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Updated: January 5, 2024
The New Jersey Secure Choice Savings Program is set to launch in 2024. That is likely to be welcome news for those working in the state, as the American Retirement Association reports that one million New Jersey employees are currently without access to an employer-sponsored retirement plan.
The program was signed into law in 2019, but as of December 2023, it has yet to be launched. When the New Jersey Secure Choice Savings Program is officially up and running, it will require certain employers to enroll employees in the program, although all private sector employers can participate once it becomes active.
In this employer’s guide, we will discuss the program’s origins, who will be required to offer access once it becomes active, and if there are exemptions if a business already provides employees with access to a retirement savings plan.
In March of 2019, New Jersey Governor Phil Murphy signed P.L. 2019 c. 56, putting the wheels in motion for the New Jersey Secure Choice Act. Though it was originally slated to begin operations in March of 2021, the implementation was repeatedly delayed due to the Covid-19 pandemic. As of December 2023, the program is due to launch in 2024, with a phased, targeted implementation expected in mid-2024.
Under the Act, the state will set up its own retirement fund, with employees automatically enrolled in the program. Once the program is active, participating will be required for the following New Jersey employers:
Although implementation has been slow, with the assignment of Vestwell as the program administrator, it’s expected that implementation will ramp up in 2024.
Simply put, employers that are required to participate once the plan is active will have to automatically enroll all of their employees, both full- and part-time, unless the employee chooses to opt out.
All contributions to the program are made by automatic payroll deductions, with 3% the default contribution level. However, employees will be given the option to change the contribution level once a year.
All contributions will be placed in a Roth Individual Retirement Account, or Roth IRA, which is fully portable. Therefore, the employee can take their retirement savings with them should they change employers. Employers are not permitted to match employee contributions to the Roth IRA.
With the program administrator now in place, it’s expected that a pilot program will be launched in early 2024, followed by a targeted launch to take place in mid-2024.
If an employer already offers a qualified retirement plan to their employees, they are not required to enroll in the New Jersey Secure Choice Savings Program. Qualified retirement plans include:
All program management fees will be paid by the State of New Jersey. Though employers will not be charged for maintaining the plan, employees will be charged management fees that have not yet been set but cannot exceed 0.75% in the plan’s first three years and 0.6% thereafter of the fund’s total balance.
Registration is not yet open for the New Jersey Secure Choice Savings Program but is expected to begin sometime in 2024.
If a New Jersey private sector employer or nonprofit meets the qualifications listed earlier, they will be required to participate in New Jersey Secure Choice Savings Program. However, other businesses that don’t meet all of the qualifications can voluntarily choose to participate in the program as well. For instance, even though they are not required by New Jersey law to do so, a business with fewer than 25 employees may participate in the program.
Please spare the messenger, as there can be some unwelcome outcomes if an employer fails to follow the rules when New Jersey Secure Choice goes live. There can be penalties for both a business that meets the requirements and chooses not to participate, or if an employer fails to enroll an eligible employee within the allotted period.
There is a schedule of potential penalties in C.43:23-31 of the Act that employers should be aware of.
Finally, there can be an additional slap on the wrist for employers who collect employee contributions but fail to remit any portion of the contributions to the fund. In this case, there can be a penalty of $2,500 for the first offense, and $5,000 for the second and each subsequent offense.
Though implementation has stalled since the initial bill was passed, with a program administrator in place and the hiring of an executive director, it looks like the program is on track to begin in 2024. However, employers would be well served to continue monitoring the Secure Choice Savings Program website for additional information.
Whether its through the New Jersey Secure Choice Savings Program or a private provider, offering workers access to retirement savings be a “win-win” situation for you and your staff. Team members get the chance to save money for retirement while employers can use savings plans to attract and retain top talent. If you have questions about picking a retirement plan, the OnPay benefits team can help!
The New Jersey State Savings Plan, known as the Secure Choice Savings Program, is a state-sponsored retirement plan that was designed to help more private sector employers offer a qualified retirement plan to their employees. The plan is administered by the Secure Choice Savings Board and is currently working on program implementation.
With the passing of P.L. 2019 c. 56 in March of 2019, all New Jersey employers with more than 25 employees that have been in business for at least two years are required to enroll employees into the Secure Choice Savings Program. If desired, employees also have the option to opt out of the program.