Mandated RetireReady NJ Program Launches for Employers with 25-Plus Employees

More than 1.7 million Garden State workers who don’t have access to a retirement plan will have the opportunity to participate in RetireReady NJ, a mandated, state-facilitated workplace retirement program that launched June 30, 2024. For-profit and non-profit businesses with 25 or more employees must offer this retirement savings program, and even businesses with fewer than 25 employees are eligible to participate.

Have Other States Mandated Employers Offer Retirement Plans?

Yes. New Jersey is one of nearly a dozen states to enact legislation for state-run retirement plans by private employers for employees.

The looming savings crisis in the United States certainly spurred the state to act, but officials in the highest offices in New Jersey also saw an opportunity to help shore up the state’s financial future. Data from an AARP study revealed that more than $190 million could be saved by the state on public assistance between 2018-2032 if lower-income workers increased their future retirement income by $1,000 a year.*

What Employers Should Know About RetireReady NJ

Employers must participate in RetireReady NJ savings program if they have:

• 25 or more eligible employees on continuous basis in previous calendar year
• Been in business for at least two (2) years
• Not offered a qualified retirement plan in the past two years

Of note, employers cannot match contributions by employees in the program.

Employers have to comply and fulfill their responsibilities once the program is established, including:

• Offering open enrollment periods at least once a year
• Enrolling new hires in the program within three months of their hire date
• Providing employees information about the program
• Depositing employee payroll deductions

There are registration deadlines based on employee count:

• 40-plus employees: deadline passed
• 25 to 39 employees: Nov. 15, 2024

What are Penalties for Noncompliance?

Employers can be subject to penalties for noncompliance based on when they were scheduled to start the program. In the first calendar year, they would get a written warning from the state; the second calendar year brings a $100 fine per employee not enrolled who hasn’t opted out; third and fourth calendar years call for a $250 fine for each employee not enrolled who hasn’t opted out; and the fifth calendar year and all subsequent calendar years could bring a $500 fine per employee not enrolled who hasn’t opted out.

Employee Eligibility Requirements for RetireReady NJ

If you are 18 years of age or older, employed by an employer or live in New Jersey, and you receive W-2 wages subject to the state’s Gross Income Tax, you are eligible to participate in the retirement program.

How Does RetireReady NJ Work?

Enrollment is automatic but employees can opt out of the program. There is a default contribution rate of 3 percent that will be withheld from each paycheck. The RetireReady NJ savings program does not include an auto escalation. An employee’s IRA is portable and can move from job to job.

Looking Forward

Paychex monitors and provides updates on state-sponsored retirement plans. New Jersey businesses also can look at starting a retirement plan such as a 401(k) for employees through a provider such as Paychex that will satisfy the requirement mandated by the law. Providing a benefit such as a retirement plan can help smaller companies compete with larger companies for talent and help younger employees start building a retirement savings.

*AARP Public Policy Institute, 2017