Minnesota has enacted legislation (House File 782), which creates a state-run retirement program that workers in the private sector can join and requires participation by employers if they have five or more employees and don’t offer a retirement plan. The law doesn’t set a timeline for implementing the program. However, the program’s board of directors must begin operation of the program no earlier than Jan. 1, 2025.
The details
House File 782 establishes the Minnesota Secure Choice program, a state-run payroll withholding savings program using Individual Retirement Accounts (IRAs).
The program doesn’t require (or even allow) employers to contribute to the IRAs. However, unless exempt, employers are required to facilitate the program.
Minnesota employers must facilitate the Secure Choice program if they:
- Employ five or more covered employees; and
- Don’t sponsor or contribute to, and didn’t in the immediately preceding 12 months, sponsor or contribute to a retirement savings plan for their employees.
Note: Employers that contract with employee leasing companies, professional employer organizations, or other similar entities to obtain workers are also covered under the program, unless that entity has a retirement savings plan that exempts it from the program.
“Retirement savings plan” is defined in House Bill 782 as “a plan or program offered by an employer that permits contributions to be set aside for retirement on a pretax or after-tax basis and permits all employees of the employer to participate except those employees who have not satisfied participation eligibility requirements that are no more restrictive than the eligibility requirements permitted under section 410(b) of the Internal Revenue Code.
To facilitate the program, covered employers must:
- Enroll employees in the program and withhold payroll deduction contributions from each covered employee’s paycheck, unless the covered employee has elected not to contribute.
- Timely remit contributions to the program.
- Provide information about the program to employees at least 30 days prior to the date of the first paycheck from which employee contributions could be deducted for transmittal to the program if the covered employee doesn’t elect to opt out of the program.
The information to provide to employees and the timeline for implementing the program, including when enrollment and contributions must begin, will be developed by the program’s board of directors.
Next steps
Employers are not required to take any immediate action at this time. The program’s board of directors must first develop procedures to administer the program. We will continue to keep clients informed of any future developments.