State retirement plan mandates have launched in California, Colorado, Connecticut, Illinois, Maine, Oregon, and many other states, requiring most small businesses to either offer a qualified plan or register for the state-run program.
State-run programs generally use automatic enrollment with Roth IRAs but typically prohibit employer matching contributions and limit investment choices to a state-managed lineup.
Adopting a private 401(k) plan satisfies state mandates while unlocking higher contribution limits, employer matching, broader investment options, and the additional advantages SECURE 2.0 provides.
If you’re an employer, you’ve likely heard about state mandates by this point. To help combat the retirement savings crisis, many states are stepping in with legislation that requires employers to provide their employees with more benefits through state-run plans. Even more, with SECURE 2.0 offering additional advantages, state mandates are aiming to be the most beneficial retirement option for businesses.
But, while state-run plans are a good starting point, there is a lot more to mandates and plan requirements than employers likely expect. From understanding what each state is offering to comparing state-run plans with private alternatives, this guide breaks down everything employers need to know to stay ahead of the mandates curve.
States with Active Retirement Plan Mandates
These states have approved and launched mandates, and employers must comply or find an alternative, or else face penalties.
The following states are either actively developing their plan program or have passed legislation but haven’t fully launched yet.
Alaska, Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont (Passed legislation and required to offer a plan based on company size), West Virginia, Wisconsin, Wyoming
States with No Mandates Yet
Even though the states below don’t have mandates or have plans to implement new regulations yet, this doesn’t mean there isn’t interest as officials will likely watch what’s trending with nearby states and where federal rules are heading.
Alabama
Florida
Mississippi
South Dakota
Common State-Run Plan Features & Limitations
It’s important to remember that each state program is slightly different, and that their simple designs can serve as a decent starting off point for employers who may not be well-versed in retirement savings. The common features they include are:
Administrative support – usually is more basic
Employee-funding only – no employer match or contributions allowed
Limited, pre-created list of investment options
Roth IRA structure
What Employers Need to Know
When exploring your state’s mandates and plan options, here’s what to keep in mind:
You will likely grow out of a state-run plan
State plans are designed to be simple and one-size-fits-all, meaning it may work right now but won’t fit your needs in the long term. Be sure to think about how your business could grow years from now before choosing your plan.
You may be leaving money on the table
Depending on your eligibility, you could qualify for tens of thousands of dollars in tax credits, and this is applicable whether you have a state plan or a private one.
Don’t just check the compliance box
While you are staying compliant with a state plan, there are other benefits you’ll likely need to stay ahead of IRS requirements (and you may not get with a state plan) like 3(16) fiduciary services, document support, and more. So, make sure to find out what services are available in your state that can provide the assistance you need.
Employees are expecting more
Retirement benefits are being prioritized by employees more than ever, and you can play a big role in helping to improve their financial wellness. State plans can either make or break how you meet their needs.
Private Plans vs. State-Run Plans
Many employers miss out on the fact that they have options beyond their state-specific retirement plan. And for many employers, a privately-run plan can offer quite a few benefits that state plans can’t, like more control, greater flexibility, and long-term profitability. Here’s what to consider if you choose to opt out of your state-run plan:
Better Employee Experience
With private plans, you have the freedom to choose your provider, vesting schedule, investment options, and more. This means you can tailor the experience to your employees’ needs and simplify saving for them, setting you apart as a forward-thinking employer.
More Cost Savings Over Time
While many providers utilize an AUM (assets under management) fee approach that grow as employees save more, Ubiquity is one of the plan sponsors that offer transparent, flat fee pricing. You and your employees can save more over time and feel more secure about the future.
Flexible Design Options
Privately-run plans can offer more plan customization options like:
Loan and hardship withdrawals
Vesting schedules
Pre-tax or Roth contributions
Profit sharing
Higher Contribution Limits
Private plans are known for having significantly higher contribution limits than state plans, giving employees the opportunity to save much more than they anticipated. Here’s a breakdown of the latest contribution limits to see what is possible.
Next Steps
Whether you plan to go with your state’s retirement plan or want to implement a privately-run one, now is the time to secure your benefits. Ubiquity can be your partner during this process. We make it simple and affordable with 401(k) solutions that fit your goals and grow with your business without the high costs or stress.
State Retirement Mandate FAQs
Can I opt out of a state-run retirement plan?
Yes, you can opt out if you implement a privately-run retirement plan instead, such as a traditional 401(k) or SIMPLE IRA. Many employers go this route to gain more flexibility and control over their retirement benefits and take advantage of additional cost savings.
Are state mandates the same across every state?
No, rules vary by state, so it’s important for you to stay up to date on what are the latest changes within your specific state. You can keep track of them with our state mandates map.
What happens if I don’t comply with my state’s mandates?
You may be faced with penalties for non-compliance, which vary by state. To avoid fines and consequences, it’s crucial for employers to take action earlier.
Can I still benefit from tax credits with state mandates?
Yes! You still may be eligible for tax credits that can help you offset set up and help with maintenance. To learn more about how much you can potentially save, check out our tax credits calculator.
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Unlocking Financial Wellness with Secure 2.0: Small Business 401(k) Strategies
Discover how Secure 2.0 helps small businesses enhance retirement plans with tax credits, compliance strategies, and employee engagement.
If you’re an employer, you’ve likely heard about state mandates by this point. To help combat the retirement savings crisis, many states are stepping in with legislation that requires employers to provide their employees with more benefits through state-run plans. Even more, with SECURE 2.0 offering additional advantages, state mandates are aiming to be the most beneficial retirement option for businesses.
But, while state-run plans are a good starting point, there is a lot more to mandates and plan requirements than employers likely expect. From understanding what each state is offering to comparing state-run plans with private alternatives, this guide breaks down everything employers need to know to stay ahead of the mandates curve.
States with Active Retirement Plan Mandates
These states have approved and launched mandates, and employers must comply or find an alternative, or else face penalties.
The following states are either actively developing their plan program or have passed legislation but haven’t fully launched yet.
Alaska, Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont (Passed legislation and required to offer a plan based on company size), West Virginia, Wisconsin, Wyoming
States with No Mandates Yet
Even though the states below don’t have mandates or have plans to implement new regulations yet, this doesn’t mean there isn’t interest as officials will likely watch what’s trending with nearby states and where federal rules are heading.
Alabama
Florida
Mississippi
South Dakota
Common State-Run Plan Features & Limitations
It’s important to remember that each state program is slightly different, and that their simple designs can serve as a decent starting off point for employers who may not be well-versed in retirement savings. The common features they include are:
Administrative support – usually is more basic
Employee-funding only – no employer match or contributions allowed
Limited, pre-created list of investment options
Roth IRA structure
What Employers Need to Know
When exploring your state’s mandates and plan options, here’s what to keep in mind:
You will likely grow out of a state-run plan
State plans are designed to be simple and one-size-fits-all, meaning it may work right now but won’t fit your needs in the long term. Be sure to think about how your business could grow years from now before choosing your plan.
You may be leaving money on the table
Depending on your eligibility, you could qualify for tens of thousands of dollars in tax credits, and this is applicable whether you have a state plan or a private one.
Don’t just check the compliance box
While you are staying compliant with a state plan, there are other benefits you’ll likely need to stay ahead of IRS requirements (and you may not get with a state plan) like 3(16) fiduciary services, document support, and more. So, make sure to find out what services are available in your state that can provide the assistance you need.
Employees are expecting more
Retirement benefits are being prioritized by employees more than ever, and you can play a big role in helping to improve their financial wellness. State plans can either make or break how you meet their needs.
Private Plans vs. State-Run Plans
Many employers miss out on the fact that they have options beyond their state-specific retirement plan. And for many employers, a privately-run plan can offer quite a few benefits that state plans can’t, like more control, greater flexibility, and long-term profitability. Here’s what to consider if you choose to opt out of your state-run plan:
Better Employee Experience
With private plans, you have the freedom to choose your provider, vesting schedule, investment options, and more. This means you can tailor the experience to your employees’ needs and simplify saving for them, setting you apart as a forward-thinking employer.
More Cost Savings Over Time
While many providers utilize an AUM (assets under management) fee approach that grow as employees save more, Ubiquity is one of the plan sponsors that offer transparent, flat fee pricing. You and your employees can save more over time and feel more secure about the future.
Flexible Design Options
Privately-run plans can offer more plan customization options like:
Loan and hardship withdrawals
Vesting schedules
Pre-tax or Roth contributions
Profit sharing
Higher Contribution Limits
Private plans are known for having significantly higher contribution limits than state plans, giving employees the opportunity to save much more than they anticipated. Here’s a breakdown of the latest contribution limits to see what is possible.
Next Steps
Whether you plan to go with your state’s retirement plan or want to implement a privately-run one, now is the time to secure your benefits. Ubiquity can be your partner during this process. We make it simple and affordable with 401(k) solutions that fit your goals and grow with your business without the high costs or stress.
State Retirement Mandate FAQs
Can I opt out of a state-run retirement plan?
Yes, you can opt out if you implement a privately-run retirement plan instead, such as a traditional 401(k) or SIMPLE IRA. Many employers go this route to gain more flexibility and control over their retirement benefits and take advantage of additional cost savings.
Are state mandates the same across every state?
No, rules vary by state, so it’s important for you to stay up to date on what are the latest changes within your specific state. You can keep track of them with our state mandates map.
What happens if I don’t comply with my state’s mandates?
You may be faced with penalties for non-compliance, which vary by state. To avoid fines and consequences, it’s crucial for employers to take action earlier.
Can I still benefit from tax credits with state mandates?
Yes! You still may be eligible for tax credits that can help you offset set up and help with maintenance. To learn more about how much you can potentially save, check out our tax credits calculator.
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If you’re an employer, you’ve likely heard about state mandates by this point. To help combat the retirement savings crisis, many states are stepping in with legislation that requires employers to provide their employees with more benefits through state-run plans. Even more, with SECURE 2.0 offering additional advantages, state mandates are aiming to be the most beneficial retirement option for businesses.
But, while state-run plans are a good starting point, there is a lot more to mandates and plan requirements than employers likely expect. From understanding what each state is offering to comparing state-run plans with private alternatives, this guide breaks down everything employers need to know to stay ahead of the mandates curve.
States with Active Retirement Plan Mandates
These states have approved and launched mandates, and employers must comply or find an alternative, or else face penalties.
The following states are either actively developing their plan program or have passed legislation but haven’t fully launched yet.
Alaska, Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Montana, Nebraska, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Vermont (Passed legislation and required to offer a plan based on company size), West Virginia, Wisconsin, Wyoming
States with No Mandates Yet
Even though the states below don’t have mandates or have plans to implement new regulations yet, this doesn’t mean there isn’t interest as officials will likely watch what’s trending with nearby states and where federal rules are heading.
Alabama
Florida
Mississippi
South Dakota
Common State-Run Plan Features & Limitations
It’s important to remember that each state program is slightly different, and that their simple designs can serve as a decent starting off point for employers who may not be well-versed in retirement savings. The common features they include are:
Administrative support – usually is more basic
Employee-funding only – no employer match or contributions allowed
Limited, pre-created list of investment options
Roth IRA structure
What Employers Need to Know
When exploring your state’s mandates and plan options, here’s what to keep in mind:
You will likely grow out of a state-run plan
State plans are designed to be simple and one-size-fits-all, meaning it may work right now but won’t fit your needs in the long term. Be sure to think about how your business could grow years from now before choosing your plan.
You may be leaving money on the table
Depending on your eligibility, you could qualify for tens of thousands of dollars in tax credits, and this is applicable whether you have a state plan or a private one.
Don’t just check the compliance box
While you are staying compliant with a state plan, there are other benefits you’ll likely need to stay ahead of IRS requirements (and you may not get with a state plan) like 3(16) fiduciary services, document support, and more. So, make sure to find out what services are available in your state that can provide the assistance you need.
Employees are expecting more
Retirement benefits are being prioritized by employees more than ever, and you can play a big role in helping to improve their financial wellness. State plans can either make or break how you meet their needs.
Private Plans vs. State-Run Plans
Many employers miss out on the fact that they have options beyond their state-specific retirement plan. And for many employers, a privately-run plan can offer quite a few benefits that state plans can’t, like more control, greater flexibility, and long-term profitability. Here’s what to consider if you choose to opt out of your state-run plan:
Better Employee Experience
With private plans, you have the freedom to choose your provider, vesting schedule, investment options, and more. This means you can tailor the experience to your employees’ needs and simplify saving for them, setting you apart as a forward-thinking employer.
More Cost Savings Over Time
While many providers utilize an AUM (assets under management) fee approach that grow as employees save more, Ubiquity is one of the plan sponsors that offer transparent, flat fee pricing. You and your employees can save more over time and feel more secure about the future.
Flexible Design Options
Privately-run plans can offer more plan customization options like:
Loan and hardship withdrawals
Vesting schedules
Pre-tax or Roth contributions
Profit sharing
Higher Contribution Limits
Private plans are known for having significantly higher contribution limits than state plans, giving employees the opportunity to save much more than they anticipated. Here’s a breakdown of the latest contribution limits to see what is possible.
Next Steps
Whether you plan to go with your state’s retirement plan or want to implement a privately-run one, now is the time to secure your benefits. Ubiquity can be your partner during this process. We make it simple and affordable with 401(k) solutions that fit your goals and grow with your business without the high costs or stress.
State Retirement Mandate FAQs
Can I opt out of a state-run retirement plan?
Yes, you can opt out if you implement a privately-run retirement plan instead, such as a traditional 401(k) or SIMPLE IRA. Many employers go this route to gain more flexibility and control over their retirement benefits and take advantage of additional cost savings.
Are state mandates the same across every state?
No, rules vary by state, so it’s important for you to stay up to date on what are the latest changes within your specific state. You can keep track of them with our state mandates map.
What happens if I don’t comply with my state’s mandates?
You may be faced with penalties for non-compliance, which vary by state. To avoid fines and consequences, it’s crucial for employers to take action earlier.
Can I still benefit from tax credits with state mandates?
Yes! You still may be eligible for tax credits that can help you offset set up and help with maintenance. To learn more about how much you can potentially save, check out our tax credits calculator.
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