New Jersey’s New Retirement Plan Mandate Roll Out Has Begun, by Karol Corbin Walker, Esq. and Nicholas J. Falcone, Esq., 1-3-2025

Many New Jersey employers are now facing new obligations to enroll their employees in a state-administered retirement savings program.

Under the new mandate, businesses with 25 or more employees, full or parttime, that have been in business at least two years and do not already offer their own qualified retirement plan will be required to register with the program, RetireReady NJ. 

RetireReady NJ, which was established by the New Jersey Secure Choice Savings Program Act (the “Act”), was designed to help bridge the gap for workers without access to a retirement plan. The program affords employees the opportunity to begin saving for retirement through payroll deductions into a Roth or Traditional Individual Retirement Account (IRA). There is no employer mandated match. 

What is a qualified, employer-sponsored retirement plan?

 Employers are exempt from the requirements of RetireReady NJ if they offer a qualified retirement plan to employees.

According to the state’s FAQ, an employer-sponsored retirement plan includes a plan qualified under Internal Revenue Code sections 401(a) (including a 401(k) plan), qualified annuity plan under section 403(a), tax-sheltered annuity plan under section 403(b), Simplified Employee Pension plan under section 408(k), a SIMPLE IRA plan under section 408(p), or governmental deferred compensation plan under section 457(b).

An employer can still meet the act’s requirements if it offers employees a plan sponsored by “an employee leasing company or professional employer organization (PEO) with which the employer has an employee leasing agreement or professional employer agreement in the preceding two years,” according to the Act’s language. 

Employer Deadlines

 For those businesses whose employees do not have access to a qualified retirement plan, the implementation/registration deadlines to enroll in RetireReady NJ are as follows:

• September 15, 2024, for those employers with 40 or more employees. Should you fail to register before June 15, 2025, you may be subject to penalties in accordance with the statute.
• November 15, 2024, for those employers with 25-39 employees. Should you fail to register before August 15, 2025, you may be subject to penalties in accordance with the statute.

Even employers who provide a qualified retirement plan must still certify their exemption from the program on the RetireReady NJ website. Also, according to the Act, “employers shall retain the option at all times to set up or provide coverage under any type of employer-sponsored retirement plan or to elect to offer coverage through a plan sponsored by an employee leasing company or professional employer organization with which that employer has an employee leasing agreement or professional employer agreement.”

Keep in mind while employers who are not exempt must automatically enroll eligible employees in the program (within three months of their date of hire for new employees), individual employees may opt out of participation via a form.

Also, since the program is not an employer-sponsored plan and it is not operated or administered by the employer, participating employers “shall not be a fiduciary, or considered to be a fiduciary, over the program, and shall not be liable with regard to investment returns, program design, and benefits paid to program participants.” They also bear no “responsibility for the administration, investment, or investment performance of the program, or for any required or permitted communications between participating employees and program administrators.”

Next Steps to Consider

 Employers should stay cognizant of the deadlines to register or certify their exemption. Among other tasks, they should also track the eligibility status for all employees, providing applicable program information to employees and speak to their payroll provider to help facilitate the process (the employer portal integrates with many leading payroll providers).  Over time, there are penalties for noncompliance so knowing your obligations will only help to reduce your liability and exposure.  

Authors: Kaufman Dolowich Partner Karol Corbin Walker, Esq. and Of Counsel Nicholas J. Falcone, Esq.