Are you a Connecticut business owner with 5 or more employees and do not currently have a retirement plan for your employees in place?
If so, then pay attention because a recent Connecticut mandatory program, MyCTSavings, sponsored by the State of Connecticut’s Retirement Security Authority was recently disseminated. If you don’t have a “Qualified Retirement Plan” for your business, then this new program will require your direct action.
What is MyCTSavings?
MyCTSavings is a new state-sponsored retirement savings program created to support Connecticut employees in saving and planning for a financially secure future. Over 600,000 private–sector employees have no employer-sponsored retirement savings plan in place. To combat this gap in retirement planning, this program now MANDATES employers to offer enrollment into MyCTSavings.
What Employers Should Know:
Who is Eligible?
- Those with 5 or more employees.
- Those who paid 5 employees $5000 or more in taxable wages in the previous calendar year.
- Those who do not currently provide a qualified, employer-sponsored retirement savings plan.
Who is Exempt?
- Those who currently provide a qualified, employer-sponsored retirement savings plan.
- Those companies who were not in existence during the current and preceding calendar years.
- Those companies that employ only individuals whose services are excluded under the unemployment compensation law.
Do I Have to Participate if I am Eligible?
Yes!! The program is MANDATORY, and it will be monitored for business compliance, penalties will be assessed as warranted. It requires direct effort. Once an employee is hired, they have 30 days to opt in or out. If the employer does not inform the employee or the employee does not respond, they are automatically enrolled at the default contribution level of 3%. There is a lot at stake if you chose to ignore the program.
When is the Registration Deadline?
MyCTSavings will be rolled out in waves, beginning with larger employers first.
|Wave 1||Wave 2||Wave 3|
|# Of Employees||100+||26 to 99||5 to 25|
What Will This Cost Employers?
Great news, absolutely nothing! There are no employer fees. Employers can not make employer contributions to the program.
Does this program replace 401(k)s?
No, the purpose of this program is not to substitute or compete with 401(k)s or other qualified retirement plans.
What Your Employees Should Know:
Who is Eligible?
- Employees must be at least 19 years old.
- You must be scheduled to work more than 120 days to be enrolled.
- Business owners and shareholders are eligible to partake.
- If an employee is an H-2A Visa Holder they are eligible if:
- Employed for over 120 days.
- The program is able to verify their information.
Are There Fees?
There are no fees in the Cash Preservation fund however there are a few other fees employees should be aware of and prompted of:
- There is an annual asset-based fee paid as a percentage of the money in your account.
- The fee for each investment option you choose is approximately 0.22% of its value per year ($0.22 for every $100 saved), which includes the investment management fee for underlying funds.
- Administration fees are $26 annual (which is charged quarterly at $6.50 each quarter).
If you find yourself having questions or unable to answer employee questions promptly like:
- What if I already have a retirement account in place?
- Are employee contributions protected?
- Does the program have income limitations?
- How much should I be contributing?
- Does this impact SNAP or TANF benefits?
No worries, our experts know the answers! consider downloading our FREE guide on The Benefits of Outsourcing Human Resources Services.
An HR Business Partner is available to have a conversation around keeping your organization compliant and answering all employee inquiries. With the deadline around the corner, contact us with your questions concerning the new MyCTSavings program.
Interested in more HR News? Read our article about The Connecticut Salary Range Disclosure Act HERE