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Updated: February 9, 2024
Did you know that Maine’s state-mandated retirement plan is open for employer registration as of January 2024? It was created in 2021 by Maine’s legislature as the Maine Retirement Investment Trust, or MERIT for short.
Fast facts about MERIT
In this employer’s guide, we will look at how Maine’s state-sponsored retirement program got its start, how savings work, and what employers should know about MERIT.
Simply put, by law the mandate requires that all Maine businesses offer their employees some type of qualified retirement savings program. Employers have the option to sponsor their own retirement plan, such as a 401(k), SIMPLE IRA, or offer employees access to MERIT.
In 2021, An Act to Promote Individual Retirement Savings through a Public-Private Partnership was passed. At the time, the state of Maine decided to collaborate with Colorado’s Secure Savings (the centennial state’s mandated retirement program) in order to accelerate the implementation of their own program. In 2023, an amendment to the original Act was passed in Maine. It provided for a phased-in implementation, while extending the time that employers have to register for the program.
In short, many Americans are approaching retirement age without having enough savings to live on once they leave the workforce. This creates challenges for many states, including Maine, where 14% of the population and about 40% of the state’s active workforce, or more than 200,000 employees lack access to a retirement savings plan.
The result? State-mandated retirement plans, such as MERIT, are gaining traction across the country. In most cases, these state-facilitated programs require employers who do not have a qualified retirement plan to provide their employees with access to one (whether through the state plan or a private carrier).
MERIT began with a 2023 pilot program that allowed employers with more than 25 employees to voluntarily begin registering for the program. Registration opened for MERIT earlier in January 2024 and employers need to be aware of the following deadlines:
Employers with five or more employees
Employers with 15 or more employees
Employers with 5-14 employees
All employers that are required to sign up will be notified by MERIT when it’s time to register. You will need the following information to register your business:
If you wish to register without receiving notification from MERIT, you can look up your business access code online.
Additional information about MERIT and its program requirements can be found on the program details page.
MERIT is free for employers. Once they sign up for a Roth IRA, employees will pay a small administrative fee. It is important to note that under MERIT rules, an employer is not permitted to contribute to their employee’s individual retirement savings account.
Once a company is registered and their employee’s information is uploaded, 5% of an employee’s pay will automatically be deducted from their paycheck and contributed to an individual Roth IRA. Moreover, the IRA is portable, without being attached to a single employer. In other words, the employee is free to take their retirement savings plan with them if they change employers or leave the workforce.
The 5% deduction is automatic unless the employee chooses to opt out of participating in the program. Any employee that opts out will automatically be reenrolled during the next enrollment period, with the option to once again opt out if they choose. Employees also have the option to change the default 5% contribution.
Maine employers are responsible for registering for MERIT in 2024. Once registered, employers need to complete the four-part onboarding process, which includes providing the following information:
While employers are responsible for the above tasks, they are not responsible for the following:
Keep in mind that if a business already has a qualified retirement plan in place, an employer can choose to opt out of participating in MERIT. That said, the business will still have to register if it offers one of the following qualified retirement savings plans:
MERIT exceptions if you offer one of the following plans | |
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Employers can also opt out of participating in MERIT if they have fewer than five employees. However, they will have to call the MERIT service team at (833) 608-8811 to update their business information to avoid being charged with fines for not registering. Any business, regardless of the number of employees, can voluntarily opt to participate in MERIT.
Let’s cover some things employees may want to know about Maine’s new state-sponsored retirement plan.
If team members are curious about how MERIT works, here are some of the main issues they may have questions about:
MERIT was initially established with $1.6 million that the state of Maine received in a settlement with Moody’s Investor Services. Moving forward, participating employees will pay an asset-based fee of $0.32 for every $100 of plan assets. Employees will also pay a $22 annual fee that is charged quarterly.
MERIT is managed by an independent board with the intention in the future of having the program become self-sustaining.
Please don’t blame the messenger, but there are penalties for any employer who does not comply with Maine’s retirement mandate and registration requirements. Penalties go into effect on July 1, 2025, and are as follows:
That said, the penalty structure gives employers time to learn about how the state’s program works, the steps they need to take to comply with, and if they are required to follow the mandates in place.
For more information about MERIT, be sure to check out the following resources.
Participating in MERIT has advantages for both employers and employees. On the one hand, employees gain access to a simple way to jumpstart their retirement savings, which they can use with their current employer (or if they move to another company). Furthermore, companies can use the benefits of a retirement savings plan in their recruiting efforts, while keeping their long-term employees productive and happy.
MERIT, or the Maine Retirement Investment Trust, is a mandated program passed in 2021 that requires all employers with five or more employees to participate in the program.
Registration began in January 2024, with businesses automatically notified when it’s time to register.
MERIT is free for employers, while employees pay a small service fee for participating in the plan.