CSG Law Alert: Employer Obligations Under the New Retire Ready New Jersey Savings Program
On July 10, 2024, the State of New Jersey launched Retire Ready NJ, a state-run retirement savings program aimed at providing private-sector employees with a secure way to save for retirement. This program mandates specific obligations for certain New Jersey employers.
Registration on the Retire Ready NJ website is required for businesses that: (1) have 25 or more employees; (2) do not offer a qualified retirement savings plan; and (3) have been in business for at least two years. It is free to register. Once the registration process is complete, employees are automatically enrolled in a payroll deduction made to a Roth IRA, unless they opt out of the program. Employers must provide information about the program to employees and offer open enrollment periods at least once a year. Employers are also responsible for facilitating payroll deductions and depositing them into the employee’s Roth IRA.
To ensure compliance with the Retire Ready NJ program, employers are required to adhere to specific deadlines based on the size of their workforce. Those with 40 or more employees must implement the program by September 15, 2024. Employers with 25 to 39 employees have until November 15, 2024, to meet the program’s requirements.
Employers are exempt if they already offer a qualified retirement program such as a 401(k) plan, a qualified annuity plan, tax-sheltered annuity plan under 403(b), a Simplified Employee Pension (SEP) plan under 408 (k), a Savings Incentive Match Plan for Employees (SIMPLE) under 408(p) or a government deferred compensation plan under section 457 (b). If an employer is exempt, they must certify their exemption on the Retire Ready NJ website.
The following proactive action items are crucial for employers to address their obligations under the program effectively.
- Assess Eligibility: Determine if your business meets the criteria for mandatory participation or if you qualify for an exemption.
- Register or Certify Exemption: Register for the program or certify your exemption through the Retire Ready NJ website.
- Inform Employees: Provide employees with information about the program and their options to participate or opt out.
- Facilitate Contributions: Ensure payroll systems are set up to handle automatic deductions and timely deposits into the Roth IRAs.
By following these steps, employers can navigate the new requirements, minimize potential penalties, and provide their employees with the opportunity to participate in this state-sponsored retirement savings initiative.
Non-compliant employers will face escalating penalties under the Retire Ready NJ program, including monetary fines. Additionally, there are significant penalties for mishandling employee contributions, underscoring the importance of proper fund management.
If you are an employer seeking guidance regarding Retire Ready NJ, including but not limited to proper implementation and compliance, please contact your CSG Law attorney or the author of this alert.