Sep
In September of 2022, Maryland passed a new law aimed at helping its employees better save for retirement. It’s called the Maryland Saves program and for many employees it might be the first time they’ve had the chance to contribute to a retirement plan through work.
For Employees
To be eligible for the retirement plan the employee has to be at least 18 years old and working for a Maryland employer or be a remote worker in Maryland. There is no qualification for employee status so seasonal, part-time, and full-time workers are all eligible.
Employees will automatically be enrolled into the system within 30 days of their employer registering for the program. The participation is voluntary so any employee can opt out and re-enroll at any time. The default contribution rate when enrolled is 5% of the employee’s pay, but employees can change the rate to whatever percentage they want, whenever they choose. If employees make no changes to the contribution rate it will automatically increase every year by 1% up to 10%.
Maryland Saves is for all purposes a Roth IRA. That means it is bound by the same rules that apply to Roth IRAs in terms of contribution limits ($6,500 a year for people under age 50, and $7,500 a year for people age 50 and older), and income phase-out limits based on your tax filing status. It also means that contributions made to the plan are done after tax has been assessed to the wages and that earnings in the plan will grow tax free!
The plan offers investments through BNY Mellon that include an Emergency Savings Fund, Target Retirement options, Bond Index options, and Global Growth Stock options.
To find out more information about the program you can visit their website here: marylandsaves.com/savers. You can also always ask us how the program can impact your tax and retirement situation!
For Employers
Employers that have been in business for at least two calendar years, employ at least one person, and use an automated payroll system are required to register for Maryland Saves (employers who sponsor a qualified retirement savings plan on their own are exempt). The state, if they haven’t already, will contact you if you meet these criteria.
Employer contributions at this time are not required, nor are employers permitted to contribute at this time but that could always change in the future.
By registering for the program, Maryland is also waiving the $300 annual report filing fee. There are also no fees to employers for entering or maintaining the program.
To register your business you will need to go to marylandsaves.com/employers. You will need to have your EIN, the access code provided to you by the state, your payroll provider’s name, payroll schedule, bank account information, and employee roster.
If you’re an employer and have further questions about the program, feel free to reach out to us at any time.