
The goal is simple: to ensure every worker has access to a plan that supports their financial future. Roughly 56 million Americans still lack an employer-sponsored plan and 20% of adults ages 50+ do not have any retirement savings.
For employers, this is both a responsibility and an opportunity to help employees plan while strengthening retention and trust in the workplace.
How state mandates work
Most state programs require employers that do not already offer a qualified plan (such as a 401(k)) to automatically enroll eligible employees in a state-facilitated Roth IRA. Employers register, communicate with staff, and submit payroll contributions.
Businesses that already offer a compliant 401(k) or similar plan are typically exempt, though most states still ask them to file an exemption notice.
These programs are designed to make participation easy, but noncompliance can be costly. In California, for example, employers may be fined $250 per eligible employee after 90 days and an additional $500 per employee after 180 days.
Active programs and deadlines
Several states are already enforcing or expanding their mandates:
- California: 1 or more employees
- Illinois: 5 or more employees; ongoing enrollment
- Maryland: 1 or more employees
- Oregon: 1–2 employees or those using a PEO
- Colorado, Connecticut, Maine, New Jersey, New York, and Virginia: active or phasing deadlines through 2026
Each state’s rules and thresholds vary, so checking your deadlines early can save time and stress later.
Secure Act 2.0: Making compliance easier
The federal Secure Act 2.0 gives small employers extra support through generous tax credits that offset startup and contribution costs:
- 100% of plan-startup costs, up to $5,000 per year for three years
- Up to $1,000 per employee in matching-contribution credits for companies with 50 or fewer employees
- $500 annual credit for automatic enrollment on new plans through 2025
Depending on plan size and participation, these credits can total more than $100,000 over five years, a meaningful boost for small employers investing in their teams.
Why it matters
For employees, access to retirement savings brings peace of mind. For employers, compliance builds credibility and strengthens loyalty. These programs aren’t just about following regulations; they’re about helping people prepare for what comes next.
Next steps for employers
- Check your state’s mandate for current deadlines and requirements
- Decide whether to join a state-facilitated plan or create a private 401(k)
- Use available Secure Act 2.0 credits to offset costs
- Communicate clearly with employees about their options and enrollment timelines
If your state’s retirement mandate is active, or soon will be, now is the right time to plan.
A partner for every step
At LewerBenefits, we know that compliance is only part of the story. True success comes from helping people feel supported and secure. Contact us to see learn about benefits strategies that balance financial responsibility with genuine care for employees.
