Washington Saves is the state’s new auto-IRA program and is scheduled to launch on July 1, 2027. It will require many private-sector employers that don’t already sponsor a retirement plan to enroll their workers in the state-run option.
What you’ll learn
What you’ll learn
Key takeaways about Washington Saves
- Eligible private-sector employers without a workplace retirement plan will be required to facilitate the Washington Saves retirement program for their employees.
- The program was authorized in 2024 and will be administered by the Washington State Department of Labor & Industries (L&I)
- Businesses that have been operating for at least two years and whose employees worked a combined 10,400+ hours in the prior calendar year fall under the mandate.
- Employees age 18 and older are enrolled automatically and at any time can opt out (and back in), change their contribution rate, or change their investment selections.
- The accounts are portable, and savings stay with the employee even if they leave the job or move out of Washington.
The program for Washington workers whose employers don’t offer a plan shifts retirement from a voluntary benefit to mandatory retirement savings. Because the law was signed only recently, you still have time to understand what’s coming and decide how you want to handle the administrative work.
Understanding the Washington Saves retirement program requirements
Washington Saves is the state’s response to the deficit in workplace retirement coverage. Roughly half of private-sector workers in the US don’t have access to a 401(k) or similar plan through their employer. Washington is following the lead of states like Oregon, Illinois, California, and Colorado in setting up an automatic IRA program to close that gap.
Once the program goes live, retirement participation effectively becomes mandatory in two ways:
- Covered employers are required to facilitate the program if they don’t already sponsor their own qualified retirement plan.
- Employees are automatically enrolled unless they choose to opt out.
Employer eligibility for the new state mandate
You’re generally a “covered employer” under Washington Saves if you check all of these boxes:
- You’re a private-sector employer doing business in Washington.
- You have been in business for at least two years.
- Your employees worked a combined total of 10,400 hours or more in the previous calendar year, or roughly the equivalent of five full-time employees.
- You don’t already offer a qualified retirement plan to covered employees who have had continuous employment of one year or more.
If you already sponsor a workplace retirement plan such as a 401(k), 403(b), SEP, SIMPLE IRA, or pension, you are exempt from the mandate. You don’t need to switch over or register for Washington Saves.
Comparing your compliance options: Washington Saves vs. employer-sponsored plans
If you are a covered employer, you have a clear choice to make before the 2027 deadline. You can facilitate the state’s auto-IRA program, or you can sponsor your own qualified retirement plan to claim an exemption.
Here is how the state-run program stacks up against common private plans to help you determine the best path for your business and your team:
| Feature | Washington Saves Auto-IRA | Private qualified plan (e.g., 401(k), SIMPLE IRA) |
| Exemption status | Does not apply (this is the baseline state option). | Fully exempt: Sponsoring a qualified plan means you do not need to register for the state program. |
| Employer fees | No cost: There are no program fees for employers to facilitate the setup. | Varies: Administration and setup costs apply based on the provider you choose. |
| Employer contributions | Not allowed: Employers cannot match employee funds or contribute to accounts. | Available: Allows for employer matching, profit-sharing, or nonelective contributions. |
| 2026 employee contribution limits | Lower limits: Up to $7,500 per year ($8,600 if age 50 or older). | Higher limits: Up to $24,500 per year for a 401(k) ($32,500 with age-50 catch-up options). |
| Fiduciary responsibility | None: The employer holds no fiduciary liability for investment performance. | Yes: Employers assume a fiduciary role, although third-party administrators can handle the heavy lifting. |
| Federal tax credits | None: Facilitating the program does not trigger federal tax incentives. | Up to $5,000 annually: SECURE 2.0 provides major startup tax credits for eligible small businesses. |
Newer businesses, very small employers under the 10,400-hour threshold, and the self-employed aren’t required to participate.
Good to know
Once it adopts rules to do so, the governing board has authority under the law to extend the program to non-covered workers, including the self-employed, independent contractors, and the unemployed.
If you operate in more than one state, this is a good time to look at how your retirement obligations stack up. Washington Saves joins a growing list of state-mandated retirement plans. Managing them alongside payroll taxes and SUI tax rates by state can quickly get complicated when you cross state lines.
How the auto-IRA works for employees and employers
For employees, Washington Saves is designed to feel like a workplace retirement plan, even though it’s structured as an IRA owned by the worker.
Once the employer registers and uploads payroll information, eligible employees age 18 and older are automatically enrolled. The default contribution rate is set by the governing board within a range of 3% to 7% of gross wages for the first year of the program. There is also the option to step up by 1% annually to a 10% maximum in later years. The board will offer a default investment plan plus alternative options and a self-directed option for workers who want more control. Employees can:
- Stay enrolled at the default rate.
- Increase or decrease their contribution within IRS limits.
- Choose a different investment from the menu the state offers.
- Opt out at any time, with no penalty.
Because the account is an IRA in the employee’s name, it is fully portable. If the employee changes jobs, leaves the workforce, or moves out of state, the account goes with them.
Your responsibilities as an employer are limited but specific. You’ll register your business with Washington Saves, share information about your covered employees, distribute program disclosures, set up payroll deductions for participating workers, and remit those deductions on schedule. You won’t make matching contributions or act as a fiduciary. And there is no cost for businesses.
Join the Washington Saves pilot program
Want to get ahead of the 2027 deadline and help shape how the state-run program works? The Washington State Department of Labor & Industries (L&I) is looking for small businesses to participate in a pilot program. If your business is interested in early participation, you can reach out directly to the state at info@wasaves.wa.gov to learn more about pilot opportunities.
Managing retirement deductions through payroll software
Even with a relatively light employer role, the real-world burden lands in your payroll process. You’ll need to track who’s eligible, who has opted out or changed their contribution rate, and how much to withhold each pay run. Multiply that across pay periods and any staffing changes, and the recordkeeping piece can quickly eat into time better spent on the business.
Seamless setup
“OnPay was very easy to set up, and their customer service has been quick to help with questions and a few customization needs. The interface is clean and simple to use, so much so that I get nervous I have forgotten something. It just can’t be this easy to run payroll!”
— Doug Smith, Sly Clyde Cider
This is where modern payroll software earns its keep. With OnPay, IRA deductions can be configured per employee, applied automatically to each pay run, and reflected on pay stubs and payroll reports. Funds can be sent to the program on schedule, and reports can be pulled when you need to verify what was withheld and remitted. If you have employees in more than one state, multi-state payroll processing helps you keep state-by-state retirement, tax, and reporting requirements in one place, so you don’t have to juggle separate systems.
Bottom line: Put Washington Saves on your radar
So, does Washington State have a retirement mandate that will affect you? If you have a Washington workforce of any meaningful size, the answer is likely yes. You still have time before the July 2027 launch, and it makes good business sense to take stock.
Start by adding up your total employee hours from the previous calendar year to see whether you’re likely to clear the 10,400-hour threshold. Confirm your business has been operating in Washington for at least two years and maintains a physical presence in the state. Check whether you already sponsor a qualified retirement plan. If so, make sure your records are in order so you can document your status when registration opens. If you don’t have a plan and you’d prefer to offer your own 401(k) rather than use the state program, this is a good window to compare options.
When you’re ready to put the right payroll setup in place, you can get started with OnPay and have a system that’s prepared to handle Washington Saves deductions, multistate requirements, and whatever else lands on your plate between now and 2027.
Take a tour to see how easy payroll can be.
Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.