In 2015 President Obama directed the U.S. Department of Labor (DOL) to exempt states from Employee Retirement Income Security Act (ERISA) regulations, creating a clear path for state retirement plans. While the DOL rule is not yet final, Maryland has moved forward with the establishment of the Maryland Small Business Retirement Savings Program and Trust, which was enacted by the state legislature and goes into effect July 1, 2016.
Although the program is aimed at small business, in reality it will affect a broad range of employers. It requires all eligible private-sector employers with at least 10 employees to participate. Employees will be automatically enrolled in an IRA, and employers will be required to remit employee contributions via payroll deduction.
Eligible employers are those with 10 or more employees who work 30 or more hours a week that pay compensation through a payroll system or service who do not currently offer an employer-sponsored retirement plan. Other exemptions may apply as the program is implemented.
Creating increased retirement savings has become a priority in Maryland and across the country. An analysis of the Survey of Consumer Finance Data done by the Economic Policy Institute in 2013 showed the median retirement account savings for workers age 50-55 was just $8000*. Statistics from the National Institute on Retirement Security** show that for the typical household whose residents are between 25 and 64, younger households have only $3,000 saved for retirement; those households near retirement age have just $12,000 saved. With the average Maryland Social Security benefit being $1400/month, the lack of savings can quickly become a crisis for many people.
One of the simplest ways to meet this mandate is with an automatic self-directed option, like the new EZ IRA from iVEST and Legg Mason. As Gary Kleinschmidt, Head of DCIO Sales for Legg Mason explains, “iVEZT, through EZ IRA, will provide a simple, inexpensive systematic payroll deduction program for small businesses to offer their employees a chance to save for their retirement. iVEZT’s solution is called EZ IRA for a very good reason – because they are working to make it easy for employers to provide and for employees to participate in retirement savings programs.”
EZ IRA in Maryland is offered exclusively through Deluxe Payroll. No employer contributions are required and there are no per-employee charges, just one small annual maintenance fee. Form filing requirements and fiduciary liability are not required of employers and the EZ IRA is 100% employee owned and portable. Employees have access to financial advisors to assist with implementation then 24/7 access to real-time account information. Plus, their retirement savings are managed by Legg Mason.
Businesses can get a jump on the Maryland Small Business Retirement Savings Program and Trust requirements by implementing a program like EZ IRA now. Mark Marszal at Deluxe Payroll is happy to help you understand the new program requirements, just give him a call at 1-800-729-5910.