What is the Minnesota Secure Choice Retirement Program Act?
The law establishes a retirement savings program (the “Program”) available to state residents employed by employers with five or more employees that do not already have a retirement program in place. Under the Program, individual retirement accounts (IRAs) will be established for eligible employees to fund with a portion of their paycheck. The Program is set to begin on January 1, 2025, but there are some outlines that will help you as small business owners prepare for its implementation.
What are some features of the Program?
- Participation in the Program is mandatory for employers that do not currently sponsor their own workforce retirement savings plan, such as a 401(k) plan;
- Employers are not required to contribute to their employees’ retirement plan;
- “Covered Employees” include any employee who is at least 18 years old and satisfies any other criteria that may be established by the Program’s Board of Directors;
- Employees can elect whether their contributions will be pre-tax or post-tax (Roth), change their contribution rate, or opt out of participation entirely;
- Employers must provide Program Information to all covered employees (the Program Information required has not yet been made available by the State);
- Annual limits on contributions to an account under this Program will mirror the Federal IRA limits which are subject to annual adjustments. For 2023, these limits are $6,500 for individuals under the age of 50 and $7,500 for individuals over the age of 50.
What does this mean for employers?
Starting January 1, 2025, there will be additional requirements, including: withholding contributions from payroll, remitting the withheld contributions to the program, and ensuring all necessary information is provided to employees. For now, there is no legal requirement to implement anything, but once the law becomes effective, civil penalties will be imposed for compliance failures.
We at rb LEGAL know how difficult it is to run a business and ensure legal compliance as countless new laws become effective. If you have any questions about the Secure Choice Retirement Program Act, and how it might affect your business, please give us a call at (763) 582-1414. We’d be happy to guide your business through this change.