Key Takeaways
New Jersey launched RetireReady NJ in July 2024.
Businesses with 40+ employees who have been in business for 2+ years have until September 15, 2024, to comply; those with 25 - 39 have until November 15, 2024
Learn how a 401(k) plan may outperform the state-provided auto-IRA
Approximately one million full-time workers in New Jersey lack access to an employer-sponsored retirement plan, according to the American Retirement Association. To help improve retirement plan access, the Garden State joined a growing list of states with state-mandated retirement programs when Governor Phil Murphy signed the New Jersey Secure Choice Savings Program Act (A4134) into law in March 2019.
RetireReady NJ launched in July 2024. Established by the New Jersey Secure Choice Savings Program Act, the state program is designed to help New Jersey employees save for retirement via automatic paycheck deductions into a Roth IRA. Employers with at least two years in operation and 25 or more workers are required to offer the state-run option, unless they already offer a retirement plan, or provide a qualified plan such as a 401(k).
Read more to learn about the details of RetireReady NJ, including deadlines, fines, and more.
Does your New Jersey business qualify for 401(k) tax credits?
Learn if starting a plan comes with tax incentives.
When does RetireReady NJ launch?
Governor Phil Murphy initially signed the New Jersey Secure Choice Savings Program Act (A4134) into law in March 2019. While the program’s initial implementation date was March 28, 2021, it was given a one-year extension due to COVID-19 and was further delayed until 2024. A pilot program launched in the spring of 2024, before the New Jersey Secure Choice Savings Program Act officially launched RetireReadyNJ in July 2024.
Is it mandatory for New Jersey companies?
Yes. Most eligible New Jersey employers are required by law to facilitate RetireReady NJ. According to RetireReady NJ, employers must register for the program or certify an exemption if they meet the following criteria:
Employ at least 25 workers during the previous calendar year
Have been in business for at least 2 years
Do not currently offer a qualified employer-sponsored retirement plan
What are the deadlines for RetireReady NJ?
As of July 2024, deadlines have started to impact businesses. According to the program website, employers will be notified by RetireReady NJ when it's time for them to register. While deadlines for businesses with fewer than 25 employees are yet to be determined, current registration dates are as follows:
September 15, 2024: Employers with 40 or more employees
November 15, 2024: Employers with 25 to 39 employees.
Are there penalties for companies that fail to comply?
Yes. Employers who do not provide a qualified retirement plan or register for the program within a year will receive a government-issued written warning. Continued non-compliance will result in escalating fines as follows:
Second year: $100 fine
Third and fourth years: $250 fine per violation
Fifth and subsequent years: $500 fine per violation
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How does the New Jersey state-mandated program work?
The program, launched in July 2024, is managed by the Secure Choice Savings Board and administered through partnerships with private sector entities. By law, New Jersey employers who meet specific criteria must either provide a qualified retirement plan or enroll their employees in this program.
Employees will contribute to RetireReady NJ through automatic payroll deductions into a Roth IRA, with the option to opt out. Contributions will grow tax-free, and withdrawals during retirement may also be tax-free.
RetireReady NJ charges an annual asset-based fee of approximately 0.75%, which is billed directly to savers. This fee covers the program's administration and does not include the operating expenses charged by the underlying investment funds in which the program's portfolios are invested, which could result in even more costs to savers.
Who can contribute: Employees, employers, or both?
Only employees can contribute to the new retirement accounts, as there is no mandate for an employer contribution or match. Employee contributions will be automatically deducted from their payroll and put into an IRA. A standard 3% payroll deduction applies unless the employee chooses to opt out or elect a higher or lower percentage.
What happens if an employee changes jobs?
IRAs are portable, so workers can move them if they switch jobs. New employees must be enrolled within three months of their hire date. If they decline initial participation, they can wait until an open enrollment period.
How are investments chosen and managed?
The program’s investment options are selected by the Secure Choice Savings Board. The program offers several investment options based on investment goals and risk tolerances. Upon enrollment, savers can either stay with the default investment—a Capital Preservation Fund for the first 30 days, followed by a Target Retirement Date Fund—or choose from options such as Capital Preservation, Target Retirement Date Fund Series, Large Cap, Mid Cap, Small Cap Core, Small Cap Value, or International Equity funds.
New Jersey business owners: Consider your options
For New Jersey business owners, now is the time to prepare for upcoming deadlines and penalties. While RetireReady NJ aims to increase retirement plan access, small businesses have options.
For employees: While intended to address the retirement savings gap by providing more coverage, RetireReady NJ is not without its drawbacks. Compared to other options like 401(k) plans, IRAs have limited flexibility (i.e. no employer matching, a default 3% payroll deduction, and a lower contribution limit).
For employers: Offering employees retirement plan options can lead to improved recruiting, decreased turnover, and tax savings. Employers aren’t responsible for investment returns, program design, or program benefits—but will have to set up infrastructure and establish processes for employee payroll deductions, ensure they’re compliant with the plan rules, and move employee funds into the state fund.
Ultimately, New Jersey businesses have options to comply with state laws and should consider whether they want to offer the program, or if another qualified retirement plan that may better suit their needs. In addition to more flexibility and higher contribution limits for savers, a 401(k) with Human Interest comes with numerous benefits for New Jersey employers, including a “no-touch” payroll integration with over 500 payroll providers.
Considering a retirement plan for your employees but not sure where to start? We can help.
Start a 401(k) with Human Interest
A Human Interest 401(k) plan can connect directly with your favorite payroll provider and has zero transaction fees.
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The Human Interest TeamWe believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.
