MyCTsavings: State Retirement Mandates in Connecticut & Beyond

In the state of Connecticut, more than 600,000 private-sector employees have no employer-sponsored retirement savings plan.1 The Connecticut Retirement Security Program was created in 2016 and was designed to help workers in the state save and plan for their retirement years.

MyCTSavings 

Program details

MyCTSavings is Connecticut’s state mandated retirement program. The program requires businesses to offer the state’s auto-enroll Roth IRA account to employees or certify their exemption by proving they have a qualified alternative offering. 

The program impacts all businesses (both for-profit and nonprofit). Businesses are required to participate in the State's program if the following conditions are met:  

1. 1.  The employer had a workforce of five or more employees in Connecticut on October 1st of the preceding calendar year. 

1. 2.  The employer paid a minimum of five employees taxable wages totaling $5,000 or more in the previous calendar year. 

1. 3.  The employer does not currently offer a qualified, employer-sponsored retirement savings plan. 

 Employers who offer a qualified, employer-sponsored retirement savings option are exempt from the program. According to the program website, qualified plans include 401(k), 403(b), 408(k), SIMPLE IRA, or 457(b). Payroll deduction IRAs do not qualify for exemption.1 Businesses that offer these plans can certify their exemption here. 

Deadlines

Deadlines to sign up for the state’s plan or certify exemption were staggered based on a business’s number of employees. The final deadline passed on March 30, 2023, which required businesses with five or more employees to either enroll in MyCTSavings or provide another qualified saving plan. 

While initial registration deadlines have passed, Connecticut businesses can still take action without fear of penalty until August 31, 2023. 

What happens if businesses don’t comply? 

In May 2023, the Connecticut House approved legislation allowing penalties for employers who do not comply with the state mandate. If enacted, fines between $500 and $1,500 could be imposed on businesses that do not comply. 

State plan vs 401(k) 

There are no costs associated with offering Connecticut’s state-run plan. Even with that in mind, other private offerings may be a better choice for businesses overall.  

What are the biggest differences between MyCTSavings and another offering? 

• MyCTSavings offers a Roth IRA account. Which allows employees to contribute a maximum of $6,500 (or $7,500 for those who are 50+) in 2023. A 401(k) or 403(b) plan has a higher contribution limit of $22,500 (or $30,000 for those who are 50+) for the same year. 
• State-mandated retirement plans offer a more limited number of investments for users to choose from, whereas non-state plans may offer a wider range of investment options. 
• Administrative responsibilities fall on the employer for state-run plans. This includes manually sending employees’ contributions to the plan with each round of payroll. Many qualified plan recordkeepers offer automated payroll integrations and may handle other administrative and compliance-related tasks.  

Beyond state mandates 

As retirement mandates continue to roll out, it’s important to know what’s  

required of your clients, help ensure they are compliant to avoid fines, and help them find the best retirement plan for their employees. 

The SECURE Act 2.0 provides several significant changes for small businesses and those saving for retirement, including tax incentives for qualifying small businesses that may cover up to 100% of the start-up costs for a 401(k) plan. Starting a Human Interest 401(k) may help your clients comply with current or upcoming state retirement mandates and utilize these beneficial federal tax credits. 

Have clients in Connecticut and other states impacted by state-mandated retirement programs or are interested in learning more about SECURE Act 2.0 tax credits? We’re here to help!