New Jersey Enacts Auto IRA Program for Employers of 25 or More Employees


On March 28, 2018, New Jersey joined California, Connecticut, Illinois, Maryland, and Oregon in enacting an auto-enrollment IRA program. The program, known as the New Jersey Secure Choice Savings Program (the “Program”), will require all New Jersey employers with 25 or more employees to participate in a state run IRA program, unless they have their own retirement plan.

The Program will be run by the newly created New Jersey Secure Choice Savings Board (the “Board”). Employees will contribute to the Program through automatic payroll deductions and the Program sets a default contribution rate of 3%. The Program must begin to enroll employers within 24 months of its effective date (i.e. March 28, 2020), although the Board is empowered to push that date back by one year.

The Program will apply to any employer in New Jersey that (1) had at least 25 employees throughout the entire previous calendar year, (2) has been in business at least two years, and (3) does not offer a qualified retirement plan, such as a 401k or another plan sponsored by an employee leasing company or professional employer organization (PEO).

Employers covered by the new requirement that fail to enroll employees in the Program will be subject to fines of $100 per employee during the second calendar year of the Program, increasing to $500 per employee in the fifth year. An employer that collections employee contributions but fails to remit any portion of the contributions to the Program is subject to a penalty of $2,500 for the first offense, and $5,00 for each subsequent offense.

Given the upcoming implementation of the Program, employers in New Jersey should review their payroll practices and benefits programs to ensure compliance with the law. If you have questions about your business’s employment law obligations, please contact us at 201.345.5412 or use our online scheduling page to set up a complimentary consultation.