New State Run Retirment Program Launches
Last week NJGCA participated in an informational seminar hosted by the NJ Treasury on the new RetireReadyNJ program. If you haven’t heard of this program before, we wouldn’t be surprised. It was actually created by the New Jersey Secure Choice Savings Program Act in March 2019. The law created a state-administered Individual Retirement Account (IRA) plan. The goal was to develop a government-run savings option for private sector workers whose employers do not offer a retirement plan. Though the program was signed into law in 2019, it obviously took a number of years to get off the ground. After multiple delays, the plan is finally ready to launch.
At this point, the obvious question is, “Does this apply to me and how will it affect my business?”. The short answer is that it may, or may not.
On its face, the law stipulates that businesses should register with the state if they:
• Are registered in New Jersey
• Do not currently have an existing retirement plan
• Have 25+ employees
• Have been operating for at least 2 years
All that is needed to register is your federal Employer Identification Number (EIN), and a confirmation access code (which is sent to you during the sign-up process).
If you already offer a retirement plan to your employees, business owners should certify their exemption from the program (which can be done with the provided access code).
Keep in mind that if you meet the qualifications to register, the employer:
• Does not administer the program
• Will make no contributions towards employees' IRA plans (there is no cost at all to employers, and in fact, employer contributions are not permitted)
• Has no fiduciary responsibilities
• Has minimal administrative involvement
• Can easily integrate the program into their current payroll processing (automatic contributions, etc)
It should be noted that, while the law only compels businesses with 25 or more employees (which do not offer a retirement plan) to register, it does not mean that you could not also voluntarily take advantage of the program. In fact, the state has promoted the idea that the program is an advantageous tool for small business owners to use in attracting and retaining talented employees. Ultimately, there may be situational and circumstantial reasons that entice you (or an employee) to register.
Here are a few additional details that should be noted:
• The deadline for employers with 40 or more employees is September 15, 2024.
• The deadline for employers with 25 to 39 employees is November 15, 2024.
• Any employee “saver” who participates in the program will have ownership and control over their individual IRA accounts.
• An employee’s participation is completely voluntary, and can change their mind on participating at any time.
• If you are self-employed, 18 years of age or older, have earned income, and are eligible to contribute to an IRA, you can open an individual RetireReadyNJ account.
• If your employee has a previous retirement savings plan, they can roll their previous account into the new RetireReadyNJ account.
• Full-time and part-time/seasonal workers are treated the same for purposes of calculating the threshold number of employees. This might be helpful in attracting/retaining part time workers to your business.
If you wish to learn more about the plan, you can visit the website by CLICKING HERE
Lastly, there will be an online employer presentation on August 7, 2024 at 11:00 AM. You can register for this information session by CLICKING HERE