Next month, Maryland will become the latest state to create a retirement program for private-sector employees who do not have access to an employer-sponsored retirement plan. The law creates mandated payroll deduction retirement accounts for covered employees of covered employers.
A “covered employer” under the law is defined as a non-government for profit or nonprofit employer in Maryland that (1) pays employees through a payroll system or service; (2) has been in business for at least 2 years; and (3) does not currently offer, or have not offered in the previous 2 years, an employer sponsored “savings arrangement.” A “covered employee” under the law is defined as an employee who (1) does not have access to an employer sponsored “savings arrangement” and (2) is at least 18 years old.
The law also establishes a Board that will administer the program. Once the program has been opened for enrollment, employers will be responsible for establishing a payroll deposit retirement saving arraignment for covered employees so that they can participate in the program. The law requires that employees be automatically enrolled unless the employee specifically opts-out of the program in writing.
The law goes into effect July 1, 2016.