MyCTSavings Retirement Program Mandated for Most Connecticut Businesses

Connecticut recently launched its MyCTSavings retirement savings program following the success of its pilot program in the fall of 2021. All eligible private-sector employers in the state with five or more eligible employees will be required to participate in MyCTSavings or offer an employer-sponsored retirement plan that satisfies the requirement.

Businesses in the Constitution State and their employees will finally get to benefit from a state-mandated retirement program that originally was enacted into law in 2016.

The Connecticut program, similar to nearly a dozen other states that have enacted programs, aims to address the ongoing and growing retirement crisis in the United States.

Why Does Connecticut Need Employee Retirement Savings Options?

More than 600,000 private-sector employees in Connecticut have no access to an employer-sponsored retirement savings plan, according to the state Comptroller’s office. In the U.S., households nearing retirement have a median retirement account balance of less than $15,000.¹

There are about 354,000 small businesses in Connecticut, according to 2023 data from the U.S. Small Business Administration, and more than 730,000 people are employed by those businesses.²

Participants in the MyCTSavings program — a Roth auto-IRA — can help employees start saving for a dignified retirement and gain a key recruiting and retention tool.

What Employers Should Know About MyCTSavings 

Connecticut requires participation by employers with:

• Five (5) or more eligible employees on Oct. 1 of the previous year  
• Who do not currently offer a retirement plan to employees
• Paid at least 5 employees at least $5,000 in the previous calendar year 

Employers impacted by this state mandate will be notified by MyCTSavings and must register for the program by Aug. 31 of the year after meeting the employer requirements or certify exemption if they already offer a retirement plan at https://myctsavings.com/. 

Private employers with four or fewer employees may also choose to participate but are not required. All employees who have been paid more than $5,000 in the calendar year will be automatically enrolled by their employer with a contribution of 3% of the employee’s payroll wages designated to a Roth IRA in the program. Employers are not permitted to make contributions to the program.

Employers will be responsible for providing each eligible employee with information about the state-run program within 30 days of the employee’s hire date and documenting it. They also must deduct and remit employee contributions in a timely manner to the program.

An employer could face civil penalties for failing to enroll an eligible employee or remit contributions in a timely manner. The Connecticut Retirement Security Authority will determine any possible penalties for noncompliance but has yet to release what such penalties would be.

What Employees Should Know About MyCTSavings Program

Employees are eligible to participate if they meet the following criteria:

• They are 19 years of age or older
• Employed for at least 120 days
• receives wages in Connecticut 

Employees will be automatically enrolled in the program but can voluntarily opt out. They can also change their enrollment rate from the default rate of 3 percent. A participant may contribute up to the annual IRS contribution limit for a Roth IRA.

Employees, should they change jobs, may continue to contribute to the account or roll it over to another retirement account.

Looking forward

Paychex continually provides updates on state retirement plans if there are changes to the program or if additional information is available. Small businesses can provide a perk such as a retirement program to enhance their ability to attract and retain younger employees and help them start building retirement savings. Looking for support with your retirement plan in Connecticut? Businesses that want to implement a workplace retirement plan such as a 401(k) can do so through a provider such as Paychex and satisfy the state mandate. 

¹National Institute of Retirement Savings, “The Continuing Retirement Savings Crisis”

²U.S. Small Business Administration Office of Advocacy, 2023 Small Business Profile

Other Resources

SECURE Act: Tax credits and benefits to establishing a workplace retirement plan

SECURE Act 2.0: What other enhancements are available?