Are you ready for Connecticut’s Retirement Mandate?
The Clock is Ticking!
Following the actions of other states, including those of Illinois, California, and Oregon, the Connecticut Retirement Security Program (CRSP) was enacted in 2016 to address the retirement savings challenge of workers in the state. At the time, it was estimated that nearly 600,000 workers in the Constitution State lacked access to a workplace retirement plan.
Connecticut's retirement benefit plan (#MyCTSavings) requires employers with 5-25 employees to opt-into the state sponsored plan or offer a qualified retirement option by March 30th. Missing the deadline may mean facing penalties.
The state retirement program is mandatory, but you don't have to choose the state-run option. Human Interest’s automated 401(k) is compliant with the state-run program and helps with the administrative burden of running a 401(k), offers higher savings thresholds than the state plan, and may provide access to additional tax benefits. With a plan from Human Interest, employers benefit too.
● Automatic payroll sync
● Continuous account management
● Managed recordkeeping and compliance
Eligibility of employees: Which employees qualify?
Covered employees are those employed by a qualified employer in Connecticut who:
- Are of age 19 or over
- Have been employed for at least 120 days
- Provide services within Connecticut as established in Section 31-222 and not exempt from “employment” as established in Section 31-222(a)(5).
How Connecticut’s state-sponsored retirement plan works.
Under MyCTSavings, employers will automatically enroll employees in the state-sponsored plan. Within 30 days of hire, qualified employers will be required to provide each employee with a participation disclosure describing the mechanics of the plan. From that date, employees will have up to 60 days to decide whether or not to opt-out of the plan.
Eligible employees can choose to contribute to Roth IRA account (subject to adjustable gross income limitations). Employees that don’t make an election will receive a traditional IRA by default.
- Employers aren’t required or permitted to make contributions.
- Default contribution rates are set at 3% of total pay, which employees can adjust at any time.
- In 2023, total contributions participants can make to both traditional and Roth IRAs can't be more than $6,500 ($7,500 if you're age 50 or older).
MyCTSavings allows participants to invest in various strategic portfolios designed to pursue specific investment goals and Target Retirement Date Portfolios that shift allocation based on expected retirement dates. Each investment option offers a portfolio that consists of various mutual funds each with differing expense ratios and fees.
Contact Jim Ferreira – Senior Product Advisor