New Jersey Latest State to Open Auto-IRA Program
State automatic individual retirement account plans continue to gain traction, with additional state legislatures passing measures to create systems that require private sector businesses to offer a state plan if they do not already sponsor their own retirement plan.
New Jersey has become the latest state to implement a state-sponsored program for private-sector workers. The state’s plan, RetireReadyNJ, is now open to residents who work for companies with 25 or more employees, have been in business for at least two years, and do not provide their own retirement plans.
Businesses must now register for the initiative, with State Treasury Department officials stating that participation is free of charge. The program establishes a 3% deduction rate, with no requirement for businesses to make contributions or matches. Vestwell, the program’s administrator, estimates that at least 800,000 New Jersey residents will benefit from it.
The program was supposed to begin in March, but the state missed the deadline, citing the pandemic. This spring, New Jersey conducted a trial program with five employers and 250 employees. Governor Phil Murphy’s administration anticipates that once established, the retirement program’s assets could exceed $10 billion.
Starting with Oregon in 2017, 17 states have enacted auto-IRA programs so far, according to the Georgetown University Center for Retirement Initiatives, collecting around $1.5 billion in total assets. Meanwhile, several states have formed partnerships to decrease the expense of running the programs.
