New Jersey businesses with at least 25 employees will soon need to prove they are providing their employees company-sponsored retirement savings plans or will need to register for a state-administered retirement savings program.
Depending on the company’s size, the deadline is either September 15 or November 15.
The requirement stems from the New Jersey Secure Choice Savings Program Act, which was signed into law on March 28, 2019. The legislation created the retirement savings plan obligation and established the New Jersey Secure Choice Savings Program, also known as RetireReady NJ, which is a state-administered retirement savings program.
According to RetireReady NJ’s website, New Jersey businesses with 40 or more employees must comply by September 15, 2024. Businesses with 25 to 39 employees must comply by November 15, 2024.
Businesses will receive notification by RetireReady NJ when their deadline is approaching.
The legislation applies to New Jersey businesses (whether for profit or not for profit) that (1) have at least 25 employees in the State at any time during the prior calendar year, (2) have been in business at least 2 years, and (3) have not offered a qualified retirement plan in the preceding two years. Businesses that offer one of the following company-sponsored retirement plans are exempt: a plan qualified under Internal Revenue Code section 401(a) (including a 401(k) plan), a qualified annuity plan under section 403(a), a tax-sheltered annuity plan under section 403(b), a simplified employee pension plan under section 408(k), a SIMPLE IRA plan under section 408(p), or a governmental deferred compensation plan under section 457(b).
Employees that count towards the 25-employee threshold are employees who are age 18 or older, who either live in New Jersey or are employed in New Jersey, and whose wages are subject to New Jersey income tax withholding. In addition, employees employed by an employee leasing company or a professional employer organization and a New Jersey business are treated as employed by the New Jersey business.
Employers who are not exempt must automatically enroll their currently eligible employees, who will have a choice to opt-out within 30 days. New employees hired more than six months after RetireReady NJ is open for enrollment must be enrolled within three months of their hire date, unless they opt-out prior to enrollment. Employers who fail (without reasonable cause or an exemption) to enroll an employee are subject to penalties under the legislation.
RetireReady NJ establishes individual Roth IRAs for each eligible employee, which are funded through employee payroll contributions. Employers cannot make contributions themselves to RetireReady NJ. Employers who collect employee contributions, but fail to remit any portion of the contributions to RetireReady NJ, are subject to penalties. Employers that register for RetireReady NJ should work with their payroll providers to ensure the employee contributions are being processed correctly and they are in compliance with State mandated deadlines.
[View source.]
