Mandatory Retirement in Maryland

By Hightower Bethesda on August 30, 2022

Registration for the “Maryland Saves” program begins September the 6^th of 2022. “Maryland Saves” is a mandatory retirement program that all employers must establish in 2022. The program seeks to provide Roth IRA’s for each employee of a business, even those businesses with only one employee. Vestwell, a part of BNY Mellon, will be administering the program for the state of Maryland. Employers do NOT contribute anything to the plan at this time, but this could change in the future.

Employers with merely one “work location” in the state of Maryland, even if they work remotely must participate. Every business MUST register, this includes single owner S-Corps.

If you have a company retirement plan already established, you are exempt from this rule, however, you must still register. Though there are no fines established at this point, Maryland could suspend business licenses due to non-compliance.

“Maryland Saves” will create individual portals for each employee. Business owners will be responsible for submitting contribution information, updating employee information, and adding new employees. Contributions and employee census data must also be updated each pay period.

Employees are automatically enrolled to contribute 5% of their earnings each pay period. The first $1,000 of contribution goes into a “rainy day” fund that the employee can withdraw without penalty. The balance is then contributed to the Roth IRA. The state of Maryland will increase this by 1% per annum until 10% is reached. Only employees can access their Roth plans and change investment percentages.

Employers can NOT make any changes in the employee portal. It is the responsibility of the employee to make changes to their plan (including if they wish to increase or decrease the amount withheld) and advise the employer of any changes they make. Employees have 30 days to opt-out of the plan and can be done through their own portal.

Employer obligations include educating your employees, preparing them for the change, and making sure employees understand that 5% of their paycheck will be withheld and go into their established Roth IRA, unless the employee takes direct action. Employers should direct employees to “Marylandsaves.com”.

The state of Maryland can help employers with the following: providing information guides for distribution to the employees in English and Spanish, completing your registration, providing certification to prove that an employer-sponsored retirement plan already exists, managing your contribution submissions and employee deduction changes through payroll.