New Jersey
On March 28th, 2019, Governor Phil Murphy (D) signed the New Jersey Secure Choice Act into law, which implemented a statewide retirement savings program for all private-sector employees in the state not currently enrolled in a retirement plan to electively participate in a state-facilitated automatic enrollment individual retirement account (IRA) program.
Legislative Summary:
In June 2018, Assembly bill 4134 was introduced by the Labor Committee and passed the General Assembly in mid-December 2018 and the Senate in February 2019. Originally slated for implementation date in March 2021, it was delayed until 2022 due to COVID.
Program Description:
The New Jersey Secure Choice Savings Program is administered by the New Jersey Secure Choice Savings Board, to provide a state-facilitated payroll-deduction individual retirement savings plan for private sector employees who do not have access to employer-sponsored retirement savings plans.
Affected Employers:
Employers with 25+ employees that have been in business for at least two years, and have not offered a retirement plan. Self-employed individuals or independent contractors may electively participate in the program, but are not required to do so.
General Requirement:
Automatic enroll employees at 5% deferral with annual increases of 1% (up to a maximum of 10%) of the enrollee’s wages.
Unique Requirement: Employees covered by a leasing arrangement (PEO) are considered employees of the service provider for purposes of the law.
Launch Status:
March 28, 2022
Full Implementation:
December 28, 2022
Compliance Deadline:
December 28, 2022
Non-Compliance Penalties:
| Deadline | MAXIMUM PENALTY |
|---|---|
| December 28, 2023 | First Year – $100 per employee |
| December 28, 2024 | 2-3 Years – $250 per employee |
| December 28, 2025 | 3+ Years – $500 per employee |
Employer Costs:
None
Employee Costs:
0.75% of account balance, during the first 3 years following implementation; 0.60% of account balance thereafter.
Investments:
The program is anticipated to offer a suite of target date funds (TDFs), as the default investment option, and additional investment options to be determined by the Board.
Program Website:
New Jersey Secure Choice Savings Program