Washington Saves Becomes Law; State Aims to Get More Employees Retirement Ready

Washington joined 15 other states when it signed into law March 28, 2024, that employers offer a state-mandated retirement plan for the workplace by July 1, 2027. It opens the potential for up to 1.2 million workers in the state to gain access to a workplace retirement plan which, according to state data, is 43 percent of its private-sector workforce.

A study in 2023 reported that 72% of the state’s small-business owners support a statewide retirement savings program.¹

What is the Washington Saves Mandated Retirement Program?

Washington Saves is an auto-IRA program similar to other retirement plan mandates in other states that require employers to provide an opportunity for employees to contribute to retirement savings through automatic payroll deduction, if they do not already offer a retirement plan. It will be overseen by a 15-member board after they design and implement it.

There will be phased-in implementation based on business sizes, as well as a default contribution rate established that will not be less than 3% nor greater than 7% of an employee’s wages. A 1% auto-escalation per year is included that will not exceed 10%.

What Employers Qualify for Washington Saves?

Covered employers are any businesses located in the state of Washington in business for at least two years, whose employees worked a combined 10,400 hours the previous calendar year, and do not currently offer a workplace retirement plan. Employers must enroll any employee who has worked for one continuous year or more at the business.

There are penalties for failure to enroll employees in the plan.

What Employees Should Know About Washington Saves?

Employees 18 years of age and older in Washington will gain a portable retirement account and they also will be able to opt out of the program at any time. One perk of this plan is former participants are allowed to contribute to their accounts.

Paychex Can Help

Millions of Americans have little to no retirement savings. As the nation’s number one 401(k) plan provider,² our mission is to help employees and employers save for a more secure financial future. Plus, starting a plan with Paychex fulfills state retirement savings mandate requirements.

¹Pew Charitable Trusts survey on retirement, July to September 2023.

²PLANSPONSOR magazine, 2023.