State-Mandated Retirement Plans: What Small Business Owners Need to Know

America is facing a retirement savings crisis. To address it, a growing number of states are stepping in with a new solution: state-mandated retirement plans that require employers to offer a way for workers to save through payroll deductions. In most cases, affected businesses must either enroll employees in a state-run program or sponsor a private plan instead.

While these programs vary in design, most are Roth IRA–based and automatically enroll employees, who may opt out if they wish. The goal is to make saving for retirement easier and more accessible for employees—especially those at small businesses.

Nearly half of U.S. states have active or developing programs—and more legislation is in the pipeline. If your state doesn’t yet require retirement plan access, it may soon. Understanding these programs now can help your business stay compliant and competitive in the job market.

Below is a state-by-state summary of these mandates, including program name, covered employers, plan type, automatic enrollment features, deadlines, and penalties for non-compliance.

What Is a State-Mandated Retirement Plan?

A state-mandated retirement plan is a government-required retirement savings program that applies to private-sector employers who do not sponsor their own retirement plan—like a 401(k), SIMPLE IRA, or pension.

These mandates are designed to expand access to retirement savings by requiring employers to either:

• • Enroll employees in a state-run retirement savings program (usually an automatic payroll-deduction IRA), or
  • Sponsor a qualified private retirement plan instead.

Common Characteristics:

• • Auto-enrollment: Employees are automatically enrolled but may opt out.
  • Payroll deductions: Contributions are deducted from after-tax wages (Roth IRAs are common).
  • Employer role: Employers must facilitate payroll deductions; contributions are not required.
  • Exemptions: The smallest or newest employers are often exempt.

These programs are intended to help more workers—especially those at small businesses—save for retirement without placing financial burdens on employers.

States With Active Mandates

The following states have enacted legislation and have implemented a state-mandated program. 

California – CalSavers

• • Website: calsavers.com
  • Covered Employers: 1+ employees and no qualified plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 8%
  • Compliance Deadline: Passed — all phases complete
  • Penalties: $250 per eligible employee after 90 days; $500 after 180 days

Colorado –  Colorado SecureSavings

• • Website: coloradosecuresavings.com
  • Covered Employers: 5+ employees, in business ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 8%
  • Compliance Deadline: Passed
  • Penalties: $100 per employee annually, up to $5,000

Connecticut – MyCTSavings

• • Website: myctsavings.com
  • Covered Employers: 5+ employees and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 3% default
  • Compliance Deadline: Passed
  • Penalties: Escalating annual penalties for noncompliance, ranging from $500 to $1,500 depending on the size of the employer

Delaware – Delaware EARNS

• • Website: earnsdelaware.com
  • Covered Employers: 5+ employees, in business ≥6 months, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline: Passed — October 15, 2024
  • Penalties: $250 per employee annually; capped at $5,000

Hawaii – Hawaii Retirement Savings Program (HRSP)

• • Website: labor.hawaii.gov/hrsp/
  • Covered Employers: 1+ employees and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default
  • Compliance Deadline: Upcoming — program projected to launch mid- to late-2026
  • Penalties: Failure to comply with registration and enrollment deadlines once they are announced could result in penalties

Illinois – Illinois Secure Choice

• • Website: ilsecurechoice.com
  • Covered Employers: 5+ employees, in business ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline: Passed
  • Penalties: $250 per employee for the first year of non-compliance; $500 per employee for each subsequent year

Maine – MERIT

• • Website: meritsaves.org/
  • Covered Employers: 5+ employees, operating ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline: Passed — final phase rolled out in 2024
  • Penalties:
    • $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

Maryland – MarylandSaves

• • Website: marylandsaves.com
  • Covered Employers: 1+ employees, operating ≥2 years, using an automated payroll, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline: Passed
  • Penalties: No direct fines; non-compliant employers forfeit the $300 annual state filing fee waiver

Massachusetts – CORE Plan

• • Website: mass.gov/core-plan-for-nonprofits
  • Covered Employers: Nonprofits with ≤20 employees
  • Employer Participation: Voluntary
  • Plan Type: Multiple Employer Plan (MEP) with safe harbor option
  • Automatic Enrollment: 6% default; auto-escalates by 1% or 2% (based on employer’s election) up to 15%
  • Compliance Deadline: Not applicable (voluntary program)
  • Penalties: None

Minnesota – Minnesota Secure Choice

• • Website: securechoice.mn.gov
  • Covered Employers: 5+ employees and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default
  • Compliance Deadline: Rolling out — program launched in early 2026; phased rollout continuing through year-end
  • Penalties: Penalty structure pending final rulemaking

New Jersey –  RetireReady NJ

• • Website: retireready.nj.gov
  • Covered Employers: 25+ employees, operating ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 3% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline:
    • 25+ employees: passed — November 15, 2024
    • Smaller employers: phased in subsequently
  • Penalties:
    • Year 1: written warning
    • Year 2: $100 per employee
    • Years 3–4: $250 per employee
    • Years 5+: $500 per employee

  Nevada – Nevada Employee Savings Trust (NEST)

  • • Website: nest.nv.gov
    • Covered Employers: 6+ employees, in business ≥3 years, and no plan
    • Employer Participation: Mandatory
    • Plan Type: Roth IRA
    • Automatic Enrollment: 5% default
    • Compliance Deadline: Passed — September 1, 2025
    • Penalties: Penalty structure pending final rulemaking

  New York – NY Secure Choice Savings Program

  • • Website: newyorksecurechoice.com
    • Covered Employers: 10+ employees, in business ≥2 years, and no plan offered in the past 2 years
    • Employer Participation: Mandatory
    • Plan Type: Roth IRA
    • Automatic Enrollment: 3% default
    • Compliance Deadline: Rolling out — specific deadlines being finalized by state
    • Penalties: $250 per employee for the first year of non-compliance; $500 per employee for subsequent years (under statute)

Oregon – OregonSaves

• • Website: oregonsaves.com
  • Covered Employers: 1+ employees and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline: Passed — final phase completed in 2023
  • Penalties: $100 per employee annually; capped at $5,000

Rhode Island – RI Secure Choice

• • Website: risavers.gov
  • Covered Employers: 5+ employees and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 8%
  • Compliance Deadline: Passed — December 12, 2025
  • Penalties: Up to $200 per eligible employee annually

Vermont – VT Saves

• • Website: vtsaves.vermont.gov/
  • Covered Employers: 5+ employees, operating ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 8%
  • Compliance Deadline:
    • 25+ employees: passed — July 1, 2025
    • 15–24 employees: passed — January 1, 2026
    • 5–14 employees: upcoming — July 1, 2026
  • Penalties:
    • Up to $10 per employee before October 1, 2025
    • Up to $20 per employee from October 1, 2025 to September 30, 2026
    • Up to $75 per employee after October 1, 2026

Virginia – RetirePathVA

• • Website: retirepathva.com
  • Covered Employers: 25+ employees, operating ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: 5% default; auto-escalates 1% annually up to 10%
  • Compliance Deadline: Passed
  • Penalties: Up to $200 per eligible employee annually

Washington – Washington Saves

• • Website: wasaves.com
  • Covered Employers: 1+ employees, operating ≥2 years, and no plan
  • Employer Participation: Mandatory
  • Plan Type: Roth IRA
  • Automatic Enrollment: Auto-enrollment with default contribution rate set by program rules
  • Compliance Deadline: Upcoming — program targeted to launch no later than January 1, 2027 per statute; rollout in progress
  • Penalties: Penalty structure pending final rulemaking

States With Mandates in Development

The following states have enacted legislation and are in the process of implementing a state-mandated program.

States Considering Mandates

Several states are also considering legislation to enact a state-mandated program. These states include Alaska, Arizona, Arkansas, 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, and Wyoming.

What Should Small Business Owners Do?

If your business operates in one of the states with an active or upcoming mandate and you don’t offer a retirement plan, now’s the time to act. You generally have two options:

1. 1. Enroll in the state-run program, or
   2. Offer a private retirement plan, such as a 401(k), to meet the requirement and potentially access more robust benefits.

Non-compliance can result in escalating penalties. If you’re unsure whether your business is affected, visit your state’s program website for enrollment tools and exemption forms.

If you would prefer a 401(k) to a state plan, we would love to help. Employee Fiduciary plans are low-cost, while offering a lot more features than a state plan. Better yet, federal tax credits can reduce the cost further. To find out more, contact a member of our sales team.