If your New Jersey business doesn’t sponsor a retirement savings program, it’s time for you to create a system allowing workers to sock away retirement money through automatic payroll deductions. Thanks to the New Jersey Secure Choice Savings Program Act, New Jersey employers with 25 or more employees that do not sponsor a retirement savings plan must establish a retirement savings program in the form of an automatic payroll deduction for those choosing to participate. Covered employers that do not sponsor a retirement savings program have until either September 15 or November 15 to enroll depending on the number of employees at the company. What steps do you need to take to ensure compliance with this new law?
Quick Background
The new state-administered retirement savings program, RetireReadyNJ, aims to make saving for retirement easy and attainable for as many workers as possible throughout the state. Registration is now open for your business to comply. You can read more about the details of the program here.
The implementation date was initially extended to March 2022 after COVID-19 scuttled the original due date. However, it was only recently that the State launched its pilot program to comply with the Act.
Who is Covered?
The Act covers all private employers in New Jersey that:
- have employed 25 or more employees in New Jersey;
- been in business at least two years; and
- have not offered a qualified retirement plan in the preceding two years (such as a 401K plan).
Small employers with fewer than 25 employees may provide payroll deposit retirement savings arrangements for employees who elect to participate in the program but are not required to do so.
What is the Pilot Program?
RetireReady NJ launched on July 10, 2024. The program is a state-run retirement savings program that aims to provide a secure way for private-sector employees to save for retirement.
Employer contributions are not permitted under the program. Rather, the program offers an easy method for employees to begin saving on a voluntary basis, and allows employees to directly control their retirement contributions through payroll deductions. This pilot program is portable if employees change jobs. RetireReady NJ also accepts rollovers and transfer of savings employees have in other IRAs or retirement plans.
What Steps Must Employers Take?
Employers can access the registration materials here. You should be notified by RetireReady NJ when it’s time to register, and you’ll be provided with an access code to do so.
- Employers with 40 or more employees must enroll by September 15
- Smaller employers with 25-39 employees must enroll by November 15
If you decide to offer your own retirement plan rather than participate in RetireReady NJ, you can withdraw from the program.
Once registered, you can invite your payroll service provider to participate in the process to ensure seamless integration. Through the portal, you will provide RetireReady NJ with a list of employees who are interested in participating. Once registered through the program, paycheck deductions for retirement contributions will commence after 30 days.
Conclusion
Qualified New Jersey employers should take the necessary steps to ensure their businesses are in compliance. Employers without their own retirement plans must make sure they do not miss the upcoming enrollment deadlines of either September 15 or November 15.
