If You Don’t Offer a 401(k), This May Apply to Your Business
More states are stepping in to address retirement savings gaps - and for many employers, that now comes with a compliance obligation.
If your business does not offer a qualified retirement plan, such as a 401(k), you may be required to participate in a state-sponsored retirement program, often structured as an automatic IRA (auto-IRA). These programs require employers to register, facilitate payroll deductions, and remit employee contributions to the state-run plan.
This is not optional in many states, and additional mandates are continuing to roll out.
States With Active or Upcoming Retirement Mandates
As of right now, employers without a qualified retirement plan may be subject to mandatory state programs in the following states:
California (CalSavers) – Employers with 5+ employees
Colorado (Colorado Secure Savings) – Employers with 5+ employees
Connecticut (MyCTSavings) – Employers with 5+ employees
Delaware (DE Earns) – Mandatory program enacted
Hawaii – Employers with 1+ employees
Illinois (Secure Choice) – Employers with 5+ employees
Maine – Mandatory program enacted
Maryland (Maryland$aves) – Employers with 5+ employees
Massachusetts (CORE Plan) – Applies to certain employers
Minnesota (Secure Choice) – Employers with 5+ employees
New Jersey (Secure Choice) – Enacted, implementation underway
New York (Secure Choice) – Employers with 10+ employees
Oregon (OregonSaves) – Applies to all employers
Rhode Island (Secure Choice) – Employers with 5+ employees
Vermont (VTSaves) – Employers with 5+ employees
Virginia (RetirePath) – Employers with 25+ employees
Washington (Washington Saves) – Transitioning to mandatory participation
More states are actively considering similar programs, so this list is likely to grow.
When Do These Requirements Apply?
While the specifics vary by state, most programs are triggered when:
The business has been operating for a set period (often two years), and
The employer does not offer a qualified retirement plan
Employee thresholds commonly start at five or more employees, though some states already apply the requirement to smaller businesses or are moving in that direction.
What Employers Are Required to Do
These programs are designed to be low-lift for employers, but participation is still mandatory if you’re covered. Typically, employers must:
Register with the state program
Enroll eligible employees automatically (employees can opt out)
Process payroll deductions and remit contributions
Employers do not contribute financially to these plans, but they are responsible for administration and ongoing compliance.
What Happens If You Don’t Comply?
Failure to comply can result in penalties, often calculated on a per-employee basis, and fines may increase over time if issues are not corrected.
Because enforcement timelines and penalties vary by state, employers can be caught off guard if they are unaware a mandate applies to them.
What Business Owners Should Do Now
If you operate in one or more states with retirement mandates, it’s a good time to:
Confirm whether your business is covered
Review whether your current retirement offering qualifies
Understand upcoming registration or enforcement deadlines
Coordinate with payroll and HR to ensure readiness
For many employers, the key is simply awareness. These programs are meant to expand access to retirement savings, but compliance still matters.
If you’re unsure whether a mandate applies to your business - or how to approach it without creating unnecessary complexity - SevenStar HR can help you understand your options and next steps.