FAQ: State-Run Retirement Plan Mandate
Connecticut launched the MyCTSavings state-run retirement program March 24, 2022.
Its program stems from a 2016 law that requires businesses with more than five employees who make at least $5,000 annually offer employees a retirement savings program.
Businesses who offer their own program to all eligible employees are not required to offer the MyCTSavings program, but will need to opt out of the program.
The Connecticut Retirement Authority oversees the MyCTSavings Program, which is administered by a third-party compay based in New York.
Officials with the program provided the following FAQ to help businesses understand their roles and responsibilities.
Q: Do employers have to facilitate this state program?
A: Yes, any business with five or more employees—each of whom has been paid more than $5,000 in the calendar year—in Connecticut must facilitate the state’s program, unless the business offers a qualified, employer-sponsored retirement plan.
Q: Are there any fees for employers to participate?
A: There are no employer fees. Also, employers are not required nor permitted to contribute to the program.
Q: Do other states have programs like this?
A: Yes, similar programs are up and running in other states, including California, Oregon, and Illinois. And many other states are about to launch state-sponsored retirement savings programs or are in the process of passing legislation to support them, including New Jersey, Maryland, and Colorado, among others.
Q: How is the MyCTSavings program different from plans like a 401(k) or an IRA?
A: Many plans involve complex administration requirements, fiduciary liability, and high costs, all of which can keep employers like you from offering employees retirement savings plans. But MyCTSavings is different.
It offers some of the best features of popular employer plans and IRAs, but without the burdensome requirements, allowing employers to focus on facilitating the program — all with no cost to you.
Q: Does this program replace 401(k)s?
A: No, this program is not meant to replace or compete with 401(k)s or other qualified retirement plans.
Q: What is considered to be a qualified, employer-sponsored retirement plan?
A: 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).
It does not include payroll deduction IRAs.
Q: Is there a minimum age to be eligible to participate in MyCTSavings?
A: Yes, your employees must be at least 19 years of age to be enrolled in the program.
Q: What was the legislation that created MyCTSavings?
A: In 2016, the Connecticut Legislature enacted Public Act 16-29, which created the Connecticut Retirement Security Authority—the authority responsible for creating MyCTSavings.
Q: Where can I find a copy of the program rules?
A: The MyCTSavings program rules are posted here.
Q: Who can I contact if have an issue related to the program or have more questions?
A: You can find many answers to program details here, or you can call 833.811.7435, Monday-Friday, 11 am-6 pm ET.
Q: Will services be available in other languages?
A: Yes, the call center will offer assistance in English and Spanish and will have access to translation services for other languages. Certain materials may also be available in Spanish.
Q: What if a business doesn’t register for the program as required by law?
A: Any business with five or more employees in Connecticut will be required to facilitate the MyCTSavings program, unless it offers a qualified, employer-sponsored retirement plan.
The program will be monitoring businesses for compliance and will try to assist businesses in getting enrolled if needed.
That said, if a business falls out of compliance and fails to register, an investigation could occur and there may be penalties.
Q: Is there a penalty for late or omitted payroll deductions?
A: Failure to remit deductions in a timely manner violates Connecticut law, including wage and hour requirements. The state may impose penalties for these violations.
Q: When can I register?
A: MyCTSavings registration is available now to all eligible Connecticut employers.
Simply enter your EIN and the Access Code that we send you via mail or email.
Until then, take time to learn more about the program and prepare to offer your employees this retirement savings opportunity.
You can also download the registration checklist.
Q: What if I already offer a qualified retirement account?
A: Employers that offer a qualified retirement plan are exempt from facilitating the program. Simply start the registration process by providing your EIN and your access code.
Then, in the space provided, certify that you offer a plan.
Q: How does enrollment work?
A: First, you’ll be asked to provide certain information about your business and employees. We ask only for the basic information necessary to set you up as an employer and to set up your employees’ accounts.
You’ll get information to share with your employees that will include instructions for them. After that, you’ll start the payroll contributions for the employees who choose to stay in the program.
Q: How long does it take to complete enrollment online?
A: That depends on how many employees you have and whether you enter their information manually or use the batch upload feature or payroll system integration for multiple employees.
Once employees are entered into the system, just update your payroll processing to include employee contributions, which are seamlessly deposited into each employee’s account.
Q: Does the state have printed or electronic materials to help my employees understand the benefits?
A: Yes. There are educational materials you can send to employees electronically or print and share with them.
Q: How are accounts tracked?
A: Accounts are tracked using tax ID numbers or Social Security numbers.
Q: What do employees need to do after I enroll them?
A: Your employees must choose to stay automatically enrolled in MyCTSavings or opt out; they have 30 days to decide after you add them to the program. If they stay enrolled, the payroll deductions that they elect and that you set up for them in your employer portal will start as soon as your next payroll. If they choose to opt out, they will be removed automatically from the program and can always rejoin later.
Q: What if an employee already has a MyCTSavings account through another employer?
A: No worries. Just provide basic information about the employee, and MyCTSavings will use the information to direct new contributions to the employee’s existing account.
Q: What does automatic enrollment mean?
A: As soon as you add your eligible employees, their payroll contributions will start, unless the employees have opted out.
Q: What if an employee asks me for advice about the program or its investment options?
A: You should not provide any advice about the program or investments. Your responsibility is to facilitate the program only. Instead, advise the employee to visit MyCTSavings.com or call 833.811.7436. You could also suggest that the employee speak to a financial or tax advisor.
Q: Do employees need to fill out paperwork to enroll or make changes?
A: Employees are enrolled automatically and do not need to fill out any paperwork.
Once enrolled, employees can manage most account functions online.
But, if needed, there are offline forms available for certain account changes; these forms can be downloaded, filled out, and sent in. The customer service team is also available if your employees need any additional help or have other questions.
Q: When do I need to enroll new employees?
A: Per Connecticut state statute, employees must be employed for no fewer than 120 days before being enrolled.
Q: What do employers need to facilitate the state’s program?
A: To enroll, you need your EIN and the Access Code provided to you via email or letter. After that, you’ll provide a list of your employees and your payroll information.
And 30 days later, you’ll need to update your participating employees’ contribution rates within your payroll.
From that point on, you’ll just need to keep your employees’ payroll contributions and staff list up to date.
Q: Can I have a designated employee or payroll services provider complete the registration and enrollment process?
A: Yes. You can elect to add “Admins” to your account to help facilitate the MyCTSavings program if you choose not to do it yourself.
This could be an authorized employee or even staff from your payroll provider. Best of all, the program is designed to work seamlessly with many payroll provider systems.
Q: What is the difference between registration and enrollment?
A: You are required to register for MyCTSavings if you do not already offer a qualified retirement plan of your own.
Once you have registered for the program, you must enroll your employees so they can review their options under the plan.
Q: If I offer MyCTSavings to my employees now and then decide to offer a qualified retirement plan later, what do I do?
A: Employers that choose to introduce a qualified retirement plan after enrolling employees in the MyCTSavings program should contact our client services team at 833.811.7435 and request to “unregister.”
That will begin the manual process of exempting your business from the program and adjusting your employees’ accounts as needed.
You should communicate what is happening to your employees and inform participating employees that they can still access their MyCTSavings account after you’ve been exempted from the program.
Q: How will I know when I have to register and enroll my employees?
A: You’ll get a series of reminders and enrollment communications from MyCTSavings when it’s time for you to participate.
This will also be your chance to certify your exemption from the program. Unless your business is exempt, required participation in the MyCTSavings program is based on the following enrollment waves:
- Wave 1:
- Employers with 100 or more employees
- 4.1.22 registration opens
- 6.30.22 registration deadline
- Wave 2:
- Employers with 26 to 99 employees
- 4.1.22 registration opens
- 10.31.22 registration deadline
- Wave 3:
- Employers with five to 25 employees
- 4.1.22 registration opens
- 3.30.23 registration deadline
Q: Can my company join the program before its required date?
A: You can join at any time. The required date though, is your deadline to comply.
Q: Which businesses are eligible to participate in MyCTSavings?
A: All Connecticut businesses with five or more employees are eligible. If your business offers a qualified retirement plan to your employees, it does not have to participate in MyCTSavings.
Q: Are H-2A visa holders eligible for the program?
A: Yes, however, they can be enrolled and have an account created for them only if they work for more than 120 days and if enough verifiable information is available to create an account in their name.
If the program is unable to verify their information, an account will not be established for them.
Q: Are my employees who live in other states eligible for Connecticut’s program?
A: Yes, if their employment is based in Connecticut.
Q: If I have employees in multiple states, including Connecticut do I just facilitate the state’s program for employees in Connecticut?
A: Yes, you would need to facilitate the program only for employees with income in Connecticut.
Q: Are seasonal employees eligible?
A: Yes, if they work for you for at least 120 days, which is the window for you to enroll new hires. If they work for fewer than 120 days, you will not need to enroll them.
Q: Are workers of only certain immigration statuses eligible for the program? What about undocumented workers?
A: Only workers with a verifiable Individual Tax Identification Number or Social Security number can participate in the program. If a worker’s information cannot be verified, the worker will not be enrolled, and an account will not be established for him or her.
Q: Do family members who work for my business count as employees?
A: Yes, they can participate if they are considered to be employees for tax purposes.
Q: If a business owner or shareholder is also an employee, are they eligible to participate?
A: Yes, they can participate if they are considered to be employees for tax purposes.
Q: Do I need to facilitate the program if I only have a small number of employees?
A: Employers with at least five employees must facilitate the state’s program if they don’t offer a qualified, employer-sponsored retirement plan.
Q: Do I need to offer the program to work-study students?
A: Nope. You do not need to facilitate the program for full-time students in work-study programs.
Q: Do payroll deduction IRAs count as a qualified, employer-sponsored retirement plan?
A: No. Payroll deduction IRAs are not qualified retirement plans as defined by either federal or Connecticut state statutes.
Q: If I offer my employer-sponsored retirement plan only to some employees but not all, do I have to offer the state’s program as well?
A: No, if you offer an employer-sponsored retirement plan to any of your employees, you will file a certificate of exemption and you will not need to facilitate the state’s program.
Q: Can cannabis-related businesses facilitate MyCTSavings?
A: Yes, cannabis-related businesses can facilitate MyCTSavings.
Q: Who is responsible for choosing the investment options for participants?
A: The Connecticut Retirement Security Authority is responsible for making decisions about the investment options available to participants of the program.
Q: Does the program have an investment consultant?
A: Yes. The program has a private investment consultant that provides input, monitoring, and feedback about investments to the Connecticut Retirement Security Authority.
Q: What is a Target Retirement Date Portfolio?
A Target Retirement Date Portfolio is an age-based portfolio designed to help manage investment risk and is based on two factors: an investor’s current age and approximate estimated retirement date.
This type of portfolio includes a mix of investments—stocks, bonds, and cash equivalents—that evolve over time to focus on growth for younger investors and to help preserve savings closer to retirement age. MyCTSavings offers a range of Target Retirement Date Portfolios.
Q: Do I need to report contributions on my employees’ W2s?
A: No. The MyCTSavings program is structured as a payroll deduction IRA and not as a traditional retirement plan that needs to be reported on your employees’ W2s.
The IRA trustee for the MyCTSavings program will file “Form 5498, IRA Contributions Information” with the IRS (as needed for your employees) and will send employees a copy for their records, no later than May 31.
Q: Can the state use money from this program to pay for other programs?
A: No. Employees’ contributions go directly to the MyCTSavings accounts in their names.
The state can’t use the money for anything else, and there is no connection to other retirement plans offered by the state.
Q: Does MyCTSavings secure funds remitted to the employee accounts?
A: MyCTSavings has processes in place to protect the security of employee contributions to their accounts.
Q: Are there measures to keep my account safe from cyber threats?
A: MyCTSavings has processes in place to protect the security of employee accounts and information.
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